MODEL ICT SERVICES AGREEMENT - BASELINE PRECEDENT CLAUSES FOR CONSIDERATION WHEN CONTRACTING FOR OUTPUTS OR OUTCOMES

(1) [THE AUTHORITY]

-and-

(2) [THE CONTRACTOR]

IPR Statement

"(1) Subject to paragraph (2), you may re-use, modify and adapt these documents (not including the Royal Arms and other departmental and agency logos) free of charge in any format or medium (as non-exhaustive examples, public sector employees may re-use, modify and adapt these documents for internal business purposes and private sector advisory firms may re-use, modify and adapt this material for the purposes of (i) providing advise and documentary deliverables to their public and private sector clients; (ii) for internal and external training purposes; and (iii) speaking at conferences and hosting seminars). You may also link to these documents from your internal intranet. You must re-use the material accurately and not in a misleading context. The material must be acknowledged as (c) Crown Copyright and you must give the title of the source documents. Where we have identified any third party copyright material you will need to obtain permission from the copyright holders concerned regarding any use of this material.

(2) If you wish to use these documents (in full or part) in any electronic or hard copy publication that will be sold for commercial gain (for the avoidance of doubt, "publishing for commercial gain" shall not be taken to include any of the activities provided as examples at paragraph 1) then a value added re-use licence will be required from the Office of Public Sector Information. In these circumstances, please apply for a Click-Use Licence for value added material at www.opsi.gov.uk/click-use/system/online/pLogin.asp. Alternatively applications can be sent to:

Office of Public Sector Information
Information Policy Team
St Clements House
2-16 Colegate
Norwich
NR3 1BQ

Fax: 01603 723000

e-mail: HMSOlicensing@cabinet-office.x.gsi.gov.uk"

IMPORTANT NOTICE

• This model ICT Services Agreement:
  
  
  • should be read in conjunction with the Key Commercial Principles for UK Government ICT services agreements published by the Office of Government Commerce ("OGC"). For projects with multiple suppliers you will also need to consider the additional guidance given in section 2 of the Key Commercial Principles document(Multi-Supplier Issues). Additionally, this Agreement contains guidance notes highlighting the issues that need to be considered and the assumptions that have been made in drafting clauses of the Agreement. The guidance notes contained in the Agreement are not part of the Agreement and should be removed before the Agreement is sent to any potential contractor or other interested party;
    
    
  • is intended to be used as a starting point to assist you with drafting your ICT Services Agreement where the Authority will be buying-in services from a Contractor involving the implementation and operation of a new system and associated services. It does not purport to be a complete contract and must, in all cases, be carefully adapted to the particular circumstances (which may include taking out parts of the agreement which are not relevant to your project or not appropriate for the size of your project). Some of the concepts dealt with in this Agreement are necessarily complex and a number of provisions are inter-dependent. It is assumed that you will develop this document with appropriate professional advice and that you and your advisers will tailor it to your particular requirements Neither OGC nor its advisers are responsible in any way for the use that you may make of this document;
    
    
  • assumes that the Contractor will own any assets employed in the delivery of the Services. Further provisions will be required if this is not the case, or if the Authority will require the transfer of assets on termination or expiry of the Agreement. Guidance Note 2 (Payment, Affordability and Asset Ownership) provides further guidance on the issues relating to assets;
    
    
  • may be used as the starting point for an outsourcing contract and it contains elements that are appropriate to this type of agreement. However, you will need to make provision with the assistance of your professional advisors for those outsourcing elements that are specific to the nature of your project, including in respect of the transfer of assets and provision in respect of employment and pensions;
    
    
  • assumes that the Authority is taking tax advice from its specialist tax advisers;
    
    
  • assumes that the law of England and Wales will apply;
    
    
  • generally reflects the law and practice as at its original drafting date of October 2004, although a number of its provisions have since been updated. You must ensure that the document is reviewed in detail and updated by your legal advisers and that any changes after this date are taken into account;
    
    
  • contains a number of different optional clauses. It is very unlikely that you will need all the provisions and you should consider each provision carefully in light of the specific project for which this Agreement is to be used;
    
    
  • has been drafted in contemplation that the procurement to which it relates will be conducted through the competitive dialogue procedure;
    
    
  • contains square brackets in clauses which indicate provisions that will need consideration and potentially amending to suit a particular project.
    
    
• Particular attention should be paid to financial limits applied to the limitations of liability of each of the parties to this Agreement.

INTRODUCTION

A [Note - set out description of background and objectives of the procurement.]

IT IS AGREED as follows:

SECTION A - PRELIMINARIES

Return to Top

1. DEFINITIONS AND INTERPRETATION

[Guidance: This clause refers the reader to schedule 1 where terms used in the Agreement are defined. The clause also deals with points of interpretation and precedence of different parts of the Agreement over others. The definitions included in schedule 1 will need to be checked for relevance and suitability for your project. Additional definitions will need to be added for any other terms you wish to use.]

1.1 In this Agreement the definitions set out in schedule 1 (Definitions) shall apply.

[Guidance: Unless words are expressly defined, the courts will interpret non-technical terms in accordance with their "ordinary and natural" meaning, or the meaning which the parties are to be inferred to have intended by the use of the words they choose. Therefore, it is a good idea to include certain definitions to avoid any uncertainty. For example, "Default" has been given a precise meaning in this Agreement. Defined terms can also be a useful "shorthand" for referring to lengthy meanings which would otherwise make the clauses themselves repetitious and confusing to follow. For example "Project Specific IPRs". Defined terms:

• should begin with a capital letter in the body of the document;
• reflect the sense of what they are defining; and
• not be incorporated from previous agreements or standard precedents without thinking carefully about their appropriateness.]

1.2 In this Agreement, unless the context otherwise requires:

1.2.1 the singular includes the plural and vice versa;

1.2.2 reference to a gender includes the other gender and the neuter;

1.2.3 references to an Act of Parliament, statutory provision or statutory instrument include a reference to that Act of Parliament, statutory provision or statutory instrument as amended, extended or re-enacted from time to time and to any regulations made under it. The impact of any such amendment, extension or re-enactment on this Agreement shall be dealt with in accordance with clause 47 (Change in Law); and

[Guidance: Clause 1.2.3 covers two issues. First, it ensures that legislation referred to in the Agreement that is amended during the course of the Agreement shall be read as including any legislation that amends, extends or re-enacts it. Second, it refers to clause 47 which deals with the impact of such changes to the legislation on the Agreement and the parties’ obligation under it.]

1.2.4 any phrase introduced by the words "including", "includes", "in particular", "for example" or similar, shall be construed as illustrative and without limitation to the generality of the related general words.

[Guidance: The objective of this provision is to make it clear that any example which follows the words "includes", "including" or "in particular" is illustrative, not definitive. It removes the need to say "including but not limited to " within the Agreement.]

1.3 The headings in this Agreement are for ease of reference only and shall not affect its interpretation.

1.4 References to clauses and schedules are, unless otherwise provided, references to the clauses of and schedules to this Agreement.

[Guidance: The objective of this provision is to remove the need to say, for example, "Clause 2 of this Agreement" throughout the Agreement.]

1.5 Without prejudice to clauses 9.4 and 12.2, if there is any conflict between the clauses and the schedules and/or any annexes to the schedules and/or any other documents referred to in this Agreement, the conflict shall be resolved in accordance with the following order of precedence:

1.5.1 the clauses and schedule 1 (Definitions);

1.5.2 schedules 2.1 (Services Description) and 2.2 (Service Levels);

1.5.3 any other schedules and their annexes (except for schedule 4.1);

1.5.4 schedule 4.1 (Contractor Solution); and

1.5.5 any other document referred to in this Agreement or any other document attached to this Agreement.

[Guidance: Consider whether any such document is intended to be contractually binding. If it is then it should be specified in the definition of “Agreement” in schedule 1. In deciding what documents will comprise the "Agreement" (in addition to the terms and the schedules) consider also whether any document may contradict what is stated elsewhere in the Agreement, whether it uses the defined terms in schedule 1 and whether it adds anything that is not already set out elsewhere.

The schedules should not normally prevail over the clauses, as it is important that the core terms and conditions are never undermined.]

1.6 Save in respect of the Charges (which shall be adjusted in accordance with schedule 7.1 (Charges and Invoicing)), if an amount or sum is expressed to be "subject to indexation" at a point in time, it shall be adjusted by reference to the percentage change in the [RPIx][Retail Prices Index (all items excluding mortgages)] over the most recent 12 months for which published data is available at that point in time.

[Guidance: The purpose of clause 1.6 is to ensure that the aggregate liability sums to which it applies in clauses 52.2 and 52.3 are aligned regularly with any changes in inflation during the term of the Agreement by using the Retail Prices Index. It is not intended that this indexation should apply to the Charges, which should be adjusted in accordance with an agreed methodology set out in schedule 7.1 (Charges and Invoicing). Consider whether the Retail Prices Index is the appropriate index to use for the Services being supplied.]

1.7 Subject to the provisions of clauses 5 - 8 (inclusive), neither party to this Agreement shall be liable for any Default of its obligations under this Agreement to the extent that such Default is caused by a failure or delay by the other party in performing its obligations under this Agreement, provided and to the extent that the affected party notifies the other party of such failure or delay within 30 days of the affected party becoming aware of its occurrence and of its likely impact.

[Guidance: This clause adds a procedural hurdle (notification) for a party wishing to escape liability for breach on the basis that the other party caused it to commit the breach (e.g. by not providing information or access).]

[Guidance: Consider whether a Conditions Precedent clause is necessary. For example the Agreement may be conditional on the Contractor providing a parent company guarantee (although best practice is to have this completed before you sign the Agreement). It is usual to have this type of clause near the beginning of the document.]

Return to Top

2. DUE DILIGENCE

[Guidance: Guidance Note 1 (Key Commercial Principles), section 1 - 5 (Due Diligence) sets out the considerations for a due diligence exercise. It is important to give the Contractor sufficient opportunity to carry out due diligence prior to the award of the Agreement. This benefits both parties in identifying any issues and incorporating any issues into the draft of the Agreement, as appropriate, before signing the Agreement. It also obviates the need for the Authority to give any warranties or assurances with respect to any information supplied and/or the Operating Environment.

This clause is drafted on the basis that due diligence has been completed and therefore the risk of providing the Services has transferred to the Contractor, as the party best able to manage this risk. Exceptionally, if it is not possible for due diligence to be carried out prior to the award of contract then consider post-award verification.]

