Contract terms

Every outsourcing organisation will either have its own general or standard terms and conditions of contract or will use an industry agreed format. So facilities managers will generally have a sound basis from which to work in collaboration with purchasing or legal departments.

The professional institutions and trade associations have been backward in producing model forms of conditions of contract specifically for facilities management. In 1999 the Chartered Institute of Building launched the first such specific model, the CIOB facilities management contract. Like all forms of model conditions it requires careful study and modification to suit the particular needs of the outsourcing organisation and the individual case. It is, however, a start.

Another source of ideas and guidance is the model conditions of contract published by the former central unit for procurement in HM Treasury, now renamed the ‘Office for Government Commerce’. This is published as ‘CUP Guidance no 59(d)’ and provides advice on the use of contract terms and conditions for the provision of strategic services. The document can be accessed and downloaded from the government procurement website at http://wood.ccta.gov.uk/treasury/reports.nsf

There is also a wide range of other interesting publications on the site. Although these have all been written primarily for central government use, they promulgate general good practice which can be adapted to suit individual needs.

The facilities manager who is not experienced in contractual matters should always seek sound professional advice on the most appropriate forms of contract conditions to use. That advice will either be available within their organisation (eg from legal advisers or purchasing departments) or it will have to be sought from external sources (eg solicitors or contract consultants etc).

Whatever general terms and conditions are used, they will not reflect in detail the particular requirements of the service being outsourced. The facilities manager therefore will need to consider, in close liaison with users and professional advisers, the special conditions of contract that must be written to cover those particular requirements. Examples of these are:

• particular quality checks and tests
• specific payment terms
• price variation options
• incentives and rebates
• premises use and protection of client’s rights
• special security arrangements
• liquidated and ascertained damages

Good professional advice is essential here to ensure that special conditions do not prejudice the general terms and conditions and to identify which conditions rule where there is any conflict between the two.

Form of tender

The detail of a ‘form of tender’ should be drawn to suit the particular requirements of the project – it cannot be prescribed. It should be structured to give the client the information it needs in the necessary format to facilitate effective evaluation of tenders. As a minimum it should direct tenderers to submit a clear fixed price, lump sum tender, supported by details of:

• management and labour rates
• the full staffing and management proposals for the contract
• materials that will be utilised
• the overheads and profit percentages that have been applied

The form of tender should also contain a ‘declaration of bona fide tender’ on the lines of the model at appendix A. Depending on the sensitivity of information disclosed in the instruction to tenderers (ITT) (see TheFB, August 2000), you might want also to include a ‘non-disclosure agreement’ on the lines of appendix B.

Transfer of undertakings

Any tender action for the provision of services must include consideration of whether the Transfer of Undertakings (Protection of Employment) Regulations 1981 (Tupe) will apply to any subsequent contract. The client should always decide its own view on this in close consultation with legal advisers. It should inform tenderers of that view, but insist that they take their own legal advice and structure their tenders accordingly. At the very least, clients should include in the proposed contract conditions provision for any subsequent contractor to indemnify them against any costs arising from Tupe issues.

If clients consider that Tupe will apply, they should ensure that the relevant Tupe information is supplied as a part of the invitation to tender. This will include the identity of the employees concerned with details of their terms and conditions of employment and any rights acquired thereby. It is imperative that specialist legal advice is taken on the implications of Tupe.

Appendix A

Declaration of bona fide tender:

1 I/We hereby offer to supply within

(state delivery offer) of the date of contract the goods, materials and/or services described in the attached Form of Tender in accordance with the Tender Documents.

2 I/We hereby declare that prior to the submission of the Tender I/we shall not have

2.1 communicated to any person the amount of any proposed tender for the goods, materials and/or services in accordance with any agreement or arrangement to communicate, or

2.2 adjusted the amount of any proposed tender for the goods, materials and/or services in accordance with any agreement or arrangement between me/us and any other person, company or organisation.

Signed (Please also print name of signatory)

Status of signatory

Duly authorised to sign on behalf of:

Company name

Address(*)

Telephone

Fax

E-mail

(*) Insert full address of registered office (if a limited company) or principal place of business.

Appendix B

Non-disclosure agreement

1 In consideration of ABC Company Ltd disclosing information to me/us, I/we undertake to use my/our best endeavours to keep secret and treat as strictly confidential all such information and not disclose the same to any third party nor make use of the same except for the purposes explicitly stated in the Invitation to Tender (ITT).

2 This undertaking shall continue in force for a period of two years from the date of issue of the ITT, but shall not extend to any information which is generally available to the public at the time of disclosure or is subsequently made public unless by breach of an obligation of confidentiality.

3 I/we accept that the disclosure of information by ABC Company Ltd to me/us pursuant to the ITT shall not be construed by me/us as the grant of any licence or other rights in respect of this matter.

4 This agreement shall be deemed to have been made in England and any dispute consequent upon it shall be governed by English Law and subject to the jurisdiction of the English courts.

5 I/we indicate acceptance of the conditions set out above by the signature below of its authorised representative.

Signed

(Please also print name of signatory)

Status of signatory

Duly authorised to sign on behalf of:

Company name

Address(*)

Telephone

Fax

E-mail

(*) Insert full address of registered office (if a limited company) or principal place of business.

David Pearson is managing partner of DJP Consultancy, djpconsultancy@btinternet.com