38. BENCHMARKING AND MARKET TESTING
38.1. The Service Provider shall undertake all Benchmarking Exercises at its own cost in relation to the Benchmarked Services in accordance with the procedure and on the dates identified in this clause 38 (Benchmarking and Market Testing) and the Benchmarking Plan.
38.2. Each Benchmarking Exercise will be undertaken to ascertain the relative quality and competitiveness of the Benchmarked Services in question. The Benchmarking Exercise will be undertaken in good faith by the Service Provider and on the basis of an objective and like for like comparison by comparing the standards and prices of the Benchmarked Services in question and the costs of providing them with the standards and prices of equivalent services and the costs of providing them provided by reputable commercial organisations and public bodies possessing an appropriate degree of skill, resources, reputation and financial standing relative to the provision of the Benchmarked Services in question (the "Benchmark Organisations").
38.3. All Benchmarking Exercises shall be conducted on an open book basis and shall be fully transparent (for example there shall be no locked spreadsheets). The Service Provider shall maintain suitably detailed records of all aspects of the Benchmarking Exercise in accordance with clause 36.2.4 (Service Provider's Records and Audit).
38.4. Without prejudice to the generality of clause 38.3 the Service Provider shall disclose all data used and proposed to be used in any Benchmarking Exercise and provide all such assistance and other documentary evidence as may be required by the Authority to enable the Authority to:
38.4.1. confirm the reliability of such data and verify its appropriateness as an accurate comparator for the Services;
38.4.2. confirm the suitability of the Benchmark Organisations as appropriate comparator organisations; and
38.4.3. interrogate the Benchmarking Exercise.48
38.5. The Service Provider shall prepare and deliver to the Authority no later than [ten (10)] months before the first Benchmarking Date a plan (the "Benchmarking Plan") for approval by the Authority setting out (without limitation):
38.5.1. the names of the proposed Benchmark Organisations;
38.5.2. the nature of the costs, standards and specifics that will be sought from the Benchmark Organisations in order to carry out the Benchmarking Exercise;
38.5.3. the method by which the costs from the Benchmark Organisations shall be determined (the "Benchmark Costs") and the extent to which factors relating to risks inherent in a change of Sub-Contractor (such as mobilisation costs) will be taken into account;
38.5.4. the method by which the costs of the Benchmarked Services shall be determined (the "Baseline Costs") including how the Service Provider will ensure that the Baseline Costs only include those associated with the Benchmarked Services and that the Baseline Costs do not include the Service Provider's own costs;
38.5.5. the reporting and communications procedures to be put in place for keeping the Authority updated on the progress of the Benchmarking Exercise; and
38.5.6. the roles and responsibilities (and resourcing implications) of the parties in implementing the Benchmarking Plan;
38.5.7. the method (including pro forma document) by which the Baseline Costs and Benchmark Costs shall be compared and the results of the Benchmarking Exercise shall be reported to the Authority (the "Benchmarking Report"); and
38.5.8. the deadline by which the Service Provider shall deliver the Benchmarking Report to the Authority.
38.6. The Benchmarking Plan shall include appropriate deadlines and milestones and allow sufficient time for the parties to discuss, clarify and agree the Benchmarking Plan and Benchmarking Exercise and for the Authority to agree the Benchmarking Report.
38.7. The Service Provider shall implement the Benchmarking Plan once agreed with the Authority, and deliver to the Authority within the timescales set out in the Benchmarking Plan, on-going progress reports and the Benchmarking Report (in each case supported by all relevant supporting documentation as required by clause 38.4).
38.8. The Services shall be benchmarked [individually] [as a whole] [in groups as follows: [ ]].
38.9. If the Baseline Costs are more than the Benchmark Costs:-
38.9.1. the Service Provider shall provide a reasonable explanation as to why this is the case; and
38.9.2. the Payment shall be reduced to reflect the sharing in the benefit of the costs reduction in the ratio of [ ] per cent to the Authority and [ ] per cent to the Service Provider.