[Guidance: It is in both parties’ interests to ensure that due diligence is carried out in a timely
and effective fashion. Bidders should be encouraged to produce a list of their due diligence requirements as soon as reasonably practical in support of their solution design, specifically identifying the due diligence issues that impact materially on price. The Authority should, as far as possible, seek to support the Bidders’ reasonable requests for data and site access in support of due diligence and ensure that there is sufficient time for the necessary checks to be carried out. However, in the event that it becomes clear that either:

a) the Authority is unable to provide reasonable access to reasonably requested sites/information; or

b) it is unreasonable to expect the Bidders to take the risk that the provided due diligence information which is critical to solution design and/or delivery costs is inaccurate (e.g. because the information may have been produced by a third party) then the Authority should consider the use of a price-variation mechanism.

The use of such a price-varying mechanism should only be considered in exceptional circumstances and following a full review of the risks of adopting it in the context of any particular project.

If the Authority decides to use a price-variation mechanism, the Bidders should be asked to identify any due diligence issues arising as a direct result of either a) or b) above as pricing assumptions and quantify the impact on the price (both positive and negative) of the information not being as currently assumed or understood. The price-variation mechanism should include a time-limited resolution period - typically a few weeks, though more time may be required for complex issues - during which any required price adjustment must be made. If the procurement is following the Competitive Dialogue process, the pre-agreed price-variation mechanism should be developed and agreed between the parties during the Dialogue phase of the procurement process. It should then still be permissible to deal with these issues after Final Tenders have been submitted and once a preferred Bidder has been appointed, provided that this does not result in modifying substantial aspects of the tender, distort competition or have discriminatory effect.]

2.1 The Contractor acknowledges that it:

2.1.1 has made and shall make its own enquiries to satisfy itself as to the accuracy and adequacy of any information supplied to it by or on behalf of the Authority;

2.1.2 has raised all relevant due diligence questions with the Authority before the Effective Date; and

2.1.3 has entered into this Agreement in reliance on its own due diligence alone.

2.2 The Contractor acknowledges that it has inspected the Operating Environment and has advised the Authority of any aspect of the Operating Environment that is not suitable for the provision of the Services and that the specified actions to remedy the unsuitable aspects of the Operating Environment, together with a timetable for and the costs of those actions, have been specified in the relevant parts of the Agreement for the Pre-Operational Phase.

[Guidance: This is the recommended position whereby the responsibility for assessing the suitability of the Operating Environment lies with the Contractor. Responsibility for resolving any issues that are identified can then be allocated and included as part of the Agreement. If the default position is not acceptable, a joint assessment could be carried out, although responsibility for the assessment will be difficult to divide. The Authority will need to assess the risks in adopting this approach before agreeing to a joint assessment and clause 2.2 will need to be amended.]

2.3 If the Contractor has either failed to inspect the Operating Environment or failed to notify the Authority of any required remedial actions in accordance with clause 2.2 then the Contractor shall not be entitled to recover any additional costs or charges from the Authority relating to any unsuitable aspects of the Operating Environment except in respect of any latent structural defect in the Authority Premises. The onus shall be on the Contractor to prove to the Authority that any work to the Authority Premises is required in respect of a latent structural defect and that the additional costs or charges are reasonable and necessary. The Contractor shall not incur such additional costs or charges without obtaining the Authority’s prior written consent.

2.4 Any disputes relating to due diligence shall be resolved through the Dispute Resolution Procedure.

Return to Top

SECTION B - SERVICE IMPLEMENTATION

3. IMPLEMENTATION PLAN

[Guidance: This clause assumes that during the Pre-Operational Phase the Contractor will be responsible for the design, build, testing, implementation and roll-out of the Contractor Solution for the delivery of the Services. This whole process is referred to for simplicity as "implementation".

It is assumed that the steps in the process of implementation will be set out in schedule 6.1 (Implementation Plan), which will contain a project plan and identify the "milestones" to be achieved along the way. Depending on the nature and scale of the project the Implementation Plan may be simple or highly complex. It should be discussed as part of the procurement process and particular care should be taken to understand and articulate the dependencies that the Contractor may have on the Authority or third parties that may affect its ability to achieve the plan.

This drafting anticipates that the Implementation Plan will contain, as a minimum, a list of milestones, a description of what the milestone deliverables are, due dates for achievement of each of the milestones and what constitutes Authority to Proceed (which is the commencement of the Operational Phase). It is envisaged that only some of the milestones will attract payments (of amounts to be set out in schedule 7.1 (Charges and Invoicing)). The objective of this clause is to make the milestone dates in the plan contractually binding so that failure to achieve them will result in financial implications for the Contractor. Depending on the project other dates will have lesser significance.

It is recommended that, as a minimum, an Outline Implementation Plan containing all the key milestones is agreed pre-contract. If further detailed planning is required the clause will need to be modified to include a process to cover the Contractor submitting the detailed Implementation Plan to the Authority for approval. Failure to achieve approval within a specified period of time or after a specified number of iterations may be used to trigger certain rights for the Authority (e.g. termination if sufficiently serious).

The drafting envisages that the project will be divided into two parts: an implementation phase and an operating phase. For each Service line the Contractor will be required to implement the Operational Service but may not provide that Operational Service until it has achieved Authority to Proceed (given in the form of a Milestone Achievement Certificate) for the relevant Service. The concept of "acceptance" used in respect of supply contracts or system developments is not considered to be appropriate to a services agreement. Instead the achievement of "Authority to Proceed" ensures that the Contractor retains the solution suitability risk. Larger projects will require the implementation of a number of services, in which case "Authority to Proceed" must be achieved in respect of each Operational Service. Further guidance is to be found in Guidance Note 1 (Key Commercial Principles), section 1 - 1.2 (Authority to Proceed).

Following the issue of a Milestone Achievement Certificate in respect of Authority to Proceed the Contractor may be expected to achieve further Milestones relating to the Operational Service. For example, an obligation to demonstrate that satisfactory system "scalability" or a period of stable operational use has been achieved. Such a Milestone will mark the achievement of a Contract Performance Point (CPP), which should also be included in the Implementation Plan. Achievement of a CPP is also marked by the issue of a Milestone Achievement Certificate. Guidance on the timing and application of CPPs is to be found in Guidance note 1 ( Key Commercial Principles), section 1 - 1.4 (Contract Performance Point). Note that until a CPP has been achieved, Milestone Payments may be subject to claw back rights which should be set out in schedule 7.1 (Charging and Invoicing).

Detail of the Implementation Plan will have particular significance in relation to the operation of the following clauses and therefore should be drafted with these clauses in mind: 4 (Testing); 5 (Implementation Delays - General Provisions); 6 (Delays Due to Contractor Default); 7 (Delays to Milestones due to Authority Cause); 8 (Delays Not Due to One Party); and 11 (Effect of Authority Cause In the Operational Phase).]

3.1 The Contractor shall provide the Services in accordance with the Implementation Plan.

3.2 The Contractor shall deliver a draft Detailed Implementation Plan to the Authority within [ ] months of the Effective Date. The Detailed Implementation Plan should be sufficiently detailed as is necessary to manage the implementation projects effectively. Once agreed with the Authority (agreement not to be unreasonably delayed or withheld), the Contractor shall monitor the performance against the Implementation Plan.

3.3 All changes to the Outline Implementation Plan shall be subject to the Change Control Procedure. The Detailed Implementation Plan shall only be varied in accordance with the process set out in paragraph 4.8 of schedule 6.1 (Implementation Plan).

4. TESTING

[Guidance: Testing provisions are critical aspects of any agreement for the delivery of ICT-enabled services primarily because a significant amount of the contract price will usually become payable (i.e. on Authority to Proceed) and/or previous milestone payments cease to be recoverable (i.e. on Achieving a Contract Performance Point). Guidance Note 1 (Key Commercial Principles), section 1 - 1 (Payment Profile, Milestones and Value for Money Provisions) and schedule 6.2 (Testing procedures) should be considered in relation to this clause).

The failure of the Milestone to pass a test will be relevant to the payment of Delay Payments to the Authority (see clause 6 (Delays Due to Contractor Default)). Therefore a robust and detailed testing regime is required notwithstanding the fact that the Contractor’s System or Contractor Solution should never be formally “accepted” in order to ensure that solution suitability and performance risks remain with the Contractor via the service performance regime.

The testing regime should be discussed fully during dialogue stage to ensure that it is clearly articulated within the Testing Procedures. This clause has been drafted on the basis that the Testing Procedures will contain full details of: the procedures to be followed by each of the parties in testing the Milestone; the categories of Test Issues with applicable severity ratings; the procedures for re-testing where the testing has not been successful; the Test Success Criteria; the issue of Non-conformance Reports showing the results of the Testing; and the stage at which a Milestone Achievement Certificate (which may signify Authority to Proceed) will be awarded. Testing is conducted in respect of any Deliverables that may form part of the relevant Milestone but non-Test related verification may be required as well to identify whether the relevant Milestone has been Achieved. Any non-conformities in the Milestone must also be identified in the relevant Non-conformance Report.

The Test Success Criteria will usually be based on the Service Description and Contractor Solution and the parties will need to work closely together to agree the criteria to be used. Appropriate tests will need to be in place to confirm the successful Achievement of all Milestones, including Authority to Proceed and the Contract Performance Point.

The Contractor will be responsible for carrying out the testing. The Authority will want to consider its involvement in the tests. The level of its involvement will be dependent on the significance of any particular Milestone, including whether any payments are due under it. The Authority's role should be made clear in schedule 6.2 to ensure that it is satisfied that the services have been delivered to specification.]

4.1 When the Contractor has completed the Services in respect of a Milestone it shall submit any Deliverables relating to that Milestone for Testing and the parties shall follow the applicable provisions of the Testing Procedures.

4.2 Each party shall bear its own costs in respect of the Testing Procedures. However, if a Milestone does not Achieve the Test Success Criteria, any costs incurred by the Authority in re-Testing or as a result of the failure to Achieve the Test shall be the responsibility of the Contractor.

4.3 If the Contractor successfully completes the requisite Tests, the Authority shall issue a Milestone Achievement Certificate. Notwithstanding the issuing of any Milestone Achievement Certificate, the Contractor shall remain solely responsible for ensuring that the Contractor Solution as designed and developed is suitable for the delivery of the Services, for ensuring that the Services are implemented in accordance with this Agreement and that the Service Levels are achieved during the Operational Phase. No rights of estoppel or waiver shall arise as a result of the issue of a Milestone Achievement Certificate (or conditional Milestone Achievement Certificate pursuant to clause 6.2.1 (Delays Due to Contractor Default)).

4.4 If the Contractor does not successfully complete or Achieve any Test, the provisions of clauses 5 (Implementation Delays - General Provisions), 6 (Delays Due to Contractor Default), 7 (Delays to Milestones due to Authority Cause) and 8 (Delays Not Due to One Party) shall apply as appropriate.

