1.  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