The collapse of Connaught means many are looking into how its contracts can be novated or assigned, but there are a host of legal issue to consider first
Following the collapse of the social housing contractor part of the Connaught Group many affordable housing landlords will be re-procuring planned and reactive maintenance services.
Contractors need to watch out for various legal issues (whilst landlords will of course need to look at the same points from their point of view):
What is being taken over?
A replacement contractor will need to be clear on the terms of its contract, especially if the Connaught contract has already determined (which may have happened automatically under certain commonly used forms such as TPC and PPC).
How long is the new contract for?
Public sector landlords will generally only be appointing for a limited period while they re-procure through a fuller OJEU process (possibly also covering leaseholder consultation). The full reprocurement may not be able to take into account the performance during the interim period - so contractors need to watch what they are actually being promised.
What is the TUPE position?
Staff who were previously allocated to the services being taken over will generally have the right to TUPE transfer to the new contractor on their existing terms of engagement (even if the new contractor is appointed for a relatively limited period). It will not always be clear who has the right to transfer and the contractor will need to price accordingly.
Are there any TUPE traps?
Contractors should watch the position if the client has taken a service in-house or used a number of small contractors to cover it for a period of time before appointing the new contractor. There may be staff who have the right to TUPE from the client and the other small contractors.
Note also that if Connaught’s previous subcontractors had staff who were allocated to the service being taken over those staff may have the right to TUPE transfer to the replacement contractor as well.
Contractors should also be aware of the possible application of TUPE if partly completed packages of planned works are being awarded.
What data is available?
Untangling issues relating to data ownership and the like may well be complex. Any replacement contractor should be clear as to what data is available and whether the client is warranting its accuracy.
Who owns the plant?
Issues like ownership of plant, vans etc will need to be resolved - it is likely that legal and practical issues will overlap.
Who takes on liability for work already done?
Replacement contractors will not generally want to take on liability for work already done, especially planned work. If a contract is being novated or assigned they will need to check the relevant wording carefully to ensure they are not taking on liability for work already undertaken.
Andrew Vickery is a partner at Trowers & Hamlins