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  1. abcdefghij Financial Partnerships Unit Process and Issues in Contract Negotiation CLAIRE DONALD Solicitor, Shepherd+ Wedderburn Legal secondee, Financial Partnerships Unit

  2. Standardisation • Increasing standardisation across all sectors – Education, health, waste • Condition of SE funding for education PPPs that SSSC3 is used • Changes to SSSC3 must be approved by FPU

  3. Process • Submit to FPU all changes to • Main body of Project Agreement • Payment Mechanism • Key Stage Reviews • Table of derogations • Comparison of Project Agreement against latest draft

  4. FPU’s approach to Standardisation • Protecting public sector position • policy considerations • acceptability of reallocation of risk • Awareness of development/sophistication of market • “Golden Rule” • project specific changes inevitable

  5. Authority Approach to Standardisation • Caution against automatically accepting golden rule changes, but….. • …….golden rule provides a guide to what will be acceptable to FPU allowing a firm line to be taken in negotiations

  6. Market approach to Standardisation • Increasing level of acceptance by market of SSSC3 • Generally seeing similar derogations on all projects • C.f. England

  7. Issues in Schools Contract Negotiation • Alternative funding structures • Insurance Premium Sharing • Utilities • Practical Issues

  8. Alternative Funding Structures • SSSC3 drafted on basis of bank funding • Increasing number of deals not bank funded • Bonds • Private placements • Legitimate changes required to contract to reflect structure • E.g. compensation on termination • Resolve prior to appointment of preferred bidder

  9. Insurance Premium Sharing • Traditionally contractor risk • Treasury/FPU – must use SPOC 3 schedule • 30% Exceptional Cost/Saving • 85% - 15% Authority/Contractor sharing • Agree mechanism and base cost figures prior to PB appointment

  10. Utilities • Project specific • Risk share:- • Contractor – consumption • Authority – rate • Resolve prior to PB appointment • Utilities critical to viability of project for FM provider • Drafting notoriously complicated!

  11. Practical Issues • Practical commercial issues, e.g. • Acquisition of FFE • Off Site Works/Planning Conditions • Land sales • All need to be reflected in the contract • Draft as soon as possible • Submit for approval by FPU as soon as possible

  12. Questions