Return to Top

5. IMPLEMENTATION DELAYS - GENERAL PROVISIONS

[Guidance: The objective of this clause is to deal with the issue of Delays prior to live operation of the Service. Guidance Note 1 ( key Commercial Principles), section 1 - 2 (Delays) offers guidance on the Delay provisions. Given that the allocation of responsibility for Delay can be genuinely difficult, the progress of the project should not be held up while the issue is debated. Therefore:

• the Contractor’s primary obligation under this clause, regardless of fault, is to notify the Authority and fix the cause of the Delay without holding up the process; and
• the clause contains provision for any arguments about responsibility for the Delay to be resolved, subsequently through the Dispute Resolution Procedure if necessary.

The notification provisions are important as, pursuant to clause 5.4, the Authority will not be liable to pay the Contractor any compensation if it does not comply with the notification requirements within the specified timescale set out in clause 5.2. These notification obligations seek to mitigate against a situation where the Contractor only raises issues of Delay due to Authority Cause late in the day when a significant claim or alleged claim may have built up. In practice this may be in response to (and possibly an attempt to counter) an Authority claim for alleged breaches by the Contractor.]

5.1 If, at any time, the Contractor becomes aware that it will not (or is unlikely to) Achieve any Milestone by the Milestone Date it shall immediately notify the Authority of the fact of the Delay and summarise the reasons for it.

5.2 The Contractor shall, as soon as possible and in any event not later than 10 Working Days after the initial notification under clause 5.1, give the Authority full details in writing of:

5.2.1 the reasons for the Delay;

5.2.2 the consequences of the Delay; and

5.2.3 if the Contractor claims that the Delay is due to an Authority Cause, the reason for making that claim.

5.3 Whether the Delay is due to an Authority Cause or not, the Contractor shall make all reasonable endeavours to eliminate or mitigate the consequences of the Delay.

5.4 Where the Contractor considers that a Delay is being caused or contributed to by an Authority Cause the Authority shall not be liable to compensate the Contractor for Delays to which clauses 7 or 8 apply unless the Contractor has fulfilled its obligations set out in, and in accordance with, clauses 5.1, 5.2 and 5.3.

5.5 Any Disputes about or arising out of Delays shall be resolved through the Dispute Resolution Procedure. Pending the resolution of the Dispute both parties shall continue to work to resolve the causes of, and mitigate the effects of, the Delay.

Correction Plan

5.6 The Contractor shall submit a draft Correction Plan where:

5.6.1 it becomes aware that it will not Achieve a Milestone by the Milestone Date; or

5.6.2 it has failed to Achieve a Milestone by its Milestone Date, whether that failure arises because of:

5.6.2.1 a failure to submit any or all Deliverables in respect of that Milestone;

5.6.2.2 the failure of the Milestone successfully to complete or Achieve any Test; or

5.6.2.3 where there are no Tests in respect of the relevant Milestone, any non-conformance in respect of that Milestone.

5.7 The draft Correction Plan shall identify the issues arising out of the Delay and the steps that the Contractor proposes to take to Achieve the Milestone in accordance with this Agreement.

5.8 The draft Correction Plan shall be submitted to the Authority for its approval as soon as possible and in any event not later than 10 Working Days (or such other period as the Authority may permit and notify to the Contractor in writing) after the initial notification under clause 5.1 or the issue of a Non-conformance Report.

5.9 The Authority shall not withhold its approval of a draft Correction Plan unreasonably. If the Authority does not approve the draft Correction Plan it shall inform the Contractor of its reasons and the Contractor shall take those reasons into account in the preparation of a further draft Correction Plan, which shall be resubmitted to the Authority within [five] Working Days of the rejection of the first draft.

5.10 The Contractor shall comply with its Correction Plan following its approval by the Authority.

[Guidance: If the Implementation Plan sets long-stop dates for any of the Milestones, then any Correction Plan submitted must Achieve the Milestones by the relevant long-stop date. Note that if the Authority does not approve of the Correction Plan, or if it is not implemented, the Authority may be entitled to terminate in accordance with clause 55.1.5.3(b) and the Contractor will not be entitled to submit a further plan in accordance with the Remedial Plan Process.]

Return to Top

6. DELAYS DUE TO CONTRACTOR DEFAULT

[Guidance: This clause sets out a process to deal with Delays that are the fault of the Contractor. The key objectives of the clause are (i) to incentivise the Contractor to meet the project timetable; and (ii) to compensate the Authority for any failure to do so in the form of Delay Payments.

The clause also provides a remedial process to mitigate the effect of the Delay on future Milestones within the Implementation Plan. Delay Payments will be payable regardless of the existence of a Correction Plan.

Delay Payments are to be set out in schedule 7.1 (Charges and Invoicing). Delay Payments are intended to be a way of adjusting the price to reflect late delivery but are likely to be treated by the courts as a form of liquidated damages and the following points should be considered in developing the regime:

• The amount of the Delay Payments must not be excessive and unreasonable or the courts will view them as unenforceable penalties. Penalties try to "punish" the Contractor for its breach (rather than compensate the customer for its loss);
• Liquidated damages should be a genuine pre-estimate, assessed and agreed by both parties, of the losses likely to be suffered by the non-breaching party. If the amounts are difficult to quantify, then a "best guess" procedure should be operated. Ideally, a record should be kept of the calculations underlying any amounts specified in the contract, or the formula used should be incorporated into the agreement; and
• Whether a term is a genuine pre-estimate of loss, and not a penalty, will be decided by reference to the time the agreement was agreed and not the time of the breach.

Guidance Note 1 (Key Commercial Principles), section 1 - 2 (Delays), 3 (Delay Payments) and 26 (Exclusive Financial Remedies) should be considered in relation to this clause and related schedules.]

6.1 If a Deliverable does not satisfy the Test Success Criteria and/or a Milestone is not Achieved due to the Contractor's Default, the Authority shall issue a Non-conformance Report to the Contractor categorising the Test Issues as described in the Testing Procedures or setting out in detail the non-conformities of the Deliverable where no testing has taken place, including any other reasons for the relevant Milestone not being Achieved and the consequential impact on any other Milestones. The Authority will then have the options set out in clause 6.2.

6.2 The Authority may at its discretion (without waiving any rights in relation to the other options) choose to:

6.2.1 issue a Milestone Achievement Certificate conditional on the remediation of the Test Issues, or the non-conformities of the Deliverable where no testing has taken place, in accordance with an agreed Correction Plan; and/or

6.2.2 [if the Test Issue is a Material Test Issue, refuse to issue a conditional Milestone Achievement Certificate as specified in clause 6.2.1 the escalate the matter in accordance with the Dispute Resolution Procedure and if the matter cannot be resolved exercise any right it may have under clause 55.1 (Termination for Cause by the Authority); and/or]

[Guidance: It is envisaged that there will be different severity categories of failure set out in schedule 6.2 and that it would only be in the rare cases that the failure was so fundamental (i.e. Material Test Issues) that termination would be contemplated. It will therefore be very important to consider the types of failure which could occur during the testing period and the severity categories into which such failures would fall. By categorising the failures the Testing regime can then specify how it wishes to deal with the different categories in terms of the Authority's rights and the prioritising of the failures for remedying.]

6.2.3 require the payment of Delay Payments, which shall be payable by the Contractor on demand, where schedule 7.1 (Charging and Invoicing) identifies that Delay Payments are payable in respect of the relevant Milestone. The Delay Payments will accrue on a daily basis from the relevant Milestone Date and will continue to accrue until the date when the Milestone is Achieved in accordance with the Correction Plan.

6.3 Where schedule 7.1 (Charging and Invoicing) does not identify the payment of Delay Payments in respect of a Milestone the Authority reserves its rights. Otherwise Delay Payments are provided as the primary remedy for the Contractor's failure to Achieve the relevant Milestone Date and it shall be the Authority's exclusive financial remedy except where:

6.3.1 the Authority is otherwise entitled to or does terminate this Agreement for the Contractor's Default or for Force Majeure; [or]

6.3.2 the failure to Achieve the Milestone exceeds a period of [six] months after the relevant Milestone Date[; or]

6.3.3 [specify other grounds particular to the project e.g. the failure of a particular Milestone to meet a particular long-stop date].

[Guidance: The suitability of the triggers in this clause will depend on the context and content of the rest of the Agreement.]

6.4 Where the Authority issues a conditional Milestone Achievement Certificate as specified in clause 6.2.1, it can choose (but does not have to) to revise the failed Milestone Date and any subsequent Milestone Date.

6.5 Any Correction Plan shall be agreed before the issue of a conditional Milestone Achievement Certificate unless the Authority is willing to agree otherwise. In the latter case the Contractor shall submit a Correction Plan for approval by the Authority within [10] Working Days of receipt of the Non-conformance Report.

Return to Top

7. DELAYS TO MILESTONES DUE TO AUTHORITY CAUSE

[Guidance: This clause provides that where delay in Achieving a Milestone is due to a breach of the Authority’s obligations, the Contractor is entitled to certain rights and relief. For example, protection from liability for its own breach arising from the Authority’s actions. Any compensation payable pursuant to clause 7.4 is subject to the Contractor’s obligation to mitigate its loss. Note that the payment of compensation will increase overall projects costs. Therefore, the Authority must consider the effect of any increase in project costs when setting out provisions relating to compensation for delay.]

7.1 Without prejudice to clause 5.3 and subject to clause 5.4, if the Contractor would have been able to Achieve the Milestone by its Milestone Date but has failed to do so as a result of an Authority Cause the Contractor will have the rights and relief set out in this clause 7.

7.2 The Contractor shall:

7.2.1 subject to clause 7.3, be allowed an extension of time equal to the Delay caused by that Authority Cause;

7.2.2 not be in breach of this Agreement as a result of the failure to Achieve the relevant Milestone by its Milestone Date;

7.2.3 have no liability for Delay Payments in respect of the relevant Milestone to the extent that the Delay results directly from the Authority Cause; and

7.2.4 be entitled to compensation as set out in clause 7.4.

7.3 The Authority Representative shall:

7.3.1 consider the duration of the Delay, the nature of the Authority Cause and the effect of the Delay and the Authority Cause on the Contractor's ability to comply with the Implementation Plan;

7.3.2 consult with the Contractor Representative in determining the effect of the Delay;

7.3.3 fix a Revised Milestone Date; and

7.3.4 if appropriate, make any consequential revision to subsequent Milestones in the Implementation Plan.

[Guidance: The Authority must manage and control the effect of a delay, including determining the extent of any extension of time given to the Contractor. In doing so it must consider the cause of the Delay and its effect and balance its need for the Services. Wherever possible the Contractor should seek to mitigate the effect of any Delay which may mean accepting that subsequent Milestones are not automatically extended].

7.4 If the Contractor has incurred any direct loss and/or expense as a result of a Delay due to an Authority Cause, the Contractor shall be entitled to compensation to the extent that it cannot mitigate that loss or expense in accordance with the principles set out in paragraph 4 of schedule 7.1 (Charges and Invoicing). The Contractor shall provide the Authority with any information the Authority may require in order to assess the validity of the Contractor's claim to compensation.

