This is the Scottish Government Health Directorates Private Finance and Capital Unit's standard form of project agreement, the intention of which is to minimise the time and costs of dealing with legal issues relating to PFI contracts. The Scottish Government Health Directorates expects the standard form project agreement to be used substantially un-amended. A certain degree of customisation of the standard form project agreement will be necessary to reflect the individual features of various schemes. However project specific justification must be given to any such customisation and must be approved by the Scottish Government Health Directorates Private Finance and Capital Unit.
Users of the standard form project agreement should be aware of the following points:
1. This project agreement is based on the equivalent document currently in use in England. In drafting that document, the Department of Health took account of deviations from the previously published version of standard form agreed on signed deals, those points raised consistently by bidders during the tender phase of projects, the views of private sector lawyers and updated guidance issued by OGC/HM Treasury. As a result, this project agreement is intended to be the definitive standard form for use in health projects in Scotland. To the extent that a point has not been addressed in a particular way (including by reference to agreements elsewhere) it is because the Scottish Government Health Directorates have taken the view that it is not appropriate for inclusion. Amendments have also been made to bring the standard form project agreement into line with Scots law and practice.
Accordingly, there may be points on which the private and public sectors have to "agree to disagree", the Scottish Government Health Directorates do not propose to enter into negotiations on these amendments. The majority of points regularly raised by the private sector have been included and it is the Scottish Government Health Directorates' hope that all parties will regard this draft as representing a genuine compromise between their respective interests. This will mean that standardisation will have a chance to bed down and this standard form project agreement can be seen as the finishing point and not the starting point for negotiations leaving the parties to focus their legal resources on project specific issues and details of the nature of the service to be delivered.
Whenever appropriate and possible this document has also attempted to ensure greater consistency of approach across the departments of the Scottish Government in connection with key commercial terms.
2. The use of this standard form project agreement is mandatory on all non-NPD schemes. Users should note that the Scottish Government Health Directorates have also published a standard form project agreement which would be relevant to NPD Schemes. That agreement is also available from the Scottish Government Health Directorates Private Finance and Capital Unit.
3. Drafting has been provided to deal with situations in which the works are carried out on a phased basis and where interim services are to be included. The drafting should be used where appropriate.
4. The Schedule to this project agreement contains a standard form independent tester contract, service provider collateral warranty and sample certificates. They are included as templates and their use is not mandatory but justification for deviations from the suggested form must be provided to the Scottish Government Health Directorates if they are not used.
5. The standard form project agreement contains a number of footnotes which identify certain key issues which Boards will need to consider when using it. This is not an exhaustive list, and the standard form project agreement will therefore need to be analysed and reviewed in detail to ensure that it is tailored to the requirements of each project and that its terms (and their impact) are clearly understood by the Board. Customisation should not however extend to Boards seeking to change the substance of commercial terms or making unnecessary drafting amendments. All changes to the standard form project agreement require the prior approval of the Scottish Government Health Directorates. Boards should include a summary of any proposed changes to the standard from project agreement in their Full Business Case.
6. The standard form project agreement will require to be amended to accommodate a bond finance solution. For information, the bond finance amendments suggested by SoPC guidance, tailored to reflect the SGHD standard form project agreement terminology, are provided in a separate schedule. Please note that HM Treasury guidance does not provide an exhaustive list of amendments. All amendments to accommodate a bond solution must be submitted to the Scottish Government Health Directorates for approval.
7. The standard form project agreement is not a replacement for independent, specialist advice and Boards must ensure that they have taken appropriate legal, financial and technical advice before using this document.
8. The standard form project agreement should be used in conjunction with the Guidance issued/adopted by the Scottish Government Health Directorates and OGC from time to time.
9. This notice and the footnotes should be removed as appropriate before finalisation of the document for execution and/or submission to bidders.
10. Should you have any questions on the draft you are asked to contact a member of the Scottish Government Health Directorates Private Finance and Capital Unit (www.show.scot.nhs.uk/pfcu).