Outsourcing: Current Legal Issues The Key to Successful Outsourcing

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Outsourcing Current Legal IssuesThe Key to
Successful Outsourcing

• Graeme Moffett
• Shepherd and Wedderburn LLP
• 01224 343546
• graeme.moffett_at_shepwedd.co.uk

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Life of an Outsourcing

• Getting in
• The contract key terms
• Managing the contract
• Getting out

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Getting In First Steps

• Key drivers
• Business case justification
• Scope, objectives, risks, costs, benefits
• Customer due diligence
• Assets and third party contracts
• Employees (TUPE and Pensions)

4
Getting In Tender Process

• Competitive procurement
• Market testing RFI
• Shortlist candidates PQQ
• Invitation to tender ITT
• Suppliers solution to customers specification
• Draft of proposed contract
• Evaluation criteria
• Suppliers due diligence
• Timetable
• Negotiation One v Many
• Public sector procurement issues

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The Contract - Structure

• Balance of precision and flexibility
• Structure of transaction single, multi, etc
• Supplier parent company guarantee
• Customer group companies
• Supplier subcontractors
• Asset transfer, software licences, IPR
• Joint ventures
• Offshoring models

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The Contract Duration

• Usually 3 to 10 years
• Many factors influence
• Termination for convenience
• Extension

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The Contract Performance

• Implementation/transition
• Plan
• Key milestones
• Delay deductions
• Services
• Legally binding description
• Objective measurement
• Service levels number and level?
• Service credits amount? bonuses?
• Seek to agree before signing

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The Contract Charges

• Fixed price, cost-plus, part-variable etc
• Suppliers recovery of costs
• Link to milestone value
• Indexation
• Benchmarking
• Fair deal for both parties

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The Contract Liability

• Areas subject/not subject to caps
• Level and structure of caps
• Exclusions
• Specific inclusions
• Insurance
• UCTA 1977 and standard terms

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The Contract Management

• Set out detailed operating framework
• Frequent information exchange
• Regular reports and meetings
• Escalation/resolution of disputes
• Monitor performance
• Use service credits

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Getting Out

• Termination rights
• Exit management
• Run-off period
• Handover of assets and information
• Employees (TUPE and Pensions again!)
• Creation of Exit Plan

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Recipe for success

• Clear objectives
• Clear scope
• Flexibility
• Good management
• Plan ahead
• Cover all the bases

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Questions?

• Contact
• Graeme Moffett
• Shepherd and Wedderburn LLP
• 01224 343546
• graeme.moffett_at_shepwedd.co.uk