outsourcing: current legal issues the key to successful outsourcing graeme moffett shepherd and...
TRANSCRIPT
Outsourcing: Current Legal IssuesThe Key to Successful Outsourcing
Graeme Moffett
Shepherd and Wedderburn LLP
01224 343546
Life of an Outsourcing
• Getting in
• The contract – key terms
• Managing the contract
• Getting out
Getting In – First Steps
• Key drivers• Business case justification• Scope, objectives, risks, costs, benefits• Customer due diligence• Assets and third party contracts• Employees (TUPE and Pensions)
Getting In – Tender Process
• Competitive procurement
• Market testing – RFI
• Shortlist candidates – PQQ
• Invitation to tender – ITT
– Supplier’s solution to customer’s specification
– Draft of proposed contract
– Evaluation criteria
– Supplier’s due diligence
• Timetable
• Negotiation – One v Many
• Public sector procurement issues
The Contract - Structure
• Balance of precision and flexibility• Structure of transaction – single, multi,
etc• Supplier parent company guarantee• Customer group companies• Supplier subcontractors• Asset transfer, software licences, IPR• Joint ventures• Offshoring models
The Contract – Duration
• Usually 3 to 10 years
• Many factors influence
• Termination for convenience
• Extension
The Contract – Performance
• Implementation/transition– Plan– Key milestones– Delay deductions
• Services– Legally binding description– Objective measurement– Service levels – number and level?– Service credits – amount? bonuses?– Seek to agree before signing
The Contract – Charges
• Fixed price, cost-plus, part-variable etc• Supplier’s recovery of costs• Link to milestone value• Indexation• Benchmarking• Fair deal for both parties
The Contract – Liability
• Areas subject/not subject to caps• Level and structure of caps• Exclusions• Specific inclusions• Insurance• UCTA 1977 and standard terms
The Contract – Management
• Set out detailed operating framework• Frequent information exchange• Regular reports and meetings• Escalation/resolution of disputes• Monitor performance• Use service credits
Getting Out
• Termination rights• Exit management• Run-off period• Handover of assets and information• Employees (TUPE and Pensions again!)• Creation of Exit Plan
Recipe for success
• Clear objectives• Clear scope• Flexibility• Good management• Plan ahead• Cover all the bases
