Outsourcing contracts: a practical guide
Gespeichert in:
| Beteilige Person: | |
|---|---|
| Format: | Buch |
| Sprache: | Englisch |
| Veröffentlicht: |
>Old Woking, UK
City & Financial Publ.
2006
|
| Ausgabe: | 2. ed. |
| Links: | http://bvbr.bib-bvb.de:8991/F?func=service&doc_library=BVB01&local_base=BVB01&doc_number=015459274&sequence=000002&line_number=0001&func_code=DB_RECORDS&service_type=MEDIA |
| Umfang: | XXXIV, 416 S. |
| ISBN: | 9781905121120 |
Internformat
MARC
| LEADER | 00000nam a2200000 c 4500 | ||
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| 020 | |a 9781905121120 |9 978-1-905-121-12-0 | ||
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| 040 | |a DE-604 |b ger |e rakwb | ||
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| 049 | |a DE-M382 | ||
| 100 | 1 | |a Lewis, Amanda |e Verfasser |4 aut | |
| 245 | 1 | 0 | |a Outsourcing contracts |b a practical guide |c Amanda Lewis |
| 250 | |a 2. ed. | ||
| 264 | 1 | |a >Old Woking, UK |b City & Financial Publ. |c 2006 | |
| 300 | |a XXXIV, 416 S. | ||
| 336 | |b txt |2 rdacontent | ||
| 337 | |b n |2 rdamedia | ||
| 338 | |b nc |2 rdacarrier | ||
| 856 | 4 | 2 | |m HBZ Datenaustausch |q application/pdf |u http://bvbr.bib-bvb.de:8991/F?func=service&doc_library=BVB01&local_base=BVB01&doc_number=015459274&sequence=000002&line_number=0001&func_code=DB_RECORDS&service_type=MEDIA |3 Inhaltsverzeichnis |
| 943 | 1 | |a oai:aleph.bib-bvb.de:BVB01-015459274 | |
Datensatz im Suchindex
| _version_ | 1819306820235165696 |
|---|---|
| adam_text | Contents
Foreword to the second edition xxix
Forward to the first edition xxxi
Preface xxxiii
Part One - Introduction 1
Defining Successful Outsourcing 3
1.1 Outline 3
1.2 What is outsourcing? 3
1.3 Classification of outsourcing 4
1.3.1 Sector 4
1.3.2 Nature of the service 4
1.3.3 Commercial structure 5
1.3.4 Onshore/offshore 6
1.3.5 Value 6
1.4 Purpose of this Guide 6
1.5 What does it mean to be successful? 6
1.5.1 Customer s perspective 6
1.5.2 Supplier s perspective 7
1.5.3 Advantages of understanding the other side s
perspective 7
1-6 Why customers outsource 8
1.7 Risk allocation 10
1.7.1 Business outcome 10
1.7.2 Service output 11
1.7.3 Input 11
1.7.4 Hybrid
Part Two - Preparation *3
Preparation by the Customer 15
2.1 Outline 15
2.2 Focus on business objectives 15
2.3 Business case 16
2.4 Due diligence 17
Outsourcing Contracts - A Practical Guide
2.5 Updating the business case 21
2.6 Risk register and risk management 21
2.7 Feedback from suppliers 22
3 A Competitive Procurement Process 23
3.1 Outline 23
3.2 Procurement process 23
3.2.1 Public and utilities sectors 23
3.2.2 Private sector 24
3.3 Preparing the request for proposals ( RFP ) 26
3.4 Procurement process 29
3.5 Confidentiality 31
3.6 Legal terms and conditions 32
3.6.1 Full set of draft terms and conditions 32
3.6.2 Heads of terms 32
3.6.3 Supplier s response 32
3.7 Legal protections 32
3.8 Disclosure of information in the RFP 33
4 Selecting a Preferred Supplier 35
4.1 Outline 35
4.2 Evaluation criteria 35
4.3 Recording the selection process 39
4.4 Due diligence 40
4.5 Reflecting the evaluation criteria in the contract 40
4.5.1 Warranties 40
4.5.2 Attaching documentation to the agreement 41
5 The Project Plan 43
5.1 Outline 43
5.2 Advantages of a project plan 43
5.3 Example project plan 44
5.4 Project manager 46
6 Preparation by the Supplier 47
6.1 Outline 47
6.2 Preparation of business case 47
6.3 Types of due diligence by the supplier 49
6.4 Warranties 54
6.5 Timing of due diligence 56
6.5.1 Advantages of carrying out due diligence early 56
6.5.2 Disadvantages of carrying out due diligence
early 56
6.5.3 Disadvantages of delavina due diliaence 57
Contents
6.5.4 Possible solution - customer carries out due
diligence 58
6.5.5 Possible solution - customer pays for due diligence 58
6.5.6 Possible solution - agree variation mechanism 58
Part Three - Services 59
The Service Description 61
7.1 Outline 61
7.2 Purpose of the service description 61
7.2.1 Support business objectives 62
7.2.2 Describe services 62
7.2.3 Describe services covered by fixed charge 62
7.2.4 Legal document 63
7.2.5 Tax description 64
7.3 Timing of agreement of the service description 64
7.3.1 Problems agreeing the service description 64
7.3.2 Problems documenting the services 64
7.4 Contents of the service description 65
7.5 Multinational outsourcing arrangements 68
7.6 Stages in drafting a service description 69
7.7 Supplier s duty to warn 70
7.7.1 No general obligation 70
7.7.2 Supplier to advise customer at commencement 70
7.7.3 Supplier to advise customer on continuing basis 70
Control over How the Services are Provided 73
8.1 Outline 73
8.2 Reasons for allowing the supplier control 73
8.2.1 Supplier is responsible for the services 73
8.2.2 Supplier is an expert in providing the services 73