[Guidance: The parties need to address the issue of compensation for Delay on a project by project basis and set out the applicable principle in schedule 7.1 (Charges and Invoicing), including any limit on the amount recoverable. The Authority may elect to compensate the Contractor either by means of a single payment or by adjusting the Charges during the Operational Phase or by extending the Operational Phase (or a combination of these). The assumptions in the financial model for the project should be used as the basis for calculating the compensation. If the Operational Phase is to be extended then care needs to be taken that this is not incompatible with the OJEU notice.]

7.5 Any Change that is required to the Implementation Plan pursuant to clause 7.3 or the Charges pursuant to clause 7.4 shall be implemented in accordance with the Change Control Procedure. If the Contractor's analysis of the effect of the Delay in accordance with clause 5.2 permits a number of options, then the Authority shall have the right to select which option shall apply.

7.6 The Authority shall not delay unreasonably when considering and determining the effect of a Delay under this clause 7 or in agreeing a resulting Change pursuant to the Change Control Procedure.

7.7 The Contractor shall [and shall procure that each Sub-contractor shall] take and continue to take all reasonable steps to eliminate or mitigate any losses and/or expenses that it incurs as a result of an Authority Cause.

Return to Top

8. DELAYS NOT DUE TO ONE PARTY

[Guidance: The objective of this clause is provide a process for the apportionment of responsibility for Delay in the event that it is due to a combination of the Contractor’s Default and Authority Cause. Without such an apportionment mechanism the Authority is unlikely to be able to enforce any proportion of Delay Payments in these circumstances, as Courts have not been prepared to step in and rule what a fair proportion would be in absence of any express agreement on this point by the parties. In such circumstances the Courts have preferred to rule that no liquidated damages should be claimable given the difficulties of apportionment.]

Without prejudice to clause 5.3 and subject to clause 5.4, where a Delay is attributable in part to the Contractor's Default and in part to an Authority Cause the parties shall negotiate in good faith with a view to agreeing a fair and reasonable apportionment of responsibility for the Delay. The parties agree that Delay Payments and compensation payable pursuant to clause 7.4 (Delays to Milestones Due to Authority Cause) shall be recoverable subject to reductions to reflect the extent to which the Authority or the Contractor respectively has contributed to the Delay. If necessary, the parties may escalate the matter in accordance with the Dispute Resolution Procedure and if the matter cannot be resolved by agreement then [either party may] [with the agreement of both parties, the parties may] refer the matter to an expert for determination.

Return to Top

SECTION C - SERVICE SUPPLY

9. SERVICES

[Guidance: The objective of this clause and the related schedules 2.1 (Services Description) and 4.1 (Contractor Solution) is to identify the Services and the obligations that apply to them. Refer to schedule 2.1 (Services Description) for guidance on the applicable considerations.

The suggested approach is to:

• agree a draft Services Description setting out issue as part of the discussion documents Authority’s requirements (ie detailed description of what the Authority wants). Both parties must work together to agree the Service Description, which will reduce the possibility of conflicting statements in the Agreement and the scope for contractual disputes. The Services Description should articulate between different types of Services that the Authority may require (e.g. Core Services, Additional Services and Future Services);
  
  
• include in the Agreement a description of the baseline Contractor solution (i.e. Schedule 4.1 (Contractor Solution)), which should be a technical description of how the Services will be provided. The inclusion of a defined technical baseline is important, as the Authority may wish to have some right of control over changes to the Contractor Solution as well as some right of control over the quality of the ICT being used in the Contractor Solution. The baseline position will also be important when operating the Change Control Procedures. This right should not stop the Contractor from devising an innovative means of satisfying the requirements. Nor should it expose the Authority to the risk of approval of the solution, as the ultimate responsibility of the Contractor should be to provide the Services in accordance with the Services Description and NOT the Contractor Solution;
  
  
• set out in this clause the key standards that are to apply to the Services (e.g. Good Industry Practice, Contractor's own established procedures and practices, the relevant Security Policy, relevant Quality Plans, HR Policies and overarching ICT strategies). Using the default drafting as a starting point, an appropriate list of relevant standards needs to be devised for each project and the clause amended accordingly. Any potential conflict between the relevant standards and the Services Description and/ or Contractor Solution also needs to be addressed; and
  
  
• set out the obligations of the Contractor regarding integration of the Authority's existing system and the Contractor Solution.]

9.1 The Contractor shall provide the Services from the Commencement Date and shall ensure that the Services:

9.1.1 comply in all respects with the Services Description as set out in schedule 2.1 (Services Description); and

9.1.2 are supplied in accordance with the Contractor Solution and the terms of this Agreement.

9.2 Without prejudice to clause 9.1, the Contractor shall supply the Operational Services:

9.2.1 from receipt of a Milestone Achievement Certificate in respect of Authority to Proceed; and

9.2.2 in accordance with clause 10.

9.3 The Contractor shall perform its obligations under this Agreement including those in relation to the Services in accordance with:

9.3.1 Good Industry Practice;

9.3.2 the Contractor's own established procedures and practices;

9.3.3 the Security Policy;

9.3.4 the Quality Plans; [and]

9.3.5 [the HR Policies; and]

[Guidance: Consider suitability of including HR Policies here given the Authority's positive obligation regarding discrimination legislation and the need to adhere to appropriate codes of conduct, etc.]

9.3.6 [the Authority's ICT strategy]. [Guidance: Only include if applicable.]

9.4 The Contractor shall draw any conflict between any of the requirements of clause 9.1 and the requirements of clause 9.3 to the attention of the Authority and shall comply with the Authority's decision on the resolution of that conflict.

9.5 The Contractor shall ensure that the Services and the Contractor System integrate with the Authority System to the extent necessary to achieve the successful provision of the Services.

[Guidance: This is a very general requirement. Ideally the specifics of integration will be captured within the Services Description and/or Contractor Solution.]

9.6 In the event of the Contractor's failure to provide the Services or to comply with the its obligations in accordance with this Agreement, the Authority may, without prejudice to its other rights, require the Contractor to re-perform the Services or to comply with its obligations.

[Additional Services]

[Guidance: this drafting envisages that the "Additional Services" (see definition) are described in the schedule 2.1 (Services Description), schedule 2.2 (Service Levels) and priced for in schedule 7.1 (Charges and Invoicing). In effect, clauses 9.7 to 9.11 allow the Authority to "call-off" services which are additional to the core Services. Any Additional Services requirement must have been expressly referred to in the OJEU Notice. If Additional Services are not required then clauses 9.7 to 9.11 should be deleted. See also guidance below with reference to Future Services.

When considering the impact of adding the Additional Services you should consider the impact on any Services that are currently being supplied or any Services that will be supplied as a later part of the project.]

9.7 [The Authority may require the Contractor to provide any or all of the Additional Services by giving notice in writing. The Contractor acknowledges that the Authority is not obliged to take any Additional Services from the Contractor and that nothing prevents the Authority from receiving services that are the same as or similar to the Additional Services from any third party.]

9.8 [If there has been an agreed Change to the Contractor Solution prior to the Authority's request for the Additional Services, then the Contractor shall notify the Authority within [10] Working Days of the request (or such other period as the parties may agree) of the impact that the agreed Change will have on the relevant Additional Services.]

[Guidance: When considering the impact of a Change under clause 26 (Change Control) you should also consider the impact on Additional Services or Future Services.]

9.9 [If, following receipt of the Contractor's impact analyses pursuant to clause 9.8, the Authority confirms in writing that it wishes to proceed with its requirement for the Additional Services the Contractor shall:

9.9.1 implement the relevant Additional Services in accordance with the Additional Services Implementation Plan; and

9.9.2 subject the relevant Additional Services to Testing.]

9.10 [Following the successful implementation of the Additional Services:

9.10.1 any additional charges for the Additional Services shall be incorporated in the Charges as specified in [paragraph [ ]] of schedule 7.1 (Charges and Invoicing);

[Guidance: See note below paragraph 8.5 of schedule 7.1 (Charges and Invoicing)]

9.10.2 any services levels in respect of the Additional Services shall be incorporated in the Service Levels schedule; and

9.10.3 the relevant Additional Services implemented in accordance with these clauses 9.7 and 9.10 (inclusive) shall become part of the Services for the purpose of all other sections, clauses, obligations and rights contained within this Agreement.]

9.11 [The parties shall implement any Additional Services requested by the Authority in accordance with the Change Control Procedure modified to reflect the fact that the terms on which the Additional Services will be supplied have already been agreed.]

[Guidance: No provision is made here for Future Services (i.e. services not fully defined and priced) as these will need to be carefully considered on a case by case basis and procurement law issues will need to be addressed. Any Future Services requirement must have been expressly referred to in the OJEU Notice.]

Return to Top

10. SERVICE LEVELS

[Guidance: The objective of this clause together with schedule 2.2 (Service Levels) is to set out the Service Levels at which the Services are to be provided and to set out the parties’ rights and obligations where those Service Levels are not met. The provisions of this clause 10 must be aligned with those in schedule 2.2 (Service Levels) and any duplications or inconsistencies removed.

Guidance Note 1 (Key Commercial Principles), section 1 - 4 (Service Levels and Service Credits) and 26 (Exclusive Financial Remedies) advise on what should be included in the Service Levels and Service Credits regime and should be consulted when reviewing and discussing this clause and the schedule with bidders during the dialogue phase.

In the event of a failure to meet the Service Levels, the first obligation on the Contractor is to notify the Authority and to restore the Services, regardless of fault (if the failure is due to an Authority Cause the Contractor will be entitled to relief in accordance with Clause 11 (Effect of Authority Cause in the Operational Phase). If the performance falls below a pre-agreed threshold, Service Credits will accrue. Service Credits are an abatement of the Charges so that you are not paying the full price for poor quality service. Therefore, Service Credits should:

• not be set at punitive levels;
  
  
• within certain pre-agreed parameters, be the exclusive financial remedy for failure to meet the Service Levels. What these parameters should be will be an important consideration in each project as highlighted by the relevant drafting notes below clause 10.4.
  
  
• vary in accordance with the severity of the Contractor's underperformance. Typically this is done through some form of points mechanism.

It is important to reserve the flexibility to review and adjust the Service Levels and/or Service Credits over the life of the Agreement in order to reflect changes in the Authority’s business and clauses 10.6 and 10.7 includes sample drafting to deal with these issues.]

10.1 The Contractor shall provide the Operational Services to meet or exceed the Service Levels from the ATP Milestone Date. The remaining provisions of this clause 10 are subject to the provisions of clause 11 (Effect of Authority Cause in the Operational Phase).