38.10. After completing and agreeing the first Benchmarking Exercise, the Service Provider shall prepare and provide to the Authority a draft 'lessons learnt document' to be agreed between the parties for use in the [second] Benchmarking Exercise, such document to provide details of:
38.10.1. the Benchmarking Exercise procedure;
38.10.2. the outcome of the Benchmarking Exercise;
38.10.3. what worked well;
38.10.4. problems encountered; and
38.10.5. recommendations to improve the process.
38.11. If within [thirty (30)] Business Days of the Authority receiving the Benchmarking Report the parties cannot agree on any price adjustment or the Authority is not satisfied that there has been a robust Benchmarking Exercise, the Benchmark Services (or any one or more of them) shall following notification by the Authority of the same, be subject to Market Testing as set out in this clause 38 (Benchmarking and Market Testing).
38.12. Following notification by the Authority pursuant to clause 38.11 that there shall be a Market Testing, the parties shall agree the Market Testing Date, such date to be no more than [eight (8)] months from the date of such notification and shall meet together as often as may be necessary in respect of all Market Tested Services to be Market Tested on that date to:
38.12.1. to consider any changes required to the Market Tested Services;
38.12.2. to discuss and seek to agree the appropriate manner of advertising the Market Tested Services and identifying the prospective tenderers;
38.12.3. to discuss and seek to agree the tender requirements which shall be in sufficient detail to allow the Service Provider to determine the preferred tenderer and shall include, without limitation:
a) a statement of the tender validity period;
b) details of the tender evaluation criteria, which shall be reflected in a tender evaluation methodology;
c) the information related to employees and their conditions of employment;
d) the information tenderers are required to provide
e) the terms and conditions under which the Market Tested Services will be contracted;
f) how many tenders are required for the Market Test to be valid;
g) whether or not an independent tender manager needs to be appointed by the Service Provider to manage the tender process.
38.13. [49Unless the Service Provider can demonstrate to the Authority that it will optimise its ability to obtain best value for money for the Authority if Market Tested Services are tendered separately or in particular groupings, or if any Market Tested Service is divided into separate parts, the grouping of any Market Tested Services shall be left to the discretion of tenderers on the basis that the tender requirements shall specify that:
38.13.1. tenderers may submit tenders for all or any of the Market Tested Services; and
38.13.2. where a tenderer submits a tender for a group or groups of Market Tested Services, it may be required to provide all or any of the services in such group or groups and shall, in any event, provide separate pricing for each service in such group or groups.]
38.14. Notwithstanding any failure of the parties to agree any matter referred to in clause 38.12.3, the Service Provider shall prepare and deliver to the Authority no later than [three (3)] months before the relevant Market Testing Date a draft Proposal for the Market Testing describing in detail the Service Provider's proposals for the Market Testing of each Market Tested Service (the "Draft Proposal"). The Draft Proposal shall describe all of the matters referred to in, and agreed pursuant to, clause 38.12.3 and the form of contract which the preferred tenderer will be required to accept.
38.15. The Service Provider shall procure that, in respect of any Market Testing, the existing it conducts its business and provides information for inclusion in the tender requirements to allow:
38.15.1. the consequences of TUPE compliance on any change of Sub-Contractor to be assessed; and
38.15.2. so far as practicable, the cost of such change to the Authority to be minimised.
38.16. If the Service Provider and the Authority are unable to agree on any matter relating to the Draft Proposal within twenty (20) Business Days of the Authority's receipt of the Draft Proposal any party may refer the matter for resolution in accordance the Dispute Resolution Procedure.
38.17. The Service Provider shall be responsible for compiling the list of prospective tenderers and selecting the tenderers from the list of prospective tenders on the basis of their:
38.17.1. financial standing; and
38.17.2. technical, managerial and other relevant experience and ability (taking into account any relevant customer references).
38.18. The Authority shall have the right to review the list of prospective tenderers. The Service Provider shall provide the Authority with an explanation of the reasons behind the non-inclusion on the list of prospective tenderers of any person identified as suitably by the Authority, if so required by the Authority.