8.2.3 Services will be more flexible 74
8.2.4 Customer benefits from fixed price 74
8.3 Reasons for allowing the customer control 74
8.4 Service requirement includes how the services are to be
provided 74
8.5 Inability to operate business 75
8.5.1 Employees 75
8.5.2 Subcontractors 76
8.5.3 Change of control 77
8.5.4 Location and relocation 77
8.6 Rights other than termination 77
8.6.1 Step in 77
8.6.2 Requirement for certain actions 79
8.7 Ensure smooth termination 79
vn
Outsourcing Contracts - A Practical Guide
8.7.1 Technology refresh 79
8.7.2 Exclusive assets 80
8.7.3 Control over nature of assets used 80
8.8 Should service descriptions be objective or subjective? 80
8.9 Should the service description include the supplier s proposal? 81
8.9.1 Inconsistent documents 81
8.9.2 Sales document 82
8.9.3 Documents serve different functions 82
8.9.4 Controlling changes to the supplier s proposal 82
9 Service i Levels or Key Performance Indicators 85
9.1 Outline 85
9.2 The need for service levels 85
9.3 Relationship with the customer s business objectives 85
9.3.1 Balanced scorecard as a strategic management
tool 86
9.3.2 Balanced scorecard in the service level regime 86
9.4 Relationship with the risk profile 86
9.4.1 Business outcome based service levels 86
9.4.2 Service output based service levels 86
9.4.3 Input based service levels 87
9.5 Examples of service levels 88
9.6 Defining the service levels 91
9.7 Customer due diligence 92
9.8 Supplier due diligence and agreement of service levels 92
9.8.1 Warranty 92
9.8.2 Due diligence 92
9.8.3 Advantages for supplier of agreeing service levels
after signature 92
9.8.4 Disadvantages for customer of agreeing service
levels after signature 93
9.8.5 A compromise 93
9.9 Transitional service levels 94
9.10 Restrictions on liability 94
9.11 Remedies for failure to meet service levels 95
10 Governance 97
10.1 Outline 97
10.2 Managing the transition 97
10.3 Communicating the customer s business objectives 98
10.4 Managing the services 98
10.4.1 Appointment of managers 98
10.4.2 Reports 99
10.5 Managing problems 100
viii
Contents
10.5.1 Incident management 100
10.5.2 Problem management 100
10.6 Managing future requirements 101
10.7 Encouraging innovation 101
10.8 Managing the customer s business objectives 101
10.8.1 Achievement of current objectives 102
10.8.2 Changed business objectives 102
10.8.3 Relationship between technical developments and
changed business objectives 102
10.8.4 Partnership board 102
10.9 Managing the customer s obligations 103
10.10 Managing risk 103
10.11 Managing integration 103
10.12 Managing value for money 103
10.13 Audit rights 103
10.13.1 Who needs the right to audit? 104
10.13.2 What audit rights will the customer need? 104
10.13.3 What would the audit involve? 105
10.13.4 Audit costs 105
10.13.5 Confidentiality 105
10.13.6 Interruption to supplier s business 105
10.13.7 Enhanced audit rights 106
10.13.8 Material breach 106
11 Dealing with Disputes 107
107
107
107
108
108
109
109
110
110
110
12 Customer Dependencies 111
12.1 Outline 1
12.2 Inclusion of customer responsibilities 111
12.3 Defining customer responsibilities 112
12.4 Obligation to notify the customer of breach 112
12.5 Service output or input based arrangement 113
12.6 The effect of non-compliance 113
IX
11.1 Outline
11.2 Internal escalation procedure
11.3 Alternative dispute resolution
11.4 Mini trial/executive tribunal
11.5 Mediation
11.6 Early neutral evaluation
11.7 Expert determination
11.8 Arbitration
11.9 Litigation
11.10 Settlement payments
Outsourcing Contracts - A Practical Guide
Part Four - Structure 115
13 Existing Equipment 117
13.1 Outline 117
13.2 Recommended approach H8
13.3 Equipment owned by the customer H8
13.3.1 Selling the equipment H8
13.3.2 Leasing or loaning the equipment 120
13.3.3 Recommended approach 120
13.4 Equipment leased by the customer 120
13.4.1 Transferring the lease 12°
13.4.2 Obtaining consent for use 122
13.4.3 Recommended approach 122
13.5 Access to equipment 122
13.6 Supply or maintenance contracts 122
13.6.1 Transferring the agreements 122
13.6.2 Retaining the agreements 123
13.7 Defining the equipment 124
14 Existing Software and Intellectual Property Rights 125
14.1 Outline 125
14.2 Intellectual property rights owned by the customer 125
14.2.1 Selling the IPR 125
14.2.2 Licensing the IPR 126
14.2.3 Taxation consequences 127
14.3 IPR licensed to the customer 127
14.3.1 Transferring the licences 127
14.3.2 Obtaining the licensor s consent 128
14.3.3 Taking out new licences 129
14.4 Problems with software licences 130
14.4.1 Ensuring all relevant parties are licensed 130
14.4.2 Breach of copyright 130
14.4.3 Due diligence 131
15 Property Aspects 133
15.1 Outline 133
15.2 Selling the premises 133
15.3 Leasing or licensing the premises 134
15.3.1 Lease 134