10.2 If there is a Service Failure or if the Contractor believes that there will be a Service Failure, the Contractor shall:

10.2.1 notify the Authority immediately of the Service Failure or likely Service Failure;

10.2.2 provide the Authority with a Correction Plan of the action that it will take to rectify the Service Failure or to prevent the Service Failure from taking place or recurring, within [10] Working Days from the day the Contractor notifies the Authority under clause 10.2.1;

10.2.3 take all remedial action that is reasonable to rectify or to prevent the Service Failure from taking place or recurring; and

10.2.4 carry out the action plan agreed under clause 10.2.2 in accordance with its terms.

10.3 Subject to the annual Service Credit limit in clause 52.2.4, where applicable the Contractor shall automatically credit the Authority with Service Credits in accordance with schedule 7.1 (Charges and Invoicing). Service Credits shall be shown as a deduction from the amount due from the Authority to the Contractor in the next invoice then due to be issued under this Agreement. If no invoice is due to be issued then the Contractor shall issue a credit note against the previous invoice and the amount for the Service Credits shall be repayable by the Contractor as a debt within [10] Working Days of issue.

10.4 Where Service Credits are provided as a remedy for Service Failure in respect of the relevant Services it shall be the Authority's exclusive financial remedy except where:

10.4.1 the aggregate number of Service Failures (whether the Service Failure relates to the same or to different parts of the Services) exceeds [specify a pre-specified number] over a period of [three] consecutive months;

10.4.2 any Service Failure that exceeds the Service Threshold;

10.4.3 the failure to perform the Services in accordance with the Service Levels has arisen due to [theft, gross negligence, fraud, or wilful default]; [or]

10.4.4 [the Service Failure results in:

10.4.4.1 corruption or loss of data;

10.4.4.2 [specify other grounds particular to contract e.g. the Service Failure triggers a compensation payment to other third parties]; or]

10.4.5 the Authority is otherwise entitled to or does terminate this Agreement for the Contractor's Default pursuant to clauses 55.1 and 55.3.

[Guidance: The suitability of each of the triggers in this clause will depend on the context and content of the rest of the Agreement.

The Authority will need to ensure that the Service Credits reflect the reduction in the quality of the Services accurately. When drafting schedule 2.2 the Authority should use some worked examples and check that the results reflect expectations.]

Return to Top

10.5 Where Service Credits are not provided as a remedy for a Service Failure and the Contractor has failed to address such a Service Failure to the reasonable satisfaction of the Authority, then the Authority may, on written notice to the Contractor, withhold a proportionate amount of the Service Charges for those Services until such time as the relevant [Service Failure is remedied][Services are restored]. [Provided that the relevant [Service Failure is remedied][Services are restored], the Authority shall resume payment of the relevant part of the Service Charges, including payment of the amount retained.]

[Guidance: Guidance Note 1 (Key Commercial Principles), section 1 - 22 (Escalating Remedies) recommends that the Authority should reserve a right to withhold service payments where the Contractor is not addressing problems with Services that are not covered by the Service Credit regime. However, the Authority is not entitled to keep the withheld payments for itself since this would conflict with the purpose of the Service Credit regime.]

10.6 The Authority and the Contractor shall review the Service Levels [every six months] throughout the Term and make any changes in accordance with the Change Control Procedure to reflect changes in the Authority's requirements.

[Guidance: The following clauses 10.7-9 provide the Authority with additional flexibility and authority in fine-tuning the service performance to meet evolving business need. In most cases it is expected that variations to the Service Credit model will be conducted through the provisions of Clause 10.6.

Guidance: The purpose of the following provisions is to fine tune the Contractors' behaviour in supporting the services. Changes are made unilaterally because the use of the Change Control Procedure to make bilateral Changes would permit the Contractor to negate the effect of the change by a variation of the Charges. The process should be used to make small changes: it should not be used to load one or two service levels, which would have a negative overall effect on the Services.]

10.7 Not more than [insert frequency] during the Term the Authority may, on at least three months written notice, change the Service Credits applicable to one or more Service Levels provided that:

10.7.1 the principal purpose of this change is to reflect changes in the Authority's business requirements and priorities, or to reflect changing industry standards;

10.7.2 the change is not specifically intended to penalise the Contractor for poor performance in relation to any particular Service Levels; and

10.7.3 there is no increase in the total value of Service Credits potentially payable.

10.8 If the Contractor reasonably believes that any proposed change, which is requested by the Authority under Clause 10.7, would materially and adversely increase Costs, the Contractor shall be entitled to submit a price variation request (supported by appropriate evidence, which should include but not be limited to an updated Financial Model) within [10] Working Days of the date of receiving the Authority’s written notice.

10.9 The Authority shall then review the Contractor’s price variation request submitted under Clause 10.8 and, within [15] Working Days shall respond to the Contractor and do one of the following:

10.9.1 accept the Contractor’s price variation request and make any required changes in accordance with the Change Control Procedure; or

10.9.2 where the Authority considers the Contractor’s price variation request to be unreasonable, the Authority may reject the Contractor’s price variation request and proceed to implement its proposed change to the Service Credits in accordance with the provisions of Clause 10.7; or

10.9.3 decide not to proceed with the change.

Return to Top

11. EFFECT OF AUTHORITY CAUSE IN THE OPERATIONAL PHASE

11.1 If the Contractor would have provided the Operational Services in accordance with the Service Levels and/or this Agreement but has failed to do so as a result of an Authority Cause the Contractor will have the rights and relief set out in clause 11.2.

11.2 The Contractor shall:

11.2.1 (in measuring the performance of any affected Service) be treated as though the relevant Service had met the relevant Service Level to the extent that the Service Failure is due to any Authority Cause; and

11.2.2 not be treated as being in breach of this Agreement to the extent that non performance or breach is due to any Authority Cause; and

[Guidance: note that the Contractor's relief is limited to the extent that the Authority has contributed to cause of the breach. This requires a balancing of the contributions of each party in line with the provisions of clause 8 (Delays Not Due to One Party).]

11.2.3 be entitled to the Charges for the relevant Services affected by the Authority Cause as if it had not occurred.

11.3 If the Contractor claims that clause 11.1 applies, and in order to claim the rights and reliefs in clause 11.2, it shall provide the Authority with details of the Authority Cause [as part of the management information that it is obliged to provide at the end of the relevant Measurement Period][within [10] Working Days].

11.4 Any Disputes about or arising out of whether an Authority Cause applies to the Contractor’s failure to provide the Services in accordance with the Service Levels and/or this Agreement shall be resolved through the Dispute Resolution Procedure. Pending the resolution of the Dispute both parties shall continue to resolve the causes of, and mitigate the effects of such failure.

Return to Top

12. STANDARDS

[Guidance: Where the Contractor will be developing software for the Authority's use, whether or not the Authority will own it, consider the standards that the Contractor or the software should be required to meet and whether the Contractor should be required to follow a particular design methodology (e.g. waterfall, rapid application development, rational unified process, etc). Also, consider any requirement for the Deliverables to conform to any particular standards, e.g. BS 17799 or PAS56, or for the Contractor to comply with any performance or management standards, e.g. PRINCE2 or ISO9001.

For this clause to add benefit, schedule 2.3 (Standards) must set out the standards which are to apply to a particular project.]

12.1 The Contractor shall comply with the Standards in performing its obligations under this Agreement.

12.2 The Contractor shall discuss with the Authority any conflict that the Contractor reasonably believes that there is or will be between any of the Standards or between any of the Standards and any other obligation under this Agreement, and shall comply with the Authority's decision on the resolution of that conflict.

Return to Top

13. QUALITY ASSURANCE AND PERFORMANCE MONITORING

Quality Plans

[Guidance: If possible, the parties should seek to agree the Quality Plans prior to contract approval. If this is done the plans can be attached to the Agreement as a schedule. Clauses 13.1 and 13.2 would then be redundant and should be deleted. If it is not possible then the parties should seek to have a draft Quality Plan that can be amended as part of the first phase of the project. Most suppliers will have plans that can be adapted to provide such a draft with minimal effort. This clause does not provide for attaching draft plans to the Agreement.]

13.1 [The Contractor shall develop, [before the Commencement Date] [within [insert period] Working Days of] the Effective Date, Quality Plans that:

13.1.1 ensure that all aspects of the Services are the subject of quality management systems;[ and

13.1.2 are consistent with ISO 9001:2000 or any equivalent standard which is generally recognised as having replaced it.]]

[Guidance: Set out the ISO standard in this clause, if it is not already stated in schedule 2.3 (Standards).]

13.2 [The Contractor shall obtain the Authority Representative’s written approval of the Quality Plans developed pursuant to clause 13.1 before beginning to implement them, which approval shall not be unreasonably withheld or delayed. The Contractor acknowledges and accepts that the Authority's approval shall not act as an endorsement of the Quality Plans and shall not relieve the Contractor of its responsibility for ensuring that the Services are provided to the standard required by this Agreement.]

13.3 The Contractor shall procure that the Services are carried out in compliance with the Quality Plans.

13.4 Any Changes to the Quality Plans shall be agreed in accordance with the Change Control Procedure.

Quality Monitoring

13.5 The Authority Representative may carry out audits of the Contractor’s quality management systems (including all relevant Quality Plans and any quality manuals and procedures) at regular intervals. The parties anticipate that these audits will be carried out at intervals of approximately [three] months, but the Authority Representative may carry out other periodic monitoring or spot checks at any other time. In each case, the Contractor shall co-operate, and shall procure that its Sub-contractors co-operate, with the Authority Representative, including by providing the Authority Representative with all information and documentation, and access to any relevant Contractor Personnel and/or to any relevant Site, which he reasonably requires in connection with his rights under this clause 13.5 at no additional charge to the Authority.
Performance Monitoring

13.6 The Authority may monitor the performance of the Services by the Contractor.

[Guidance: How, what and where such monitoring occurs will depend on the nature of the services. This clause may need to be expanded to provide for (for example) access to the Contractor's premises, personnel and/or materials].

13.7 The Authority may increase the extent to which this monitoring is conducted if the quality of the Services is degraded in any way. The Authority shall give the Contractor prior notification of its intention to increase the level of monitoring.

13.8 The Contractor shall co-operate, and shall procure that its Sub-contractors co-operate, with the Authority in carrying out the monitoring referred to in clause 13.6 at no additional charge to the Authority.

13.9 If the Contractor believes that the Authority's monitoring of the Services is unreasonable the Contractor may escalate the issue with the Authority using the Escalation Process.

Return to Top

14. SERVICES IMPROVEMENT

[Guidance: The generic obligations for continuous improvement described in this clause 14 may be superseded or complemented by specific obligations to be described in schedule 2.4 (Continuous Improvement). If there are no specific obligations then schedule 2.4 (Continuous Improvement) can be deleted.

The Authority should take care to ensure that it does not add new services to the Agreement under the pre-text of service improvement. To do so may result in the inadvertent breach of the procurement regulations.]