38.19. The Authority shall have a right to prevent the selection of any person as a prospective tenderer if it reasonably believes such person does not (or could not reasonably be considered to) comply with any of the criteria referred to in clause 38.17 above.
38.20. A person shall not be disqualified from selection as a tenderer merely by virtue of the existence of the contractual relationship with any other member of the Project, subject to:
a) compliance with all Laws; and
b) the establishment of, and compliance with, arrangements reasonably satisfactory to the Authority to avoid any conflict of interest or unfair advantage. Failure by the Service Provider to comply with any such arrangements shall automatically lead to the disqualification of the person in question and the provisions of clause 38.35 shall apply
38.21. The Authority shall, in its absolute discretion, have the right to prevent the selection of any person as a tenderer on the grounds that the prospective tenderer has committed a Prohibited Act.
38.22. The Service Provider shall (after consultation with the Authority) provide any prospective tenderer which is unsuccessful in being selected as a tenderer with an appropriate explanation of the reasons behind its non-selection, if so requested by the person in question.
38.23. Where, in respect of any Market Tested Service or group of Market Tested Services or any part of any Market Tested Service, there is only one prospective tenderer (or the Service Provider intends to select only one of the prospective tenderers as tenderer), the Service Provider shall not be entitled to proceed with the Market Testing of the same without the prior written consent of the Authority.
38.24. The Service Provider shall be responsible for managing and co-ordinating the Market Testing in an efficient and fair manner in accordance with the Market Testing Proposal (and in particular, but without limitation, the tender requirements) and shall procure that only tenderers selected in accordance with this clause 38 (Benchmarking and Market Testing) are invited to submit tenders. The Service Provider shall ensure that the principle of equality of information to, and treatment of, tenderers shall apply at all times.
38.25. The Service Provider shall send all necessary documents and information to tenderers (including, without limitation, the tender requirements) in a timely manner.
38.26. Tenders must be assessed for compliance with the tender requirements.
38.27. The Service Provider shall bear all of its own costs, fees and expenses associated with Market Testing.
38.28. Following expiry of the tender validity period, the Service Provider shall (subject to the provisions of this clause 38 (Benchmarking and Market Testing)) determine which compliant tenderer (the "Preferred Tenderer") in respect of any Market Tested Service, group of Market Tested Services or individual part of any Market Tested Service, represents (as the case may be) the best value for money for the Authority.
38.29. Immediately upon making the determination referred to in clause 38.28 the Service Provider shall supply to the Authority a copy of its tender evaluation together with sufficient supporting information concerning the tender evaluation to enable the Authority to analyse and understand the basis for the Service Provider's determination.
38.30. If the Authority does not agree with the Service Provider's determination in the case of any compliant tender, the Authority may, within fifteen (15) Business Days of being provided with the tender evaluation pursuant to clause 38.29 above, dispute such determination and, if the parties do not resolve such dispute within a further fifteen (15) Business Days, the dispute shall be dealt with in accordance with the Dispute Resolution Procedure.
38.31. The Service Provider shall procure that all preferred tenderers (as agreed or determined in accordance with clause 38.30 above) are appointed to provide the relevant Market Tested Service or group of Market Tested Services or individual parts of any Market Tested Service (as the case may be) on the basis set out in their compliant tender prior to the relevant Market Testing Date.
38.32. Without prejudice to clause 38.23, where the Service Provider believes that only one compliant tender is likely to be submitted, or where only one compliant tender is submitted, the Service Provider shall not be entitled to proceed further with the Market Testing or (as the case may be) to appoint a Preferred Tenderer without the prior written approval of the Authority.
38.33. The Service Provider shall (after consideration with the Authority) provide any tenderer which is unsuccessful in being selected as a Preferred Tenderer with an appropriate explanation of the reasons behind its non-selection, if so requested by the party in question.