15.3.2 Specific licence 134
15.3.3 General licence 135
15.3.4 Landlord s consent 135
15.4 Terms of the licence or lease 135
Contents
16 Treatment of Assets During Term 137
16.1 Outline 137
16.2 Ensuring value for money 137
16.2.1 Resale of the assets
16.2.2 Use of the assets to provide services to other
customers 137
16.2.3 Approval on a case-by-case basis 138
16.2.4 General approval 138
16.2.5 Residual value 138
16.3 Use of the assets and premises 139
16.3.1 Services not adversely affected 139
16.3.2 Third-party agreements 139
16.3.3 Smooth transition on termination 139
16.4 Maintenance 139
16.4.1 Damage to the assets 139
16.4.2 Maintenance and customisation 140
16.4.3 Replacement of the obsolete assets 140
16.5 New or replacement assets 140
17 Different Supplier Models 141
17.1 Outline 141
17.2 Relationship between different suppliers 141
17.2.1 Types of relationship 141
17.2.2 Factors to take into account 142
17.3 Joint venture between supplier and customer 144
17.3.1 Structure of joint venture 144
17.3.2 Combining strengths 145
17.3.3 Termination arrangements 146
17.3.4 Cost 146
17.3.5 Business outcome based charging 146
17.3.6 Obtaining funding 146
17.3.7 Transparency of charges 146
17.3.8 Responsibility 147
17.3.9 Management time 147
17.3.10 Control 147
17.3.11 Staff 147
17.3.12 Political considerations 147
17.3.13 Conclusion 147
Part Five - Charging 149
18 The Charging Regime 151
18.1 Outline 151
18.2 Risk/reward 151
Outsourcing Contracts - A Practical Guide
18.2.1 Appropriate if supplier is responsible for business
outcomes 151
18.2.2 Not appropriate if difficult to measure or
demonstrate 152
18.2.3 Not appropriate if supplier lacks control over
outcomes 152
18.2.4 Not appropriate if payment too high 152
18.2.5 Not appropriate during final years 152
18.2.6 Appropriate with other charging mechanisms 153
18.2.7 Share of profits on exploiting assets 153
18.3 Fixed price 153
18.3.1 Appropriate for service output deals 153
18.3.2 Fixed price linked to volume adjustments 153
18.3.3 Volume adjustment procedure 154
18.3.4 Fixed price linked to other charging assumptions 154
18.3.5 Insufficient due diligence 155
18.3.6 Uncertain charges - the problem for the customer 155
18.3.7 When charging assumptions may be appropriate 155
18.4 Pay as you go 156
18.4.1 PFI payment mechanism 156
18.4.2 Non-PFI pay-as-you-go payment mechanisms 156
18.5 Cost or cost plus 156
18.5.1 When appropriate 156
18.5.2 Use with other charging mechanisms 157
18.6 Resource based 157
18.6.1 Flexibility to change resources provided 158
18.6.2 Notice of requirement for resources 158
18.6.3 Use of resources over the relevant period 158
18.6.4 Payment for resources not used 158
18.7 Expenses 159
18.8 Inflation 159
18.8.1 Fixed-price charges 159
18.8.2 Charges are indexed 159
18.8.3 Compromise between the two 159
18.8.4 The relevant index 159
18.9 Minimum charge 160
18.10 Breakdown of the charges 160
18.11 Payment profile 161
18.11.1 Profiling of the charges 161
18.11.2 Implication for termination or change 161
18.11.3 Overlap with other provisions 161
18.11.4 Payment of termination charge for supplier breach 162
18.12 Payment of the charges 162
18.12.1 Payment in advance or arrears 162
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Contents
18.12.2 Payment period 162
18.12.3 Reconciliation of charges 163
18.13 Remedies for non-payment 163
18.13.1 Interest 163
18.13.2 Suspension 163
18.13.3 Termination 163
18.14 Value added tax 163
18.14.1 Payments include or exclude VAT 163
18.14.2 Supply taxable, exempt or outside the scope of VAT 164
18.14.3 Recoverability of VAT 164
18.14.4 Requirement for VAT invoice 164
18.14.5 Timing of payment 164
18.14.6 Reverse charging 165
19 Service i Credits 167
19.1 Outline 167
19.2 Types of service-credit regimes 167
19.3 Evasion of the service-credit regime 169
19.3.1 Gaming 169
19.3.2 Failure to report 169
19.4 Complexity of service-credit regime 170
19.5 Exclusive remedy - supplier s perspective 170
19.6 Exclusive remedy - customer s perspective 170
19.6.1 Service credits may not reflect the customer s losses 171
19.6.2 Service credits capped 171
19.6.3 Service credits less than the investment required
to correct the defect 171
19.6.4 Importance of keeping records 171
19.7 Exclusive remedy - possible compromises 171
19.7.1 Exclusive remedy except for termination 172
19.7.2 Service credits apply to minor failures 172
19.8 Payment of service credits 172
19.8.1 Set off 172
19.8.2 Recover as a debt 172
19.8.3 Waiver 172
20 Ensuring Competitive Charges 173
20.1 Outline 173
20.2 Benchmarking 173
20.2.1 Factors to be taken into account 174
20.2.2 How the factors are taken into account 174
20.2.3 Benchmarking changes 174
20.2.4 Benchmarking part of the services 175
20.2.5 Benchmarking aU of the services 175
