Covid 19 - mitigating the impacts on public sector contracts
We recognise what a difficult time the next few weeks and months could be for the public sector and its suppliers. As such, we're happy to offer practical commercial advice and help on a free of charge basis if requested.
Whatever the impacts of Covid 19, keeping services running will always be the top priority and rightly so. But failure to protect your commercial position could result in major operational impacts, and subsequent costs, if you get it wrong.
Our five step checklist
1. If you've not done so already, start talking to your providers about how they and you will manage potential impacts from Covid 19. These may include different reporting and monitoring arrangements. At a minimum, make sure the commercial implications are agreed and recorded.
2. Review the business continuity and disaster recovery clauses in your relevant contracts. Make sure the provider has robust plans in place and be sure that you have corresponding plans. Document any new arrangements or agreements you make and be clear on any commercial implications.
3. Check any Force Majeure event provisions in your contracts. Force Majuere provisions can allow non-performance of a contract provided certain conditions are met. Typically, these would be that the event (in this case Covid 19) prevents the affected party from performing its obligations under the contract (not just making it difficult or unprofitable), the event must be beyond the reasonable control of both parties and all reasonable steps must be taken to avoid the impact or to mitigate its effects. This last condition is very important and you should make sure any provider can show you what they have done.
4. If you find that a provider is deficient in any respect, then communicate this clearly to them and describe what steps you expect them to take and when. If they fail to do so, make whatever arrangements you think are reasonably necessary. You can pick up the commercial fall-out afterwards but you will, at least, have protected your position without compromising service delivery.
5. Once the dust has settled you may be presented with additional charges. If you've followed steps 1-4 it will be a simple task establishing if they are valid and payable (or not). Remember that record keeping is key. Capture discussions, phone calls, and video meetings in writing at the time and issue those notes to your providers as soon as you can.