Katrina Day and Lee Clarke summarise key recommendations from the Government on contracting and how they might impact on housing providers' relationships with contractors.
The Cabinet Office has issued a new guidance note this month with recommendations for behaviour in performing and enforcing contracts which have been impacted by COVID-19. This applies to all individuals, business and public authorities.
Why has this guidance note been issued?
The guidance encourages all contracting parties to work together to maintain contract performance or, if a contract cannot continue at this time, preserve that contract so it is ready to go once the COVID-19 emergency situation is over.
The key aims are to support the protection of health, jobs and the economy; protecting businesses and supply chains.
What is it asking us to do?
The guidance asks parties to act fairly and responsibly. This includes being reasonable and proportionate about contractual issues and acting in the spirit of co-operation. The guidance lists a number of areas where fair and responsible behaviour is encouraged including:
- When looking at relief for impaired performance
- Considering extensions of time
- When dealing with Force Majeure
- Claims for damages
- Claiming breach of contract.
Does this mean I have to ignore contractual provisions?
No, the guidance is clear that it does not override specific contractual provisions. You are still entitled to exercise your contractual rights and a contractor cannot therefore use the guidance as a means to justify poor performance.
The guidance is however trying to prevent opportunistic behaviour and tries to encourage parties to instead try and resolve contractual issues responsibly. This might include looking at negotiation or Alternative Dispute Resolution rather than recourse to litigation, for example.
This is the sort of behaviour we have already seen displayed in the sector. Housing providers working with their contractors to agree adjustments to their service delivery during the lock-down period, agreeing changes to delivery timescales, etc. in order to keep contracts going during the crisis, working together for the benefit of both parties and service users.
Is this a requirement?
It is not a requirement to follow the guidance and the note makes it clear that this does not override specific contractual provisions or legal requirements. It also does not override statutory guidance such as the Procurement Practice Notes (PPN) previously issued in relation to the impact of COVID-19 on contracting and procurement practices. Read more from us on procurement guidance, our top tips for considering your procurement options and the PPN on supplier relief.
The Cabinet Office is keeping this issue under review and there is scope to formalise the guidance further, but this is not proposed at this time.
We do not expect to see any material changes in behaviour as a result of this guidance. Housing providers should keep this guidance in mind when looking at contractor issues, as it may be raised as a moral argument by contractors seeking relief under contracts and there is the potential for PR issues for failure to act fairly and responsibly.
If you do agree any changes to a contract as a result of the impact of COVID-19, we recommend recording this in writing, making it clear how long these changes apply for, to avoid disputes arising at a later stage and as the lock-down measures begin to relax.