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Outsourcing Contracts - A Practical Guide
20.2.6 Frequency of benchmarking 175
20.2.7 Benchmarking agent 176
20.2.8 Number of suppliers to be compared 176
20.2.9 What findings will result in an adjustment to the
supplier s charges? 176
20.2.10 Adjustments imposed or agreed 177
20.2.11 Adjustment in the form of a credit 177
20.2.12 Remedies if adjustment not agreed 177
20.2.13 Supplier s right to benchmark 178
20.3 Open book 178
20.3.1 Different levels of open book 178
20.3.2 Confidentiality problems 178
20.3.3 Administrative effort 179
20.3.4 Open book for changes 179
20.3.5 Limitations on value of open book 179
20.4 Maximum margin 179
20.5 Most favoured customer 180
20.6 Ensuring value for money for transferred assets 180
20.7 Overlap 181
20.8 Multisourcing 181
Part Six - Change 183
21 Transformational and Developmental Outsourcing 185
21.1 Outline 185
21.2 Usina outsourrinn transactions tn imnlement chanae 185
g p
21.2.1 Transformational outsourcing 185
21.2.2 Developmental outsourcing 186
21.2.3 PFI I86
21.3 Transformational and developmental outsourcing 18*
21.3.1 Preparation of functional specification 186
21.3.2 Preparation of technical specification I86
21.3.3 Acceptance by customer of technical specification 187
21.3.4 Payment for development of technical specification 187
21.3.5 Interactive development !87
21.3.6 Implementation timetable 187
21.3.7 Acceptance tests 188
21.3.8 Remedies for failure to pass the acceptance tests 188
21.3.9 Balance sheet treatment 188
21.4 Ongoing change 189
21.5 Transition period 189
22 Change Management 191
22.1 Outline 191
22.2 Anticipating change 191
xiv
Contents
22.3 Agreeing change - the change control procedure 192
22.4 Effect of the change upon the customer s business objectives 192
22.5 Effect of the change upon the services 192
22.6 Effect of the change upon the terms of the agreement 193
22.7 Effect of the change upon the charges 193
22.8 Clear definition of changes 194
22.9 Good bargaining power 194
22.10 Control over additional expenditure 194
22.10.1 Prior notice from supplier 194
22.10.2 Approval of additional expenditure 195
22.11 Reasonable changes to the charges 195
22.11.1 Increase in the charges 195
22.11.2 Reductions in the charges 195
22.11.3 Relationship between charges for increases and
reductions 196
22.11.4 Taxation implications 197
22.12 Minor changes 197
22.13 Operational change management procedure 198
22.14 Timescales 198
22.15 Mandatory changes 198
22.15.1 Changes in the law 198
22.15.2 Changes in customer s policies 199
22.15.3 Similar services 200
22.16 Resolving disputes about changes 200
Part Seven - Termination 201
23 Term and Termination Rights 203
23.1 Outline 203
23.2 Determining an appropriate term 203
23.2.1 Fundamental changes in arrangement 203
23.2.2 Expected life of assets 204
23.2.3 Costs saving 204
23.2.4 Public sector considerations 205
23.3 Termination grounds 205
23.3.1 Importance of agreeing appropriate termination
rights 205
23.3.2 Insolvency 205
23.3.3 Breach 205
23.3.4 Force majeure 207
23.3.5 Corruption 207
23.3.6 Fraud related to the provision of the services 208
23.3.7 Other fraud 208
23.3.8 Change of control 208
23.3.9 Change of organisation or management 209
XV
Outsourting Contracts - A Practical Guide
23.3.10 Loss of licence or approval 210
23.3.11 Termination for convenience 210
23.3.12 Failure to agree 210
23.3.13 Termination under the common law 211
23.4 Other remedies 211
23.5 Time limits 211
23.6 Termination in part 2*
23.6.1 Division of services into service elements 2*2
23.6.2 Severability of the services 212
23.6.3 Severability of the charges 213
23.6.4 Avoiding abuse 213
23.6.5 Option to terminate all services 213
23.7 Termination of multinational arrangements - right to
terminate services to the group 213
24 The Termination Decision 215
24.1 Outline 215
24.2 More due diligence 215
24.3 Information and documentation 2^
25 Implications of Termination 221
25.1 Outline 221
25.2 Consideration of termination before signature of the
contract 221
25.3 Information and documentation 2Z1
25.3.1 Information and documentation required 221
25.3.2 When required 222
25.3.3 Who will need the information and documentation 222
25.3.4 Cooperation with due diligence 223
25.3.5 Supplier s concerns 223
25.4 Data 223
25.4.1 Ownership of the data 223
25.4.2 Licence for software holding the data 224
25.4.3 Format of data 224
25.5 Assets 224
25.6 Assets belonging to the customer 2Z4
25.7 Hardware and other equipment 225
25.7.1 Customer s dependency upon the equipment 225
25.7.2 Deciding which equipment will transfer -
exclusive or non-exclusive equipment 225
25.7.3 Defining the equipment to be transferred 225
25.7.4 Sale price of the equipment owned by the
supplier 226
25.7.5 Transfer of leased equipment 226
XV)
