Schools and academy trusts: are your contracts up-to-date?

Following lockdown and the phased and full opening of schools, we look at the importance of ensuring your contracts are up-to-date.

Background

Following the initial closure of schools for all pupils except those of key workers and vulnerable children, schools and academy trusts will have varied their contracts with suppliers to reflect the change in circumstances. In doing so, they will have had regard to the Government’s Procurement Policy Note - Supplier relief due to COVID-19 and so gone to great lengths to help ensure their suppliers survive the pandemic. This will have included agreeing to pay invoices sooner, making interim or advance payments, granting suppliers relief from performance penalties and termination and agreeing a reduced specification.

With the phased wider opening of schools towards the end of the summer term, schools and academy trusts will have again varied their contracts with suppliers, especially to ensure the more regular and deep cleaning of premises so that staff and students continue to be safe.

As schools open fully with the start of the new academic year, contracts will also have been varied to reflect the new normal with some services returning to pre-Covid levels and others, such as cleaning, adapting to a return to school with social distancing and some continued online teaching. Some schools and academy trusts may also be agreeing a revised specification should they be included in a local lockdown.

Getting it right

With all the changes to school life during Covid-19, it will have been a challenge for schools and academy trusts to keep and maintain an accurate written record of the contract variations they have agreed with their suppliers. In some cases, a trusted relationship may have contributed to a verbal agreement to vary a contract. However, while a verbal agreement to vary may be binding, depending on the terms of the contract, a clear written record of the agreed contract variation is essential if later disputes are to be avoided. A written record of an agreed variation should therefore be produced and maintained even if time has lapsed since the variation was first agreed.

Care must also be taken to follow the procedure in the contract for making a variation. For example, some contracts may require a formal notice of change to be served on and agreed by the supplier while others may say that a written record of the variation, signed by representatives of the parties, will suffice. Alternatively, a deed of variation signed by the parties will be conclusive and binding as to the terms of the variation. Again, ensuring the correct procedure has been followed will avoid future disputes regarding the terms of the contract variation. Where a variation has been agreed in writing but not as prescribed by the contract, the parties should follow the correct procedure to confirm the variation though the courts will look to their intentions when deciding the terms of the variation. However, this is not ideal and should be avoided.

It is also recommended that schools and academy trusts keep a written risk assessment of each variation and a written record of the reasons for agreeing this with the supplier.

Summary

Keeping and maintaining a clear written record of variations to contracts with suppliers and recording those variations using the correct procedure is key to effective contract and risk management and therefore core to good governance. It will therefore safeguard your future success and avoid the watchful eye of the Education and Skills Funding Agency.