Draft Contract

Purpose:

A draft contract is a "deal focused" contract which is, as far as possible, complete save for those areas which you wish the prospective providers to "bid back" as part of the competitive process. The draft contract is dispatched to the prospective providers as part of the tender documentation. In the competitive dialogue procedure, the draft contract may then be subject to some negotiation, prior to submission by the prospective provider of their final tender. 

The tender submitted by the prospective provider may then itself be clarified/fine tuned, according to the competitive dialogue procedures rules. OGC has produced detailed guidance on the competitive dialogue procedure. (PDF)

The restrictive procedure does not allow for the negotiation of the draft contract, submitted to prospective tenders.

The prospective providers will submit a price, in complete knowledge of all the liabilities and obligations they will face, if they win the deal. .

Fitness for purpose checklist:

• has the draft contract (DC), to be sent out with the tender documents, been subject to an internal QA?
• have all clauses and all schedules been subjected to a consistency check?
• has the DC been subject to legal QA?
• is the contract acceptable to the department and its advisers?
• have the evaluation criteria and the evaluation model been produced as a by-product, prior to the issue of the DC with the tender documents?
• will the contract deliver the right deal?
• does the contract facilitate easy contract management or service management?
• are termination, exit and recompetition strategies embedded?

Always beware of (and maintain a plan for) one or more provider withdrawing from the negotiation process, leaving the possibility of a single tender by default, or meaning that no award of contract can be made at all and that, consequently, the whole procurement project has to be cancelled and restarted.

Suggested content:

Please see OGC models terms and conditions for guidance as to the content.

However, the following should also be considered:

• The contracting authority is likely to wish to reserve the rights to share management information concerning the contract with other government departments, to aid the sharing of best practice.
• Departments will provide appropriate clauses in their standard procurement contracts on the use of ADR techniques to settle their disputes. The precise method of settlement would be tailored to the details of individual cases.
• For collaborative frameworks, there are additional provisions to consider for the draft contract. The following are given as examples:

• The provider shall submit management information reports to the contracting authority on a monthly basis, unless otherwise agreed, covering the period since the date of the previous management information report and showing the progress of its obligations, under the supply contract. The contracting authority reserves the right to share and discuss this information with other contracting authorities.
• Additionally and at no extra cost, the contracting authority should consider imposing on the provider a duty to supply (if requested) annual accounts to HM Treasury, the OGC and the NAO, as necessary, detailing:

• Annual spending by organisation, highlighting any new entrants to the framework or contract;
• Volume figures or usage profile for each organisation, e.g. what has been bought, how much has been bought, was it evenly covered throughout year, which sites were serviced, etc;
• Changes on previous year, if applicable.

Source information:

Proposals from providers, who have been successfully shortlisted; skeleton draft contracts given to each provider at the outset of the draft contract negotiation stage; advice from procurement consultants; legal advice; and considerations drawn from commercial intelligence reports on providers.

Further information:

OGC model terms and conditions

Dispute resolution

Procurement workbook

Risk allocation model