Contents
25.7.6 Title in the equipment 227
25.7.7 Condition of the equipment 227
25.7.8 Option or obligation to purchase the equipment 227
25.8 Third-party software licences 228
25.8.1 Return of customer s licences 228
25.8.2 New licences 228
25.9 Supplier s bespoke software 228
25.9.1 Software developed as part of the services 228
25.9.2 Other software 229
25.9.3 Escrow 230
25.10 Support, maintenance and other contracts 230
25.11 People issues 230
25.12 General assistance 230
25.13 Termination management 231
25.14 Termination charges 231
25.14.1 Supplier s costs 231
25.14.2 Payment for termination assistance 232
25.14.3 Agreement of termination charge in advance 232
25.14.4 Retention of charges 233
25.14.5 Taxation treatment of termination payments 233
25.15 Termination in part and step in 233
Part Eight - Insolvency and People Issues 235
26 Insolvency Issues 237
26.1 Outline 237
26.2 Due diligence before the agreement is signed 237
26.2.1 Parent company guarantee 237
26.2.2 Performance bond 238
26.2.3 Payment terms 238
26.2.4 Liens 238
26.2.5 Source code escrow 238
26.3 Ongoing due diligence 238
26.3.1 Trigger events 239
26.3.2 Additional information 239
26.3.3 Additional guarantees 239
26.3.4 Escrow account 239
26.4 Assignment or novation of the contract 240
26.5 Termination rights 240
26.6 Direct agreement with subcontractors or hinders 241
26.7 Transactions which can be set aside 241
27 People Issues 243
27.1 Outline 243
27.2 ADDlication of TUPE 243
XV11
Outsourcing Contracts - A Practical Guide
27.2.1 AimofTUPE 243
27.2.2 Identifiable economic entity 244
27.2.3 Service provision change 244
27.2.4 The sale of shares 244
27.2.5 Changes in application of TUPE 244
27.3 Legal effect of TUPE applying 245
27.3.1 Transfer of contracts of employment 245
27.3.2 Transfer rights, powers, duties and liabilities 245
27.3.3 Employees can object 245
27.3.4 Dismissals automatically unfair 245
27.3.5 Constructive dismissal 246
27.3.6 Union recognition agreements transfer 246
27.4 Duty to consult 246
27.4.1 Obligations of existing employer 247
27.4.2 Obligations of new employer 247
27.4.3 Timing 247
27.4.4 Remedies 247
27.5 Transfer of staff from customer to supplier 247
27.5.1 Details of employees 248
27.5.2 Indemnity for precommencement liabilities 248
27.5.3 Indemnity for employees not listed 248
27.5.4 Indemnities for constructive dismissal 248
27.5.5 Failure to consult 248
27.5.6 Mutual indemnities 249
27.5.7 Indemnities in favour of new supplier 249
27.6 Secondary TUPE 249
27.6.1 Effect of TUPE applying 249
27.6.2 Protections on termination 250
27.6.3 Indemnities 250
27.6.4 Details of employees 250
27.6.5 Indemnity for pre-commencement liabilities 251
27.6.6 Indemnity for employees not listed 251
27.6.7 Transfer from subcontractors 251
27.6.8 Failure to consult 251
27.6.9 Grant of the indemnities 251
27.7 Soft effects of TUPE 252
27.8 Secondment 252
27.9 Competence of transferring staff 253
27.10 Adequacy of transferring staff 254
27.11 Managing transferring staff 254
27.11.1 Varying terms and conditions on transfer 254
27.11.2 Varying changes unrelated to transfer 255
27.11.3 Dismissal of employees who refuse to agree
changes 255
xvni
Contents
27.11.4 Unilateral variation of the changes 255
27.11.5 Two tier workforce 256
27.12 Termination of the outsourcing agreement 256
27.12.1 Transfer to the customer 256
27.12.2 Transfer to incoming supplier 256
27.12.3 Indemnities 256
27.12.4 Effect of the economic climate on termination 256
27.12.5 Changes in the law of TUPE 257
27.13 Redundancies 257
27.13.1 When redundancies may occur 257
27.13.2 Legal background on redundancies 257
27.13.3 Redundancy costs 258
27.14 Pensions 258
27.14.1 Transfer of pension rights under TUPE 258
27.14.2 The Pensions Act 2004 and the Transfer of
Employment (Pension Protection) Regulations
2005 259
27.14.3 The situation in the public sector 259
Part Nine - Liability 261
28 Liability and Risk 263
28.1 Outline 263
28.2 Liability of supplier for failure - force majeure 263
28.3 Definition of force majeure 263
28.3.1 Specific definition 264
28.3.2 General definition 264
28.4 Conditions that the supplier must satisfy 264
28.5 Effect upon the charges 265
28.5.1 No payment 265
28.5.2 Payment of all of the charges 265
28.5.3 Part payment 266
28.5.4 Payment or non-payment depending upon the
force majeure event 266
28.6 Termination rights 266
28.6.1 Customer s right to terminate 266
28.6.2 Supplier s right to terminate 266
