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Outsourcing: Current Legal Issues The Key to Successful Outsourcing

Outsourcing: Current Legal Issues The Key to Successful Outsourcing. Graeme Moffett Shepherd and Wedderburn LLP 01224 343546 graeme.moffett@shepwedd.co.uk. Life of an Outsourcing. Getting in The contract – key terms Managing the contract Getting out. Getting In – First Steps.

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Outsourcing: Current Legal Issues The Key to Successful Outsourcing

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  1. Outsourcing: Current Legal IssuesThe Key to Successful Outsourcing Graeme Moffett Shepherd and Wedderburn LLP 01224 343546 graeme.moffett@shepwedd.co.uk

  2. Life of an Outsourcing • Getting in • The contract – key terms • Managing the contract • Getting out

  3. Getting In – First Steps • Key drivers • Business case justification • Scope, objectives, risks, costs, benefits • Customer due diligence • Assets and third party contracts • Employees (TUPE and Pensions)

  4. Getting In – Tender Process • Competitive procurement • Market testing – RFI • Shortlist candidates – PQQ • Invitation to tender – ITT • Supplier’s solution to customer’s specification • Draft of proposed contract • Evaluation criteria • Supplier’s due diligence • Timetable • Negotiation – One v Many • Public sector procurement issues

  5. The Contract - Structure • Balance of precision and flexibility • Structure of transaction – single, multi, etc • Supplier parent company guarantee • Customer group companies • Supplier subcontractors • Asset transfer, software licences, IPR • Joint ventures • Offshoring models

  6. The Contract – Duration • Usually 3 to 10 years • Many factors influence • Termination for convenience • Extension

  7. The Contract – Performance • Implementation/transition • Plan • Key milestones • Delay deductions • Services • Legally binding description • Objective measurement • Service levels – number and level? • Service credits – amount? bonuses? • Seek to agree before signing

  8. The Contract – Charges • Fixed price, cost-plus, part-variable etc • Supplier’s recovery of costs • Link to milestone value • Indexation • Benchmarking • Fair deal for both parties

  9. The Contract – Liability • Areas subject/not subject to caps • Level and structure of caps • Exclusions • Specific inclusions • Insurance • UCTA 1977 and standard terms

  10. The Contract – Management • Set out detailed operating framework • Frequent information exchange • Regular reports and meetings • Escalation/resolution of disputes • Monitor performance • Use service credits

  11. Getting Out • Termination rights • Exit management • Run-off period • Handover of assets and information • Employees (TUPE and Pensions again!) • Creation of Exit Plan

  12. Recipe for success • Clear objectives • Clear scope • Flexibility • Good management • Plan ahead • Cover all the bases

  13. Questions? Contact: Graeme Moffett Shepherd and Wedderburn LLP 01224 343546 graeme.moffett@shepwedd.co.uk

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