Procurement in a Nutshell – PFI contracts and coronavirus
03rd April 2020
On 2 April 2020 the Government issued guidance relating to Private Finance Initiatives and PF2 Projects. The guidance, which is to be enforced with immediate effect (currently due to stay in place until 30 June 2020), is one of a number of guidance notes issued to date.
Click here for the guidance.
Key messages to contracting authorities
- PFI contractors should very much consider themselves as being part of the public sector response to the current pandemic.
- Covid-19 is not regarded as, and is not to be classified as a force majeure event.
- PFI contractors must ensure that contingency plans are up to date and have been reviewed and discussed with contracting authorities to enable the continuity of full services to respond to the pandemic and maintain vital public services.
- Contracting authorities should work closely with PFI contractors to use all available options to maintain public services during the emergency period.
- Local arrangements should be made where it is not possible for PFI contractors to deliver the agreed requirements and performance standards.
- “Best efforts” should be made by all parties for the continuation of service provision.
What should contracting authorities be doing now?
- Working with PFI Providers to get contingency plans up to date.
- If a PFI provider is struggling to achieve service delivery requirements due to Covid-19, then local arrangements should be put in place to:
- maintain unitary charge payments;
- revise contract requirements/standards
moderating payment and performance regimes where appropriate.
- In any event, you may wish to review and adjust your requirements to reflect the current situation. It is possible that some requirements can be relaxed, whereas others need to be tightened. For example, there may be an increased need for cleaning and maintenance in certain areas of your PFI premises or the layout of the premises and/or room uses may have temporarily changed. With staff illness and shortage likely to be an issue, you may also wish to consider if resource can be moved from one area to another to help maintain essential services.
- When putting local bespoke arrangements into place it is vital that:
- contract requirements or performance standards are not relaxed to the point where health and safety is put at risk.
- it is made clear that the arrangements are temporary and that matters will return to normal as soon as the Covid-19 emergency is over. Indeed the guidance note makes clear that if assets temporarily close they should be kept in such condition that they can be immediately up and running when this emergency is over. In such instances, it is likely that a basic level of maintenance and security will therefore be required as a minimum.
How can we help?
The Government expects the use of bespoke contractual documents to implement temporary arrangements relating to your PFI contracts.
With time and resource precious commodities, focus should be given to documenting:
- the key changes to your PFI requirements;
- the temporary nature of the measures;
- the requirement for best efforts on behalf of the PFI Contractor; and
- the importance of continued health and safety measures at all times.
If you require any assistance with this, or any advice regarding current or perspective contracts, please do not hesitate to contact us.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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