38.34. Without prejudice to any of the Service Provider's general obligations under this Agreement, including without limitation to the other provisions of this clause 38 (Benchmarking and Market Testing), the Service Provider shall:
38.34.1. maintain a full record and audit trail of each Market Testing and make all such records (including details of all tenders received) available for inspection by the Authority and its authorised representatives (including, without limitation, the National Audit Office) on reasonable notice from the Authority;
38.34.2. provide to the Authority, in a comprehensive and accurate manner, all information necessary to enable the Authority to review and assess all matters relating to the Market Testing;
38.34.3. certify to the Authority within twenty (20) Business Days of expiry of the tender validity period that:
a) neither it, nor, to the best of its knowledge and belief, any Service Provider Related Party intends to or will obtain any direct or indirect financial or other benefit from such appointment (other than the benefit of the contract itself);
b) neither it, nor, to the best of its knowledge and belief, any Service Provider Related Party has colluded in connection with the Market Testing; and
c) there has been full compliance with all requirements relating to ensuring equality of information provided to, and treatment of, tenderers.
38.35. The Service Provider shall indemnify and keep the Authority fully indemnified at all times for and against all claims (including any claim made by any person (including any prospective tenderer, tenderer or preferred tenderer) that is not awarded a contract), demands or notices which may be brought or alleged or threatened against the Authority and from and against all Direct Losses or fines which the Authority may suffer or incur in relation to any such claims, demands or notices which occur as a result of or in connection with:
38.35.1. the implementation of this clause 38 (Benchmarking and Market Testing); and
38.35.2. any breach of the provisions of this clause 38 (Benchmarking and Market Testing);
save and to the extent that any such breach or claim results from any failure of the Authority to comply with the express provisions of this clause 38 (Benchmarking and Market Testing).
38.36. Where the Service Provider is required by this Agreement to carry out Market Testing, for the purpose of clause 53 (Termination on Corrupt Gifts and Fraud) of this Agreement it shall be an additional Prohibited Act for the Service Provider or any Service Provider Related Party (or anyone acting on its behalf) to:
38.36.1. accept or agree to accept any gift or consideration of any kind as an inducement or reward:
a) for doing or not doing (or for having done or not having done) any act in relation to the obtaining or performance of any sub-contract to the Agreement; or
b) for showing or not showing favour or disfavour to any person in relation to any sub-contract to this Agreement;
38.36.2. enter into any sub-contract relating to the Agreement in connection with which commission has been paid or has been agreed to be paid unless, before the sub-contract is made, particulars of any such commission and of the terms and conditions of any such agreement for the payment of such commission have been disclosed in writing to the Authority and it has consented to the same (in its absolute discretion)
and the provisions of clause 53 (Termination on Corrupt Gifts and Fraud) (changed according to context) shall apply and be construed accordingly.
38.37. Where the Service Provider is required by this Agreement to carry out Market Testing and any prospective tenderer or tenderer (or anyone acting on its or their behalf or any of its or their directors, officers or employees) offers or agrees to give to the Service Provider or any Service Provider Related Party any gift or consideration of any kind as inducement or reward:
38.37.1. for doing or not doing (or for having done or not having done) any act in relation to the obtaining or performance of any sub-contract to this Agreement; or
38.37.2. for showing or not showing favour or disfavour to any person in relation to any sub-contract to this Agreement;
the Authority may (without prejudice to any of its other rights) by notice to the Service Provider require the Service Provider to procure, as soon as practicable, the termination of that person's involvement in the Market Testing or, if discovered after the award of the relevant contract, the termination of the relevant sub-contract (and the provisions of clause 53 (Termination on Corrupt Gifts and Fraud) shall not apply and be construed accordingly).
38.38. The Service Provider shall notify the Authority of the occurrence (and details) of any Prohibited Act promptly on Service Provider becoming aware of its occurrence.
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48 The Authority will need to examine, interrogate and validate the Benchmarking Exercise and may need also to independently collect comparative information
49 Where a number of Services are being Market Tested the question may arise as to whether bidders must tender for all the Market Tested Services or whether they can select certain Services and tender in respect of those only. This drafting sets out one way of dealing with this issue.