It's a matter of survival .....

Commercial contract lawyers have for years had fun with “survival” provisions, and the current fashion is for an ever increasingly long list of clauses to “survive termination”. However, a number of public sector contracts now go one step further, having introduced wide ranging “termination assistance” provisions.

We are used to the concept of termination assistance – that an outgoing provider should provide help and support to facilitate the incoming provider taking over the relevant service.

However, these new provisions go further, in that they anticipate that the termination assistance could include…providing the services!

Hang on, I hear you cry. If the service provider is providing the services, has the contract really terminated?

And (more importantly for this blog post) from a procurement perspective, is the use of termination assistance to acquire additional services for a period a contract variation for the purposes of Regulation 72? Our view on Regulation 72 is that the termination assistance may not be a variation where it is possible to procure the assistance under the existing contract by the buyer simply serving a notice on the supplier – the contract has not been varied at that point, the buyer is simply exercising a right it has under the existing contract terms.

However, a good question to ponder is how many buyers will include the maximum term of any termination assistance period in the contract term which is originally advertised in the contract notice. If it is genuinely an optional extension to the provision of services under the contract, then this should under the Regulations be included in the calculation of the full contract term.

So where does this leave us?

If you are a buyer, think about termination assistance when advertising your contract, and do look at whether it is an option to secure services instead of a short term extension.

If you are a supplier, you might not be able to wind down your service delivery team as early as you think. Do check the notice and payment provisions around termination assistance, and consider whether it is appropriate for any service levels to apply during any post-termination assistance period.

Both parties are likely to want pretty much all of the contract to survive termination if the services are to continue being provided.

As to whether the contract has really terminated? The way I see it is that if the whole of something survives, it is going to be a challenge to argue that it is dead!

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