As local government reorganisation gathers pace across England, councils facing a merger or restructure must confront a critical operational question: what happens to existing contracts? The assumption that contracts simply transfer to successor authorities oversimplifies a complex reality that demands careful planning and robust contractual frameworks.
When two or more councils merge, they invariably bring multiple contracts for similar services - often with different providers, on different terms, and at varying stages of their lifecycle. For example, a new unitary authority might inherit three separate highway maintenance contracts, two waste collection agreements, and multiple ICT support arrangements. The challenge isn't merely administrative; it strikes at the heart of service continuity, value for money, and legal obligations.
The suite of contracts from NEC offers crucial advantages in this environment. Their collaborative ethos and flexible structure provide mechanisms to manage transition effectively. The NEC4 Framework, for instance, allows multiple service providers to work under a unified governance structure whilst maintaining separate work packages. This enables successor authorities to consolidate oversight without prematurely terminating functioning contracts that deliver value.
The secondary option clauses within NEC contracts prove especially valuable during reorganisation. Option X20 (Key Performance Indicators) allows new authorities to establish consistent performance metrics across inherited contracts, creating comparability where none existed. Option X12 (Partnering) facilitates collaborative relationships between the new authority and multiple legacy suppliers during transition periods.
Despite some clear challenges, reorganisation also presents an opportunity too. Where contracts are genuinely redundant or poorly performing, termination provisions must be exercised judiciously. NEC's clear termination procedures and compensation event mechanisms provide transparent routes to wind down unsuitable arrangements whilst protecting both parties' legitimate interests.
The critical success factor is early engagement. Authorities must audit their contract portfolios immediately upon reorganisation announcements, identifying conflicts, gaps, and consolidation opportunities. Using NEC's early warning provisions proactively, even before a formal merger, allows all parties to plan for change rather than react to crisis.
Local government reorganisation will continue. The contracts framework you choose today determines whether tomorrow's transitions are managed smoothly or become costly, contentious obstacles to service transformation. The NEC suite of contracts, when properly implemented, provides the tools for the former.
Rekha Thawrani OBE Global Director of NEC Contracts