28.7 Force majeure and service continuity 267
28.7.1 Importance of service continuity 267
28.7.2 Exclusive disaster recovery services 267
28.7.3 Shared disaster recovery services 267
28.7.4 Reliance upon force majeure 267
28.7.5 Customer retains business risk 267
28.8 Liability for subcontractors and third-party suppliers 268
P8-8.1 Snnnlipr * third-nartv cunnliere 268
XIX
Outsourcing Contracts - A Practical Guide
27.3
27.4
27.5
27.6
27.7
27.8
27.9
27.10
27.11
27.2.1 AimofTUPE 243
27.2.2 Identifiable economic entity 244
27.2.3 Service provision change 244
27.2.4 The sale of shares 244
27.2.5 Changes in application of TUPE 244
Legal effect of TUPE applying 245
27.3.1 Transfer of contracts of employment 245
27.3.2 Transfer rights, powers, duties and liabilities 245
27.3.3 Employees can object 245
27.3.4 Dismissals automatically unfair 245
27.3.5 Constructive dismissal 246
27.3.6 Union recognition agreements transfer 246
Duty to consult 246
27.4.1 Obligations of existing employer 247
27.4.2 Obligations of new employer 247
27.4.3 Timing 247
27.4.4 Remedies 247
Transfer of staff from customer to supplier 247
27.5.1 Details of employees 248
27.5.2 Indemnity for precommencement liabilities 248
27.5.3 Indemnity for employees not listed 248
27.5.4 Indemnities for constructive dismissal 248
27.5.5 Failure to consult 248
27.5.6 Mutual indemnities 249
27.5.7 Indemnities in favour of new supplier 249
Secondary TUPE 249
27.6.1 Effect of TUPE applying 249
27.6.2 Protections on termination 250
27.6.3 Indemnities 250
27.6.4 Details of employees 250
27.6.5 Indemnity for pre-commencement liabilities 251
27.6.6 Indemnity for employees not listed 251
27.6.7 Transfer from subcontractors 251
27.6.8 Failure to consult 251
27.6.9 Grant of the indemnities 251
Soft effects of TUPE 252
Secondment 252
Competence of transferring staff 253
Adequacy of transferring staff 254
Managing transferring staff 254
27.11.1 Varying terms and conditions on transfer 254
27.11.2 Varying changes unrelated to transfer 255
27.11.3 Dismissal of employees who refuse to agree
changes 255
xvm
Contents
27.11.4 Unilateral variation of the changes 255
27.11.5 Two tier workforce 256
27.12 Termination of the outsourcing agreement 256
27.12.1 Transfer to the customer 256
27.12.2 Transfer to incoming supplier 256
27.12.3 Indemnities 256
27.12.4 Effect of the economic climate on termination 256
27.12.5 Changes in the law of TUPE 257
27.13 Redundancies 257
27.13.1 When redundancies may occur 257
27.13.2 Legal background on redundancies 257
27.13.3 Redundancy costs 258
27.14 Pensions 258
27.14.1 Transfer of pension rights under TUPE 258
27.14.2 The Pensions Act 2004 and the Transfer of
Employment (Pension Protection) Regulations
2005 259
27.14.3 The situation in the public sector 259
Part Nine - Liability 261
28 Liability and Risk 263
28.1 Outline 263
28.2 Liability of supplier for failure - force majeure 263
28.3 Definition of force majeure 263
28.3.1 Specific definition 264
28.3.2 General definition 264
28.4 Conditions that the supplier must satisfy 264
28.5 Effect upon the charges 265
28.5.1 No payment 265
28.5.2 Payment of all of the charges 265
28.5.3 Part payment 266
28.5.4 Payment or non-payment depending upon the
force majeure event 266
28.6 Termination rights 266
28.6.1 Customer s right to terminate 266
28.6.2 Supplier s right to terminate 266
28.7 Force majeure and service continuity 267
28.7.1 Importance of service continuity 267
28.7.2 Exclusive disaster recovery services 267
28.7.3 Shared disaster recovery services 267
28.7.4 Reliance upon force majeure 267
28.7.5 Customer retains business risk 267
28.8 Liability for subcontractors and third-party suppliers 268
28.8.1 SuDDlier s third-oartv suDDliers 268
XIX
Outsourcing Contracts - A Practical Guide
28.8.2 Customer s third-party suppliers - before novation
to the supplier z68
28.8.3 Customer s third-party suppliers - after novation
to the supplier 268
28.9 Liability of supplier for failure - PFI approach 269
28.9.1 Principle behind PFI contracts z69
28.9.2 Definition of force majeure Z70
28.9.3 Conditions that the supplier must satisfy Z70
28.9.4 Implications of force majeure Z71
28.9.5 Termination rights Z71
28.10 Liability of the customer for failure Z7Z
28.10.1 Relief from delaying payment z72
28.10.2 Customer s other obligations Z7Z
28.10.3 Payment of compensation by customer Z7Z
28.11 Supplier s liability for damages 2
28.11.1 Measure of loss 273
28.11.2 Expectation damages Z73
28.11.3 Reliance damages z74
