On 5 July 2018, the Crown Commercial Service launched a new, simplified Public Sector Contract, which has been developed by CCS, the Government Digital Service and the Government Legal Department.
What will the Public Sector Contract be used for?
The Public Sector Contract is designed for use in framework arrangements where the government calls off common goods and services. No mention has yet been made of any thresholds for use of the contract, which suggests that the current expectation is that the contract should be used for all framework arrangements irrespective of the value or complexity of the goods and services being procured. It is expected, for example, that the contract will be used as a basis for the government’s new facilities management marketplace framework, estimated to be worth around £12 billion.
What does the Public Sector Contract look like?
The Public Sector Contract is made up of a set of standard core terms, written in ‘plain English’, which form part of both the framework and call off contracts (at just over 20 pages).
In addition to standard award and order forms, the contract also includes a suite of schedules which are intended to be customised for each procurement and which include guidance as to their use. The schedules include:
- framework schedules e.g. specification, prices, framework management
- call-off schedules e.g. key suppliers, exit management, benchmarking
- joint schedules applicable to both the framework and call-off contracts e.g. definitions, insurance, form of guarantee.
Can the terms of the Public Sector Contract be changed?
CCS has indicated that the core terms may not be changed. However, the Framework Award Form allows for ‘Framework Special Terms’ to be specified “to revise or supplement Core Terms or Schedules”. Any such special terms must be run past the Policy Implementation team at CCS, and it is not yet clear whether these terms may only be proposed by CCS or whether they can be agreed following negotiation with a proposed supplier.
CCS has indicated that the schedules will be customised for each procurement and will be included in the relevant bid pack.
What are the key terms to be aware of?
There is no doubt that government suppliers will be scrutinising the terms of the Public Sector Contract carefully, and – irrespective of CCS indicating that the core terms are not up for negotiation – it remains to be seen whether there will be sufficient market appetite for use of the unamended contract, at least on higher value and complex procurements.
Features of the contract likely to be of particular interest to suppliers include:
- specified limits of liability for each party under both the framework agreement (£100,000 per contract year) and call-off contract (the greater of £5 million or 150% of the estimated yearly charges under each call-off contract)
- the ability of CCS/the public sector buyer to terminate the framework arrangement at will on notice
- a requirement on suppliers to reserve the right to terminate subcontracts in certain circumstances at the request of the buyer.
It will also be interesting to see whether the ‘modular’ nature of the contract, with significant detail underpinning the relationship between the parties specified in schedules, will achieve the government’s stated objective of simplifying the contracting arrangements. This is particularly the case given that the majority of the schedules are given legal precedence over the core terms in the event of conflict between the documents.
Why is CCS doing this?
The contract is intended to make it easier for businesses (particularly SMEs) to apply for government contracts by simplifying the relevant terms of business and providing for a more standardised approach to contracting across Government.
Increasing SME involvement in government procurement remains a key issue for the government, particularly given its stated ambition to spend £1 in every £3 with SMEs by 2022. As of October 2017, it was estimated that the proportion stood at around £1 in every £4, and that while direct spend with SMEs had increased, the government’s target remained challenging.
It will be interesting to see whether the launch of the Public Sector Contract has a marked impact on the level of SME involvement in government contracting, and whether any impact extends to increased involvement in higher value, more complex procurements.
How can Burges Salmon help?
If you would like to discuss any of these issues further, please contact Laura Wisdom, John Houlden or your usual Burges Salmon contact.