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Drafting and negotiating a University outsourcing contract

Facts

Client: University

Country: UK

Industry: Education

Issues

The decision to outsource its catering services was a major development for the client. The agreement with the Service Provider was for a seven-year period and contained complex technical and financial procedures, including capital investment by the Service Provider in the facilities at the university in the form of the provision of assets and the carrying out of works to enhance the facilities, make them more efficient for the Service Provider and more attractive to the users.

Other complex issues included insurance, licensing and the university’s and the Service Provider’s respective employment obligations at the beginning and on termination of the agreement.

Confidentiality was another important issue, involving both the Freedom of Information Act and the Data Protection Act. There were also intellectual property and audit requirements and detailed variation order procedures, as well as access and security considerations.

Solutions

One of the first points we addressed was in respect of the annual budget and the capital investment; these financial obligations were clearly critical to the ultimate success of the agreement.

Equally, the specification of services was a key component and it was vital to ensure that the specification was as comprehensive and as accurate as possible. We introduced clauses providing procedures for instructions and variations to be authorised, detailing the implications of not carrying out the variation and enabling the scope of a variation to be broad enough to extend the services as business grew, for example by adding in another café if necessary. We provided for the services to be inspected on a regular basis to ensure compliance with the statutory requirements relating to hygiene, health and safety.

We introduced KPIs to monitor the quality and level of the services. There were defined performance targets in areas such as customer numbers and staff remuneration, and strict obligations upon the Service Provider to comply with and implement all standard operating policies and procedures of the university.

Benefits

The agreement is now halfway through its term and has successfully achieved its objectives for the benefit of both parties as a result of careful analysis at the outset and clarity and comprehensiveness of drafting of the agreed terms.

The variation procedure has been implemented twice in order to add further café facilities on the university’s premises, and the entire agreement has proved both easy to operate and simple to understand.