28.11.4 Which measure of loss to claim 275
28.11.5 Limitations of recovery - remoteness of loss 275
28.11.6 Liability for damages in PFI contracts z76
28.12 Supplier s liability under indemnities Z77
28.12.1 Legal effect of indemnities 277
28.12.2 IPR indemnity from the supplier 277
28.12.3 IPR indemnity from the customer 278
28.12.4 Other indemnities 278
28.13 Liability to third parties z78
28.13.1 Members of the customer s group 278
28.13.2 Incoming contractor Z79
28.13.3 Employees 279
28.13.4 Customer s clients 279
28.13.5 Contracts (Rights of Third Parties) Act 1999 Z79
29 Limitations of Liability 281
29.1 Outline 281
29.2 Financial caps 281
29.3 Relevant factors in deciding the cap 281
29.4 Structure of the cap 282
29.4.1 One limit 282
29.4.2 Several limits 282
29.4.3 Unlimited 283
29.4.4 PFI approach 283
29.5 Enforceability of caps 284
29.5.1 UCTA1977 284
XX
Contents
29.5.2 St Albans City and District Council v ICL 287
29.5.3 Watford Electronics v Sanderson 287
29.5.4 Horace Holman Group v Sherwood International 288
29.5.5 SAM Business Systems Ltd v Hedley Co 288
29.5.6 Frans Maas v Samsung 288
29.5.7 Changes in the law 289
29.5.8 Documenting the limitation of liability 289
29.6 Exclusion by the supplier of consequential loss and other
specified losses 290
29.6.1 Exclusion of consequential loss 290
29.6.2 Definition of consequential loss 291
29.6.3 Clarification of losses claimable 291
29.7 Limitation of liability by the customer 292
29.8 Insurance 292
30 Confidentiality, Data Protection and Security 295
30.1 Outline 295
30.2 Confidentiality 295
30.2.1 During the procurement stage 295
30.2.2 During the term 295
30.2.3 On termination 296
30.3 Publicity 296
30.4 Data protection 296
30.4.1 Data controller s obligations 296
30.4.2 Data processor s obligations 297
30.4.3 Specific guidance 298
30.5 Security 298
30.6 Loss of data 300
Part Ten - Regulations 301
31 Financial Services Sector 303
31.1 Outline 303
31.2 FSA s statutory functions 303
31.3 Outsourcing as an operational risk 304
31.4 Definition of outsourcing 304
31.5 General principles and regulations in the FSA Handbook 304
31.5.1 Background to specific regulation on outsourcing 304
31.5.2 High level principle 3 - organisation of affairs
and risk management 305
31.5.3 Systems and controls 305
31.5.4 Internal controls 305
31.5.5 Risk management and associated systems and
controls 306
31.5.6 Responsibility for regulatory obligations 306
xxi
Outsourcing Contracts - A Practical Guide
31.5.7 Business continuity 306
31.5.8 Record keeping 306
31.5.9 Notification 307
31.5.10 Audit arrangements 308
31.5.11 Outsourcing of a controlled function 308
31.5.12 Segregation of duties 309
31.5.13 Specific regulation for banks and building societies 309
31.6 Outsourcing by insurance companies - SYSC 3A 309
31.6.1 Application 309
31.6.2 Form of guidance 309
31.6.3 Change of policy in 2004 310
31.6.4 Background to SYSC 3A 310
31.6.5 Key elements of SYSC 3A 311
31.6.6 CP 06/09 318
31.7 Outsourcing by banks and investment firms - MiFID 318
31.7.1 Application 318
31.7.2 Levels of legislation 318
31.7.3 Implementation timetable 319
31.7.4 Key elements of the level 1 Directive 319
31.7.5 Other relevant requirements 32^
31.7.6 Key elements of the draft level 2 Directive 321
31.7.7 Other relevant requirements 324
31.8 Outsourcing by banks and investment firms - Capital
Requirements Directive 326
31.8.1 Introduction to the CRD 326
31.8.2 Application 326
31.8.3 Robust governance arrangements 326
31.8.4 Business continuity 326
31.8.5 Provision of regulatory capital 326
31.9 CP 06/09: Organisational Systems And Controls (May 2006)
(CP 06/09) 327
31.9.1 Objective 32?
31.9.2 Consultation timescale 328
31.9.3 Form of guidance and rules 328
31.9.4 General approach - no super-equivalence 328
31.9.5 Exception to no super-equivalence - common
platform 328
31.9.6 Governance arrangements and adequate internal
control mechanisms 329
31.9.7 Non critical or unimportant operational functions 329
31.9.8 Definition of critical or important operational
functions 330
31.9.9 Omissions 330
31.9.10 Implementation timescale 330
xxii
Contents
31.9.11 Guidance on application 331
31.10 International guidance 331
31.11 Sector specific guidance 331
31.12 Relationship between the different guidance 332
31.13 Comments on the FSA guidance 332
31.13.1 Negotiation lever 332
31.13.2 Additional burden 332
31.13.3 Contentious 333
31.13.4 Not exhaustive 333
31.14 Lessons for customers not regulated by the FSA 333
