5.4.  Third Party Contracts4

5.4.1.  Assisted by the Service Provider, the Authority shall use all reasonable efforts to arrange the novation of each Third Party Contract effective from the [Service Transfer Date].  Such novation shall be subject to the Authority, the Service Provider and the Third Party Contractors agreeing the form of a novation agreement.  The Service Provider shall assist the Authority to obtain all requisite consents and approvals and reasonable co-operation from all applicable third parties to the Third Party Contracts and all reasonable and proper costs incurred by the Service Provider in obtaining such consents shall be met by the Authority.

5.4.2.  If any novation referred to in clause 5.4.1 does not occur for any reason and until it occurs and subject to any requisite consents of third parties, the Authority shall appoint the Service Provider as its agent for the purposes of managing the Third Party Contract in question.  The Authority shall notify all relevant third parties of its appointment of the Service Provider as its agent for the purposes of the Third Party Contracts.

5.4.3.  In managing a Third Party Contract, the Service Provider shall be responsible for the performance of the Authority's obligations under each Third Party Contract and shall use reasonable endeavours to ensure that the Third Party Contractors are complying with the terms of their contracts.  The Service Provider shall be responsible for paying the Third Party Contractor in accordance with the terms of the relevant Third Party Contract.

5.4.4.  Whilst managing a Third Party Contract, the Service Provider shall do nothing which would put the Authority in breach of its obligations in the Third Party Contracts.  After the novation of a Third Party Contract, the Authority shall do nothing which would put the Service Provider in breach of its obligations in the Third Party Contract.

5.4.5.  Whilst managing a Third Party Contract, the Service Provider shall not terminate, extend or vary the Third Party Contract (or purport to do so) without the prior written approval of the Authority.

5.4.6.  Upon the termination or expiry of a Third Party Contract and for the remainder of the Service Period, the Service Provider shall have responsibility for performing and delivering the services that were comprised within the Third Party Contract and such services shall form part of the Services.

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4  Guidance: There may be a number of existing contracts between the Authority and the third party contractors relating to the services, which are being transferred to the Service Provider.  If these contracts do not expire until after the Service Provider takes over the Services, suitable arrangements will need to be put in place.  Depending on the terms in the contract in question and the stance taken by the third party contractor these arrangements may include (a) the Authority transferring the contract to the Service Provider, (b) the Service Provider managing the contract on behalf of the Authority until it expires, (c) the Authority continuing to manage the contract until it expires or (d) seeking to negotiate an early termination of the contract.  To enable appropriate decisions to be made and to facilitate the Bidders' due diligence, the Authority will need to identity the relevant contracts early on in the process.  This is not always a straightforward task, particularly for lower value contracts.