Our recommended approach is that Authorities set up a project team and produce an action plan to address the issues discussed in this paper. This will enable the Authority to map out what actions are required over the remaining years of the contract and in the process to the post Handback period, recognising that some issues might be more back ended and that the plan will develop and evolve over time.
A. Where the accommodation transfers back to the Authority who is intending to continue to remain in and use the Facility, the following issues should be considered.
• The process for ensuring that the Authority has ownership of the Facilities (unencumbered by any ground leases) or other arrangements for the Authority's occupation going forward.
• The process for ensuring that any outstanding lifecycle replacement or other works identified in the initial and handback survey including lifecycle replacement (that will be required prior to the end of contract) are carried out. This should take account of the need for identifying access and timing and resolving any issues with ProjectCo. It is useful in this context to understand which private sector party holds the lifecycle risk and reward (either ProjectCo or the FM company).
• The service model of the Authority going forward and in particular whether the Authority will thereafter itself be providing the hard and, if applicable, soft FM services provided by ProjectCo prior to the end of the contract or whether a procurement of outsourced services is required.
• The process for transitioning to the new service model and for operating business as usual thereafter.
• Budgetary consequences need to be considered of: (i) the cost of the Handback process itself; (ii) any acquisition or residual value payment; (iii) the costs of maintaining and operating the Facility; and (iv) the new service model going forward, including staff costs, investment requirements for equipment, including staff costs, investment requirements for equipment.
• Development of a risk register that should be comprehensive and regularly reviewed and updated as required.
• There is likely to be an important process in relation to the application of TUPE and consideration of pensions and other employment issues. Good communication and liaison with ProjectCo and its FM provider and the employees concerned will be crucial.
• Identification of the equipment (both currently used by the Authority as part of the project and in the provision of ProjectCo's services), furniture and fixtures that will be required to carry on the services after the end of contract. In particular, Authorities should clarify which party owns the furniture and fixtures and equipment and whether there are any relevant provisions in the Project Agreement dealing with transfer at the end of contract, as well as to the condition of those items. Likewise, spares that are held by ProjectCo or the FM provider should be considered, particularly if they are bespoke to the Facility.
• The impact of the ending of the hard FM service on issues such as practical responsibility for legislative requirements relating to fire, electrical and water testing and the appointment of designated individuals, particularly for health projects.
• Arrangements for maintenance contracts that will need to be in place to deal with, for example, lift maintenance and alarm systems.
• Insurance arrangements to be put in place, where the Authority does not self-insure, after the end of contract.
• Documentation and other data that will require to be provided to the Authority at the end of contract, including asset register, O&M manuals, maintenance and audit records and how this information and documentation system will integrate with wider systems in use within the wider estate: an early discussion will be required with ProjectCo and its FM provider as to what is available and what needs to be assembled, taking into account the contractual provisions.
• A process for and approach to engaging with ProjectCo and for applying and exercising remedies under the contract and, where appropriate, a negotiating strategy will be required.
• Any other issues identified in relation to the project or in the risk register should be addressed.
B. If the Authority intends to vacate the Facility at the end of contract, then the action plan will reflect those circumstances. It would include:
• Planning for the alternative premises from which it will reprovide the services currently carried out at the Facility and ensuring those are in place in good time;
• A potential discussion with ProjectCo as to the level of service required in the period prior to the end of contract;
• The future use and ownership of the Facility and whether there is any value that can be realised for the Authority (see 7 below);
• Budgetary consequences of vacating and the new arrangements going forward;
• Contingency measures if alternative arrangements are not in place by the end of contract; and
• Other consequences of the end of contract and the vacation of the Facility, including any impact on staff.