As each day passes it is easy to think that physical distancing and lock-down is the “new normal” and returning to BAU is an unknown quantity, but, as Tim Farr highlighted in his blog post “Looking to the Future: Holding Your Nerve and Delivering Services after Lockdown” , there are steps that authorities can take now to make the transition as pain-free as possible.
Since lock-down was announced on 23 March 2020, authorities will have been having urgent discussions with their suppliers about how best they can deliver facilities management services to their corporate and non-corporate estates. In light of Procurement Policy Note 02/20, authorities may have made the decision to temporarily vary their contracts so that they focus on the delivery of emergency and statutory required services with suppliers given relief from performance management mechanisms such as service credits and KPIs.
However, the CCS guidance stresses that a pragmatic approach should be taken and contracting authorities should not accept claims from suppliers who were already struggling to meet their contractual obligations prior to the COVID-19 outbreak
Facilities management companies, like the construction industry, work to very tight margins and the additional uncertainty created by the COVID-19 pandemic is likely to increase these financial pressures.
Many FM contracts, such as the CCS’s Facilities Management Marketplace Framework Agreement, contain “financial distress” mechanisms in order to monitor the financial standing of suppliers through the contract period. If a supplier suffers a “financial distress event”, it is required to put in place a continuity plan setting out how it will ensure continued performance and delivery of the services.
As we move out of lock-down and “get back to normal”, contracting authorities will be taking stock of what action they can take to ensure that any supplier financial instability caused by the pandemic does not negatively impact on service delivery.
Some actions that you could take are:
- Increased monitoring of supplier financial performance so that you can have early conversations with your suppliers to ensure service continuity;
- Improved contract management and performance monitoring against KPIs and service standards;
- Considering service delivery options such as insourcing of some services if you are reaching the end of the contract term or if you are making a decision regarding a potential contract extension;
The commercial contracts team at Sharpe Pritchard has extensive experience of advising contracting authorities on procurement and contractual issues in the facilities management sector. We are familiar with the various contractual forms that are used in this sector such as NEC3/4 Term Service Contract and the CCS FM Marketplace Framework Agreement and can help you with any procurement and contractual issues that you may be facing.
The team is on hand to help you navigate these uncertain times.
This article is for general awareness only and does not constitute legal or professional advice. Law and guidance relating to the COVID19 pandemic is continually being updated and the law may have changed since this page was first published. If you would like further advice and assistance in relation to any issues raised, please contact us today by telephone or email firstname.lastname@example.org.