[Guidance: The provisions of schedule 2.2 (Service Levels) provide for the conduct of customer satisfaction surveys and service reports to provide additional information to the Authority on the success of the project and a view of how well the Contractor is performing the Services from the perspective of the end user. The provisions anticipate that schedule 2.2 (Service Levels) will set out the mechanisms to put such surveys and reports in place. When deciding whether the project requires these provisions, consider the nature of the Services to be provided, the duration of the contract and the costs involved in conducting service reviews. If the Services do not have end users then those provisions in schedule 2.2 (Service Levels) will not be applicable.]

14.1 The Contractor shall have an ongoing obligation throughout the Term to identify new or potential improvements to the Services in accordance with this clause 14 [and schedule 2.4 (Continuous Improvement)]. As part of this obligation the Contractor shall identify and report to the Management Board [quarterly] in the first Contract Year and once every [six] months for the remainder of the Term on:

14.1.1 the emergence of new and evolving relevant technologies which could improve the ICT Environment and/or the Services, and those technological advances potentially available to the Contractor and the Authority which the parties may wish to adopt; and/or

14.1.2 new or potential improvements to the Services including the [quality, responsiveness, procedures, benchmarking methods, likely performance mechanisms and customer support services in relation to the Services] [Guidance: revise the list as appropriate for the Services being procured]; and/or

14.1.3 new or potential improvements to the interfaces or integration of the Services with other services provided by third parties or the Authority which might result in efficiency or productivity gains or in reduction of operational risk; and/or

14.1.4 changes in business processes and ways of working that would enable the Services to be delivered at lower costs and/or at greater benefits to the Authority.

14.2 The Contractor shall ensure that the information that it provides to the Authority shall be sufficient for the Authority to decide whether any improvement should be implemented. The Contractor shall provide any further information that the Authority requests.

14.3 The Authority shall at all times be responsible for determining its own ICT strategy. The Authority may notify the Contractor of any changes to the Authority's ICT strategy and request the Contractor to consider, review and respond to that strategy. If, in the Contractor’s opinion, any notified change to the Authority ICT strategy would impact upon the provision of the Services, the Contractor shall refer the matter [to the Management Board/the Change Control Procedure].

[Guidance: the approach taken to dealing with such changes will depend upon the form of the governance arrangements in schedule 8.1 (Governance).]

14.4 If the Authority wishes to incorporate any improvement identified by the Contractor the Authority shall send the Contractor a Change Request and the parties shall:

14.4.1 develop a plan for the implementation of the improvement within [20] Working Days of the Authority's Change Request for the approval of the Authority;

14.4.2 implement the improvement in accordance with the provisions of an implementation plan approved by the Authority; and

14.4.3 submit the improvements to testing in accordance with the provisions of clause 4 (Testing).

Return to Top

15. EQUIPMENT

15.1 [Unless otherwise agreed in writing by the Authority, all Contractor Equipment will be used by the Contractor solely for the purposes of providing the Services to the Authority and will not be used for the Contractor's own purposes or in providing any other services to third parties.]

[Guidance: In practice, it is unusual for Contractor Equipment to be used exclusively for the provision of the Services. Therefore, only retain this provision if it is imperative for the Authority to have exclusive rights of use of all Contractor Equipment (including hardware) and to ensure it has the right to take over such equipment on termination. If privacy of data, etc., are the concerns then consider whether such issues can be resolved without insisting on exclusive rights. The downside of requiring exclusive rights is that it prevents one of the "easy wins" of cost reductions achieved by economies of scale.]

15.2 The Contractor shall be solely responsible for the cost of carriage of Contractor Equipment to the Sites and to the Authority Premises, including its off-loading, removal of all packaging and all other associated costs. Likewise on termination or expiry the Contractor shall be responsible for the removal of all relevant Contractor Equipment from the Authority Premises, including the cost of packing, carriage and making good the Authority Premises following removal.

15.3 All the Contractor's property located on the Sites, including Contractor Equipment, shall remain at the sole risk and responsibility of the Contractor[, except that the Authority shall be liable for loss of or damage to any of the Contractor's property located on Authority Premises which is due to the negligent act or omission of the Authority].

[Guidance: include words in square brackets if this would otherwise result in an increased premium for the Contractor]

15.4 Subject to any express provision of the Business Continuity and Disaster Recovery Plan to the contrary, the loss or destruction for any reason of the Contractor Equipment held on any Site shall not relieve the Contractor of its obligation to supply the Services in accordance with the Service Levels.

[Guidance: The Contractor should not be relieved of its obligations automatically for the costs or destruction of its equipment. The Business Continuity and Disaster Recovery Plan should provide a supply of the Services, possibly at reduced levels, in the event of such a loss occurring. In the event that those plans fail, then the Contractor should become fully liable for non-delivery of the Services.]

Return to Top

SECTION D - PAYMENT AND VALUE FOR MONEY PROVISIONS

16. CHARGING AND INVOICING

[Guidance: Guidance Note 2 (Payment, Affordability and Asset Ownership) provides guidance on issues that relate to Charges or their abatement. Schedule 7.1 will need to be consistent with clauses and schedules in the Agreement, particularly those dealing with Delay, Delay Payments and compensation (clauses 5, 6, 7 and 8), Milestones triggering payments and Milestone failures triggering repayment of payments (schedules 6.1 and 7.1), Services, Additional Services (clause 9), Service Credits (clause 10), and any commercial exploitation arrangements for IPRs licensed to the Contractor by the Authority (clause 36).

This clause is drafted on the basis that all payments due under this Agreement together with any abatements such as Service Credits will be specified in schedule 7.1 as well as the mechanisms by which the Charges will be calculated, abatements applied and invoices issued.

The parties will also need to consider what they are expecting to be included within the amount of the Charges. For example, clause 16.4 contains details of other costs and expenses that fall outside the Charges and that are borne by each party.]

16.1 In consideration of the Contractor carrying out its obligations, including the provision of the Services under this Agreement, the Authority shall pay the Charges to the Contractor in accordance with the payment profile and the invoicing procedure specified in schedule 7.1 (Charges and Invoicing).

16.2 The Contractor shall ensure that a term is included in any Sub-contract permitted under this Agreement which requires the Contractor to pay any undisputed sums due to the relevant Sub-contractor within a specified period that does not exceed 30 days from the date the Contractor receives the Sub-contractor's invoice.

16.3 The Contractor shall not suspend the supply of the Services unless the Contractor is entitled to terminate this Agreement under clause 55.6 for failure to pay undisputed Charges. Interest shall be payable on the late payment of any undisputed Charges properly invoiced in accordance with the Late Payment of Commercial Debts (Interest) Act 1998.

16.4 Except as otherwise provided, the parties shall each bear their own costs and expenses incurred in respect of compliance with their obligations under clauses 4.2 (Testing), 13 (Quality Assurance and Performance Monitoring), 24 (Audits), [41 (Protection of Personal Data)], 42 (Freedom of Information) and, to the extent specified therein, clause 60 (Step-In Rights). [Guidance: The charges schedule may define limits on this.]

Return to Top

17. TAX

[Guidance: Under s77A Value Added Tax Act 1994 and s18 Finance Act 2003 the Authority could become liable for any VAT which has been paid to the Contractor but which is not then accounted for by the Contractor to HM Customs & Excise. The indemnity in clause 17.2 safeguards the Authority against this secondary liability. It has been drafted specifically in respect of UK services supplied by UK suppliers: it will require amendment where the Authority deals with non-UK suppliers, including direct deals with non-UK parent companies. In such circumstances the Authority should consult its specialist tax advisers.]

17.1 The Charges are stated exclusive of VAT, which shall be added at the prevailing rate as applicable and paid by the Authority following delivery of a valid VAT invoice.

17.2 The Contractor shall indemnify the Authority on a continuing basis against any liability, including any interest, penalties or costs incurred, which is levied, demanded or assessed on the Authority at any time in respect of the Contractor's failure to account for or to pay any VAT relating to payments made to the Contractor under this Agreement. Any amounts due under this clause 17.2 shall be paid in cleared funds by the Contractor to the Authority not less than five Working Days before the date upon which the tax or other liability is payable by the Authority.

Return to Top

[Guidance: Consider appropriate set-off policies in accordance with the scope of your project and amend this clause accordingly. In particular, consider whether this clause should relate to wider set-off rights in respect of cross-cutting programmes.]

The Authority may retain or set off any amount owed [to it or any Contracting Authority or any other Crown Body] by the Contractor against any amount due to the Contractor under this Agreement [or under any other agreement between the Contractor and the Authority or Contracting Authority or any other Crown Body].

Return to Top

19. VALUE FOR MONEY

[Guidance: Schedule 7.3 should set out the mechanisms to be used by the parties that demonstrate how the Contractor is providing value for money in the Agreement, including gain-sharing, benchmarking and financial audits. Guidance Note 1 (Key Commercial Principles), section 1 - 1.5 (Value for Money Provisions) and Guidance Note 2 (Payment, Affordability and Asset Ownership) provide further guidance on the operation and employment of these mechanisms.]

The parties shall comply with their obligations set out in schedule 7.3 (Value for Money Provisions).

Return to Top

20. FINANCIAL MODEL

The provisions of schedule 7.5 (Financial Model) shall apply in relation to the Financial Model and the parties shall comply with their respective obligation in schedule 7.5.

Return to Top

SECTION E - CONTRACT GOVERNANCE

21. REPRESENTATIVES

[Guidance: This clause assumes that schedule 9.3 (Key Personnel) will specify the Authority Representative and the Contractor Representative as Key Personnel. However, it may be more appropriate to limit schedule 9.3 to a list of the Contractor's Key Personnel (in accordance with clause 28) and create a separate schedule for the contact details of key appointments, service of notices under clause 70, etc. Details should include name, title, contact details.]

21.1 Each party appoints the persons named as such in schedule 9.3 (Key Personnel) as the Authority Representative and the Contractor Representative respectively. The Representatives shall have the authority to act on behalf of their respective party on the matters set out in, or in connection with, this Agreement. Either party may, by further written notice to the other party, revoke or amend the authority of its Representative or appoint a new Representative.

21.2 The respective Representatives shall be sufficiently senior within the organisation of the appointing party, and granted sufficient authority by that party, to ensure full cooperation in relation to the operation and the management of this Agreement.

21.3 The Authority may require the Contractor to replace the Contractor Representative in accordance with clause 28.9 (Key Personnel).

Return to Top

22. GOVERNANCE

[Guidance: This clause assumes that schedule 8 (Governance) will include all the detail as to how the Agreement and project will be governed. Detail should include: a structure of various committees or individuals to be responsible for different elements of the Agreement and to meet, report on and make decisions within their allocated remit; and obligations on the Contractor to produce information and reports charting the progress of the project, and for the escalation of issues.]

The parties agree to manage this Agreement through the governance structure detailed in schedule 8 (Governance).

