Indemnities, Guarantees and Contractual Claims - Section 24

76  Section 24 of SoPC deals with the issues of indemnities, guarantees and contractual claims.  These issues are relevant to a Local Authority social care PFI project.  

77  Section 24.3 of SoPC states that Local Authorities should not offer a reciprocal indemnity to the Service Provider and this guidance should be followed for social care PFI projects.  

78  Local Authorities must also consider who should be responsible for users of the social care facilities.  In social care PFI projects currently in operation, the Local Authority is often responsible for the acts and omissions of the service users but should not be responsible for visitors or general members of the public.  This may be resisted by some bidders and needs to be taken into account when evaluating the bids.

79  Section 24.3.8 of SoPC includes suggested drafting on indemnities, which has been incorporated into the Model Contract, and includes a cap in respect of breach of statutory duty only.  

80  Paragraph 24.3.4 of SoPC advises that a Service Provider should only be permitted to cap its indemnity when it offers value for money.  As stated above, SoPC drafting gives a cap in respect of breach of statutory duty.  Bidders should not be offered other caps and Local Authorities should strongly resist any request for further caps on liability for claims to be included.

81  As noted in paragraph 24.3.7 of SoPC, the Local Authority may be faced with specific issues that require the Local Authority to offer a reciprocal indemnity.  This should be requested and other mechanisms considered.  If an indemnity is given by the Local Authority it must be limited to the specific issue.