Lawyers are warning that support services companies may be required to renegotiate the catering elements of PFI school contracts after the government announced plans to ban vending machines selling crisps and chocolate
The warning comes as the industry reacted to the proposals, announced by education secretary Ruth Kelly last week, by calling for “healthy” products to be sold instead to save a vital source of revenue often used to pay for maintenance and repairs.
Rupert Choat, a lawyer at CMS Cameron McKenna, said firms that break contracts with catering suppliers might not be entitled to compensation from the schools and might have to renegotiate rates in the benchmarking process to make a profit from these contracts.
He said: “Under most project agreements the contractor will be covered for changes in policy and would be entitled to compensation for loss of income and for the liability it has incurred for the catering suppliers’ loss of profit. However, some contractors will be regretting the wording of their agreements. They will need to increase the cost of doing this work, which will lead to tough negotiations and potential disputes.”
Stephen Reffitt, managing director of Design Solutions, the arm of Atkins that advises schools on PFI contracts, played down the cost implications. He said: “We don’t think revenue will go down, as long as schools and their teams are entrepreneurial. We would advise schools to find healthy options, such as apples, mineral water and muesli bars instead of crisps and chocolate.”
We don’t think revenue will go down, as long as schools are entrepreneurial
Stephen Reffitt, managing director, Design Solutions
A spokesperson for Interserve, which operates 33 schools, said: “Where contracts have provided a guaranteed level of income we will have to renegotiate”.
Last week it emerged that Harry Carlton School in Nottingham was unable to remove junk food from vending machines without compensating Alfred McAlpine, which has a maintenance contract, for the loss of income.
An Alfred McAlpine spokesperson said it was negotiating with the school and will abide by any new government guidelines for stocking foodstuffs.