"Living Wills": protecting the public sector in the event of service provider collapse?

Back in November 2018 the Cabinet Office set out a plan which it hoped would allow public bodies to be better prepared in the event of supplier failure. This came on the back of Carillion’s collapse earlier in 2018 which left public bodies frantically trying to work out what to do to ensure continuity of services and supplies. Although most of these contracts already provide for assignation and step-in (as appropriate), there are suggestions that the Government was left somewhat on the back foot in the wake of Carillion’s collapse. As Interserve’s share price hit a low in between Christmas and New Year (although since then it has been creeping back up), the need for these has started to come back into focus. It has been reported in the press that Interserve, and others, have already volunteered to create these “living wills”.

The idea is for suppliers and service providers to prepare contingency plans to be implemented in the event of failure, to allow public services to continue and to smooth the transition process. This could cover all material aspects of running the contract and key organisational information, to allow another provider to take over provision of the services without too much disruption. They could even go so far as to have a fallback supplier, with current project knowledge, ready to take over, although it seems to us unlikely that an incumbent would want to provide a competitor with the relevant know how to take on this role.

We may see specific drafting requirements creeping into new public sector contracts, setting out what the plans should cover, when they should be updated, who could trigger them and in what circumstances. Whether such plans are required only in the event of failure, or to cover a greater range of occurrences such as where there are difficulties – late payment or multiple sub-contractor disputes amongst others - remains to be seen. It is entirely possible that an apparent sign of financial difficulty may have an entirely legitimate explanation. Accordingly, public sector bodies should be wary of jumping to conclusions, because triggering the provisions of the contingency plan could cause more problems than it solves if the company was not actually in financial trouble. What would happen if the public sector’s analysis of the situation is incorrect – would the supplier or service provider have any redress?

In addition, it is not clear that having these plans in place will actually reduce the risks for the public sector, although they may ease the pain of service disruption should there be a collapse.

MacRoberts can advise on all aspects of construction law, including contentious and non-contentious. Please contact us for further details. 

Construction at MacRoberts

Our experience and expertise in construction extends back many decades and MacRoberts’ lawyers are widely respected both in legal circles and within the construction industry.

Latest updates from @MacRoberts

  • Our award-winning Family Law team can help you and your partner through difficult situations by providing support w… https://t.co/sOwEmv13fP 27/07/2021
  • To celebrate the Olympic Games in Tokyo, we're delighted to launch our latest sporting challenge in support of our… https://t.co/Y8IEq3eT53 23/07/2021
  • MacRoberts is recruiting! We are currently looking for a Real Estate Planning Solicitor to join the MacRoberts tea… https://t.co/ioGQaF2hQc 23/07/2021
  • The countdown is on! With just 100 days to go, we’re looking forward to #COP26 in Glasgow! ♻️ As a firm accredite… https://t.co/Ooldhmo8tW 22/07/2021
  • Has lockdown led you to consider a move to the countryside? From discussing a possible purchase to obtaining the… https://t.co/patbF42pjk 22/07/2021
  • Have you seen our latest vacancies? 💼 We currently have opportunities in various departments across the firm. Fin… https://t.co/NpiWs2sphg 21/07/2021
  • Acas has published new guidance for employers with helpful information on #flexibleworking & #hybridworking. With t… https://t.co/SoX87hFkko 20/07/2021
  • Busting the myth that a career in law is only for the privileged few: @marikaflawyer is speaking at this morning’s… https://t.co/awfcub4cw0 19/07/2021
  • MacRoberts is recruiting! We are currently looking for a Support Services Assistant to join our team in Edinburgh.… https://t.co/DJ27fRmmdb 16/07/2021
  • MacRoberts is pleased to have been part of the team advising @HV_Systems in its £5m capital boost from Beehive Equi… https://t.co/BxcwjCgIVk 15/07/2021
  • MacRoberts is recruiting! We are currently looking for a NQ Solicitor to join our Conveyancing & Private Client te… https://t.co/zubGY4zo0D 14/07/2021
  • For the last of our IGTV mini-series, we hear from Katie MacLeod. She will be giving an insight into what it’s like… https://t.co/0v2nNQ9zzZ 14/07/2021
  • RT @marikaflawyer: Exciting opportunity for Associate in our award winning Family Law team #familylaw #LegalCareer https://t.co/z3WEtfFJUo 14/07/2021
  • MacRoberts is recruiting! We are currently looking for an Associate to join our Family Law team in Edinburgh or Gl… https://t.co/CaitiMeVBs 14/07/2021
  • Last week, the UK Government took the decision to relax the rules on the length of time lorry drivers can work as a… https://t.co/o559McerYg 13/07/2021