Return to Top

23. SUPPLY CHAIN RIGHTS

[Guidance: In respect of large procurements it is very likely that the Contractor will wish to sub-contract some of its obligations. Alternatively, the Contractor may be the prime contractor in a consortium formed to provide the Services. In either case, the Authority will require the inclusion of provisions that permit it rights over the supply chain. Further guidance on the issues is provided in Guidance Note 1 (Key Commercial Principles), section 1 - 28 (Supply Chain Rights).]

[Guidance: Not all provisions set out in Clause 23 will be relevant or appropriate to all Contracts. Projects should therefore review their need for specific supply chain rights and obligations on a case-by-case basis.]

Sub-contracting

23.1 The Contractor shall not sub-contract any of its obligations under this Agreement without the Authority's prior written consent, which, subject to clause 23.2, shall not be unreasonably withheld or delayed.

23.2 The Authority may withhold or delay its consent where it considers that:

23.2.1 the appointment of a proposed Sub-contractor may prejudice the provision of the Services or may be contrary to the interests of the Authority; [and/or]

23.2.2 the proposed Sub-contractor is considered to be unreliable and/or has not provided reasonable services to its other customers[; and/or

23.2.3 the proposed Sub-contractor employs unfit persons].

[Guidance: Who will be "unfit" will depend on the nature of the project and the identity of the Authority.]

23.3 Subject to clause 23.4, in making a request pursuant to clause 23.1 the Contractor shall provide the Authority with the following information about the proposed Sub-contractor:

23.3.1 its name, registered office and company registration number;

23.3.2 a copy of the proposed Sub-contract;

23.3.3 [the purposes for which the proposed Sub-contractor will be employed, including the scope of any services to be provided by the proposed Sub-contractor;]

23.3.4 [if relevant, confirmation that the Sub-contract requires the proposed Sub-contractor to comply with any relevant Service Levels;]

23.3.5 where the proposed Sub-contractor is also an Affiliate of the Contractor, evidence that demonstrates to the reasonable satisfaction of the Authority that the proposed Sub-contract has been agreed on "arms-length" terms; and

23.3.6 any further information reasonably requested by the Authority.

[Guidance: Clauses 23.3.3 and 23.3.4 can be deleted where this information is provided in the Sub-contract. However, before deleting these clauses, consider the possibility that the Contractor will seek approval of the proposed Sub-contractor before it has agreed the material terms of the Sub-contract.]

23.4 If the supply of information required pursuant to clause 23.3 would amount to a breach of any rules and regulations of any exchange on which the shares of the Contractor are admitted for listing and/or trading, or any other rules or regulations with which the Contractor is obliged to comply as a result of that listing, the Contractor shall provide the Authority with the relevant information to the fullest extent permitted by those rules and regulations.

23.5 [The Authority has consented to the engagement of the Sub-contractors listed in schedule 4.3 (Notified Sub-contractors) subject to the provision by the Contractor of the information listed in clause 23.3 within 20 Working Days of the Effective Date (or such other period that the Authority may permit and notified to the Contractor in writing).]

[Guidance: This clause permits pre-authorisation of Sub-contractors. If there will be no pre-authorised sub-contractors, then it can be deleted. Note that the Contractor must still provide the Authority with information relating to the Sub-contract, whether this is actually provided before or after the Effective Date. This information is necessary to permit the Authority to understand the relationship between the Contractor and Sub-contractor and to ensure the certainty of supply of the sub-contracted services.

Guidance: The restrictions placed on Sub-contracts in the clause below may be unnecessary or may be unworkable if the Contractor needs to engage a number of Sub-contractors to deliver the Services. The Authority should consider whether only some of the restrictions should apply or whether they should apply only to material Sub-contracts. For example 'material sub-contracts' could be defined by reference to their value or importance to the overall delivery of the project. For further discussion please refer to the guidance notes within schedule 4.3 (Notified Sub contractors).]

Guidance: The Authority should recognise that, in some cases, the Contractor will wish to subcontract to a (material) Sub-contractor using a pre-existing contractual relationship with existing contractual terms. In such cases, the Authority should seek assurances and evidence from the Contractor that any such contract provides incentives that are consistent with the Agreement and will secure value for money at least equivalent to a bespoke contractual arrangement. Before agreeing to the use of any pre-existing arrangement that is material to the delivery of Services, the Authority should therefore seek access to its key terms and conditions, in order to establish whether its incentives are consistent with those of the main Agreement.]

23.6 The Contractor shall not make use of a pre-existing contract with any [material] Sub-contractor, listed as such in Schedule 4.3 (Notified Sub-contractors), without the prior written consent of the Authority, which shall not be unreasonably withheld or delayed.

23.7 The Contractor shall ensure, except where the Authority has given its prior written consent under Clause 23.6, that each [material] Sub-contract shall include:

23.7.1 a right under the Contracts (Rights of Third Parties) Act 1999 for the Authority to enforce the terms of that Sub-contract as if it were the Contractor;

23.7.2 a provision enabling the Contractor to assign, novate or otherwise transfer any of its rights and/or obligations under the Sub-contract to the Authority;

23.7.3 [a provision requiring the Sub-contractor to enter into a direct confidentiality agreement with the Authority on the same terms as set out in clause 43 (Confidentiality);]

23.7.4 [a provision requiring the Sub-contractor to comply with protection of data requirements pursuant to clauses 40 (Authority Data) and 41 (Protection of Personal Data);]

23.7.5 [a provision requiring the Sub-contractor to comply with the restrictions on corrupt gifts and payments pursuant to clause 64 (Prevention of Corruption);]

23.7.6 [a provision restricting the ability of the Sub-contractor to further Sub-contract elements of the service provided to the Contractor without first seeking the consent of the Authority]; and

23.7.7 a provision enabling the Contractor, the Authority or any other person on behalf of the Authority to step-in on substantially the same terms as are set out in clause 60 (Step-in Rights).

[Guidance: consider also flowing down provisions into Sub-contracts to deal with Project Specific IPR (see guidance to clause 38) and Exit Management (see guidance to clause 59.3.4).]

Return to Top

Termination of Sub-contracts

23.8 The Contractor shall not terminate or materially amend the terms of any Sub-contract without the Authority's prior written consent, which shall not be unreasonably withheld or delayed.

23.9 The Authority may require the Contractor to terminate a Sub-contract where the acts or omissions of the relevant Sub-contractor have given rise to the Authority's right of termination pursuant to clause 55.1 (Termination for Cause by the Authority).

[Guidance: This right permits the Authority to seek the termination of the Sub-contract instead of exercising its right to terminate the Agreement.]

23.10 [The Authority may terminate [this Agreement][require the Contractor to terminate the relevant Sub-contract] if there is a Change of Control of a material Sub-contractor on the same terms as those set out in clause 55.4 (Termination for Change of Control).]

Competitive Terms

[Guidance: The following competitive terms clause should only be considered in the event that the Authority has a more favourable contract with a supplier of commodity goods or services (e.g. standard application software) and following an assessment of the risk to the Authority if these goods/services subsequently contribute to service delivery failure (with services likely to carry greater risk than goods). Normally such arrangements would be with market leaders and for supplies/services that are or are planned to be in widespread use.]

23.11 If the Authority is able to obtain from any Sub-contractor or any other third party more favourable commercial terms with respect to the supply of any goods, software or services used by the Contractor or the Contractor Personnel in the supply of the Services, then the Authority may:

23.11.1 require the Contractor to replace its existing commercial terms with that person with the more favourable commercial terms obtained by the Authority in respect of the relevant item; or

23.11.2 subject to clause 23.13, enter into a direct agreement with that Sub-contractor or third party in respect of the relevant item.

23.12 If the Authority exercises either of its options pursuant to clause 23.11, then the Charges shall be reduced by an amount that is agreed in accordance with the Change Control Procedure.

23.13 The Authority's right to enter into a direct agreement for the supply of the relevant items is subject to:

23.13.1 the Authority making the relevant item available to the Contractor where this is necessary for the Contractor to provide the Services; and

23.13.2 any reduction in the Charges taking into account any unavoidable costs payable by the Contractor in respect of the substituted item, including in respect of any licence fees or early termination charges.

Retention of Legal Obligations

23.14 Despite the Contractor's right to sub-contract pursuant to this clause 23, the Contractor shall remain responsible for all acts and omissions of its Sub-contractors and the acts and omissions of those employed or engaged by the Sub-contractors as if they were its own. An obligation on the Contractor to do, or to refrain from doing, any act or thing shall include an obligation upon the Contractor to procure that its employees, staff, agents and Sub-contractors' employees, staff and agents also do, or refrain from doing, such act or thing.

Return to Top

24. AUDITS

[Guidance: It is very important to an Authority that it can gain access to certain information held by the Contractor in relation to the Services and to make checks as to how the Services are being provided. The purpose of clause 24.1 is to set out the purposes for which the Authority may conduct an audit. It is only an illustrative list and should be reviewed on a case by case basis and amended, as necessary, to meet the requirements of specific projects. However, care should be taken so that the audit rights that are required by the Authority in order to comply with its own legal duties and requirements are not deleted and the Authority's position compromised. The Authority's legal advisers should be consulted on this.

The Authority should endeavour to provide notice of its intention to conduct an audit pursuant to clause 24.5. The Contractor may want the Authority to accept more commitment than this clause provides for but there will be circumstances where the Authority cannot do so. For example: where an audit is required to confirm compliance with the Security Policy; the Authority has reasonable grounds to suspect that the Contractor is in material breach of its obligations or other circumstances (e.g. fraud) have arisen which would give rise to the Authority having the right to terminate this Agreement; the Authority has reasonably held concerns about the solvency of the Contractor; or where an audit is required by a Regulatory Body. Consequently, the Authority cannot commit to always giving prior notice of an audit.

The Authority will want to ensure that the audit rights are not duplicated, contradicted or undermined by other requests for information that may be included in the Agreement, for example, in schedule 8.1 (Governance).]

24.1 The Authority may, not more than [twice in any Contract Year] [and for a period of [12 months] following the Term], conduct audits for the following purposes:

[Guidance: The Authority may agree to limit its post-contract right of audit to specific grounds where appropriate to do so. However, key grounds such as an audit of Charges, audits under the National Audit Act and audits required by Regulatory Bodies should be retained.]