32 Public Sector Outsourcing 335
32.1 Outline 335
32.2 Public Procurement Regulations 335
32.2.1 Application of the directives - countries 335
32.2.2 Implementation of the directives 336
32.2.3 Main changes in the directives 336
32.3 When do the Public Procurement Regulations apply? 336
32.4 The award procedures 338
32.4.1 Open procedure 338
32.4.2 Restricted procedure 338
32.4.3 Competitive dialogue procedure 339
32.4.4 Negotiated procedure 339
32.4.5 Competitive negotiated procedure 339
32.4.6 Non-competitive negotiated procedure 339
32.5 The procurement process 340
32.5.1 Advertising the project - the OJEU notice 340
32.5.2 Pre-qualification 341
32.5.3 Tender stage 341
32.5.4 Framework agreements 341
32.5.5 Electronic procurement 342
32.5.6 Alcatel notice and standstill period 342
32.5.7 Contract award 342
32.8 Introduction to PFI 342
32.8.1 History 342
32.8.2 Guidance 343
32.8.3 Contract structure 343
32.8.4 Finance 344
32.8.5 Service description 344
32.8.6 Commencement of payment 344
32.8.7 Financial deductions 344
32.8.8 Relief events and compensation events 345
32.8.9 Adjustments to the charges 345
*? « 1f) Term 345
xxm
Outsourcing Contracts - A Practical Guide
32.8.11 Termination 345
32.8.12 Termination compensation 345
32.8.13 Change in law 346
32.8.14 Insurance 346
32.9 PFI: Meeting the Investment Challenge 346
32.10 PFI: strengthening long-term partnerships 347
32.11 Decision map guidance for procurement 348
32.12 Model terms and conditions 348
32.13 Intellect s contracting best practice guidance 349
32.14 Other laws and guidance 349
33 Utilities Sector 351
33.1 Outline 351
33.2 Introduction 351
33.3 When do the Utilities Regulations apply? 351
33.4 The award procedures 3^
33.4.1 Open procedure 353
33.4.2 Restricted procedure 354
33.4.3 Negotiated procedure 3^
33.4.4 Competitive negotiated procedure 3! 4
33.4.5 Non-competitive negotiated procedure 354
33.5 The procurement process 3^
33.5.1 Advertising the project - the OJEU notice 355
33.5.2 Pre-qualification 355
33.5.3 Tender stage 355
33.5.4 Qualification systems and framework agreements 356
33.5.5 Electronic procurement 356
33.5.6 Alcatel notice and standstill period 357
33.5.7 Contract award 357
33.6 Other issues relating to outsourcing by utilities 357
33.6.1 Outsourcing transactions with associated companies 357
33.6.2 Term of outsourcing agreements 357
33.6.3 Audit arrangement 357
Part Eleven - Offshore Outsourcing 359
34 Offshore Outsourcing 361
34.1 Outline 361
34.2 Growth in offshore outsourcing 361
34.2.1 Services offshored 361
34.2.2 Offshore destinations 362
34.3 Political implications of offshore outsourcing 362
34.3.1 US policy 363
34.3.2 UK policy 363
XXIV
Contents
34.3.3 Trade unions in the UK 363
34.3.4 Professional bodies and trade associations in the UK 363
34.4 Preparation by the customer 363
34.5 Structuring the arrangement 368
34.6 The services 371
34.7 How the services are provided 372
34.8 Service levels and service credits 372
34.9 Service management 372
34.10 Charges 373
34.11 Termination 373
34.12 FSA regulations 374
34.13 FSA - offshore operations - industry feedback 374
34.13.1 Background to the report 374
34.13.2 Staff attrition rate 375
34.13.3 Business continuity 375
34.13.4 Security 375
34.13.5 Quality 375
34.13.6 Conclusion of the report 375
34.14 Data protection 376
34.14.1 No transfer without adequate protection 376
34.14.2 Specific exceptions to the restriction 376
34.14.3 Country recognised as providing adequate protection 377
34.14.4 Contractual protections 377
34.15 TUPE 378
34.16 Publicity 379
Part Twelve - Conclusion 381
35 Key Success Factors 383
35.1 Importance of understanding commercial and legal issues 383
35.2 Kev commercial and leaal success factors 383
Index 387
xxv
|
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| spellingShingle | Lewis, Amanda Outsourcing contracts a practical guide |
| title | Outsourcing contracts a practical guide |
| title_auth | Outsourcing contracts a practical guide |
| title_exact_search | Outsourcing contracts a practical guide |
| title_full | Outsourcing contracts a practical guide Amanda Lewis |
| title_fullStr | Outsourcing contracts a practical guide Amanda Lewis |
| title_full_unstemmed | Outsourcing contracts a practical guide Amanda Lewis |
| title_short | Outsourcing contracts |
| title_sort | outsourcing contracts a practical guide |
| title_sub | a practical guide |
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