24.1.1 to verify the accuracy of Charges (and proposed or actual variations to them in accordance with this Agreement), [any cost reduction and income generation initiatives carried out pursuant to clause 14 (Services Improvement)], and/or the costs of all suppliers (including Sub-contractors) of the Services [at the level of detail agreed in schedule 7.1 (Charges and Invoicing)];

24.1.2 to review the integrity, confidentiality and security of the Authority Data;

24.1.3 to review the Contractor's compliance with the Data Protection Act 1998, the Freedom of Information Act 2000 in accordance with clauses 41.2.10 (Protection of Personal Data) and 42 (Freedom of Information) and any other legislation applicable to the Services;

24.1.4 to review the Contractor's compliance with its obligations under clauses 9.1 and 9.3 (Services) and 13 (Quality Assurance and Performance Monitoring);

24.1.5 to review the Contractor's compliance with its obligations set out in schedule 7.3 (Value for Money Provisions);

24.1.6 to review any records created during the design and development of the Contractor's System and pre-operational environment such as information relating to Testing;

24.1.7 to review any books of account kept by the Contractor in connection with the provision of the Services;

24.1.8 to carry out the audit and certification of the Authority's accounts;

24.1.9 to carry out an examination pursuant to Section 6(1) of the National Audit Act 1983 of the economy, efficiency and effectiveness with which the Authority has used its resources;

24.1.10 to verify the accuracy and completeness of any Management Information delivered or required by this Agreement;

24.1.11 to inspect the ICT Environment (or any part of it);

24.1.12 to inspect the Authority's Assets, including the Authority's IPRs, equipment, facilities and maintenance, for the purposes of ensuring that the Authority's assets are secure and that any register of assets is up to date;

24.1.13 to ensure that the Contractor is complying with the Standards; and/or

24.1.14 any other audit that may be required by any Regulatory Body.

[Note: This clause contains only an illustrative list, which should be reviewed on case by case basis and amended, if necessary, to meet requirements of specific projects.]

24.2 The Authority shall use its reasonable endeavours to ensure that the conduct of each audit does not unreasonably disrupt the Contractor or delay the provision of the Services.

24.3 Subject to the Authority's obligations of confidentiality, the Contractor shall on demand provide the Authority (and/or its agents or representatives) with all reasonable co-operation and assistance in relation to each audit, including:

24.3.1 all information requested by the Authority within the permitted scope of the audit;

24.3.2 reasonable access to any Sites controlled by the Contractor and to any equipment used (whether exclusively or non-exclusively) in the performance of the Services;

24.3.3 access to the Contractor System; and

24.3.4 access to Contractor Personnel.

24.4 The Contractor shall implement all measurement and monitoring tools and procedures necessary to measure and report on the Contractor's performance of the Services against the applicable Service Levels at a level of detail sufficient to verify compliance with the Service Levels.

[Guidance: Ensure that schedule 2.2 (Service Levels) makes provision for the monitoring of and reporting on Service Levels.]

24.5 The Authority shall endeavour to (but is not obliged to) provide at least [15] Working Days notice of its intention to conduct an audit.

24.6 The parties agree that they shall bear their own respective costs and expenses incurred in respect of compliance with their obligations under this clause, unless the audit identifies a material Default by the Contractor in which case the Contractor shall reimburse the Authority for all the Authority's reasonable costs incurred in the course of the audit.

24.7 If an audit identifies that:

24.7.1 the Contractor has failed to perform its obligations under this Agreement in any material manner, the parties shall agree and implement a remedial plan. If the Contractor's failure relates to a failure to provide any information to the Authority about the Charges, proposed Charges or the Contractor's costs, then the remedial plan shall include a requirement for the provision of all such information;

24.7.2 the Authority has overpaid any Charges, the Contractor shall pay to the Authority the amount overpaid within [20] Working Days. The Authority may deduct the relevant amount from the Charges if the Contractor fails to make this payment; and

24.7.3 the Authority has underpaid any Charges, the Authority shall pay to the Contractor the amount of the under-payment [less the cost of audit incurred by the Authority if this was due to a Default by the Contractor in relation to invoicing] within [20] Working Days.

Return to Top

25. RECORDS AND REPORTS

[Guidance: Schedule 8.4 (Records Provisions) should detail the reports to be kept and their contents. These will need to be agreed between the parties but should include records setting out the history of the performance of the Agreement (such as Milestone Achievement Certificates) and periodic reports that indicate the Contractor's performance (such as Management Information).]

The parties shall comply with the provisions of schedule 8.4 (Records Provisions) in relation to the keeping of records and the making of reports.

Return to Top

26. CHANGE CONTROL

[Guidance: The Change Control Procedure is critical to the Authority as it will set out the process that must be followed (unless the Agreement stipulates otherwise) for agreeing any change to the Agreement.]

Any requirement for a Change shall be subject to the Change Control Procedure.

[Guidance: When considering the impact of a Change you should also consider the impact on any other Services that are currently being supplied, will be supplied as a later part of the project or which fall into the category of Additional Services or Future Services.]

Return to Top

27. DISPUTES

[Guidance: The Dispute Resolution Procedure in schedule 8.3 should provide for an escalation of measures, including commercial negotiations through a number of executive levels, mediation and then either arbitration or litigation.]

27.1 The parties shall resolve Disputes arising out of or in connection with this Agreement in accordance with the Dispute Resolution Procedure.

27.2 The Contractor shall continue to provide the Services in accordance with the terms of this Agreement until a Dispute has been resolved.

Return to Top

SECTION F - PERSONNEL

28. CONTRACTOR PERSONNEL

28.1 The Authority may refuse admission to the Authority Premises and/or direct the Contractor to end the involvement in the provision of the Services of any of the Contractor Personnel whom the Authority believes represents a security risk or does not have the required levels of training and expertise or where the Authority has other grounds for doing so. The decision of the Authority shall be final and it shall not be obliged to provide any reasons.

28.2 The Contractor shall use its best endeavours to ensure continuity of personnel and to ensure that the turnover rate of its [staff][Key Personnel] engaged in the provision or management of the Services [is at least as good at the prevailing industry norm for similar services, locations and environments][does not exceed [ ]% in any Contract Year].

Relevant Convictions

[Guidance: Consider whether, because of the nature of the Services or the recipients of the Services, it is necessary to bar any of the Contractor Personnel who have criminal convictions. Examples of a general clause and one specific to Services involving access to children or other vulnerable persons are set out below. The ability of the Authority to require the disclosure of spent convictions will depend on the role of the Authority and the reason for the disclosure. The right to do so will not apply in all instances and the Authority should seek specific legal advice on the following clauses and the definitions of Conviction and Relevant Conviction.]

28.3 The Contractor shall ensure that no person who discloses that he has a Relevant Conviction, or who is found by the Contractor to have any Relevant Convictions (whether as a result of a police check or through the Criminal Records Bureau procedures or otherwise), is employed or engaged in the provision of any part of the Services [involving ] [Guidance: you may wish to limit this to particular activities e.g. financial processing] without the Authority's prior and express written consent.

28.4 For each of the Contractor Personnel who, in providing the Services, has, will have or is likely to have access to children, vulnerable persons or other members of the public to whom the Authority owes a special duty of care the Contractor shall (and shall procure that the relevant Sub-contractor shall):

28.4.1 carry out a policy check with the records held by DfES;

28.4.2 conduct thorough questioning regarding any Relevant Convictions; and

28.4.3 ensure a police check is completed and such other checks as may be carried out through the Criminal Records Bureau, and the Contractor shall not (and shall ensure that a Sub-contractor shall not) engage or continue to employ in the provision of the Services any person who has a Relevant Conviction or [what would reasonably be regarded as] an inappropriate record.

Key Personnel

[Guidance: Key Personnel will be those employees of the Contractor who are important or valuable to the project because they have a pivotal role. Changes to such personnel, particularly at certain critical points in the contract, will have a disproportionate effect on its success. The following provisions are aimed at securing that information and also ensuring that any Key Personnel or replacement to any Key Personnel are suitable. The Authority will need to consider which of the Contractor’s personnel it wants to be made subject to these provisions and include them in the list of Key Personnel at schedule 9.3. This list should be limited to key roles within the project e.g. key managers and technical staff appointments.]

28.5 The parties have agreed to the appointment of the Key Personnel listed in schedule 9.3 (Key Personnel) as at the Effective Date. The Contractor shall and shall procure that any Sub-contractor shall obtain the prior written consent of the Authority before removing or replacing any Key Personnel during the Term (including when carrying out Exit Management), and, where possible, at least [three] months written notice must be provided by the Contractor of its intention to replace Key Personnel.

28.6 The Authority shall not unreasonably delay or withhold its consent to the appointment of a replacement for any relevant Key Personnel by the Contractor or Sub-contractor. The Authority may interview the candidates for Key Personnel positions before they are appointed.

28.7 The Contractor acknowledges that the Key Personnel are essential to the proper provision of the Services to the Authority. The Contractor shall ensure that the role of any Key Personnel is not vacant for any longer than [10] Working Days and that any replacement shall be as or more qualified and experienced as the previous incumbent and fully competent to carry out the tasks assigned to the Key Personnel whom he or she has replaced.

28.8 The Contractor shall ensure that each of the Key Personnel shall work for such a period of time in the performance of the Services that is commensurate with and sufficient to perform the obligation of that person's role unless the Authority otherwise gives its prior written consent. To the extent that it can do so without disregarding its statutory obligations, the Contractor shall take all reasonable steps to ensure that it retains the services of all the Key Personnel.

28.9 The Authority may identify any of the Contractor Personnel as Key Personnel, who will then be included on the list of Key Personnel by the Contractor. The Authority may also require the Contractor to remove any Key Personnel that the Authority considers in any respect unsatisfactory.

28.10 The Authority shall not be liable for the cost of replacing any Key Personnel and the Contractor shall indemnify the Authority against all Employee Liabilities that may arise in this respect.

[Staffing Security]

28.11 [The Contractor shall comply with the Staff Vetting Procedures in respect of all Contractor Personnel employed or engaged in the provision of the Services. The Contractor confirms that all Contractor Personnel employed or engaged by the Contractor at the Effective Date were vetted and recruited on a basis that is equivalent to and no less strict than the Staff Vetting Procedures.]

28.12 [The Contractor shall provide training on a continuing basis for all Contractor Personnel employed or engaged in the provision of the Services in compliance with the Security Policy and Security Plan.]

[Terms and Conditions of Services Employees]

[Guidance: These provisions will apply only in respect of local authorities and best value authorities.]

28.13 [The Authority has a statutory duty pursuant to Part I of the Local Government Act 1999 to have regard to the Code of Practice on Workforce Matters in Local Authority Service Contracts. Accordingly, the Contractor shall comply with, and shall procure that any Sub-contractor complies with, the conditions set out in schedule 9.2 (Terms and Conditions of Services Employees).]

Return to Top

29. EMPLOYMENT INDEMNITY

[Guidance: Where Contractor Personnel will work alongside the Authority's employees, whether at the Contractor's or the Authority's premises, there is a possibility that any acts or omissions of the Contractor or its employees could give rise to claims against the Authority. This indemnity is intended to ensure that responsibility for resolving these claims remains with the Contractor. It is not intended to cover issues arising out of a TUPE transfer, which are dealt with in clause 30 and schedule 9.1 (Staff Transfer).]

The Contractor shall indemnify the Authority against all Employee Liabilities that may ar