SCHEDULE 2 MOBILISATION PLAN Mobilisation Activity ...

OFFICIAL SENSITIVE - COMMERCIAL

SCHEDULE 2

MOBILISATION PLAN

Part A: Authority Mobilisation Activities

Acceptance Test Serial Responsibility Mobilisation Activity

Evidence required Testing and evaluation methodology

Timeline

A. Administration

AUT 001

Authority Authority to establish DIGA and DIDO, by:

confirming the organisation design of DIGA, to include the following appointments: Senior Duty Holder, Senior Risk Owner, Senior Data Protection Officer, Information Asset Owner, Sustainable Development Champion and Fraud Focal Point

recruiting and resourcing

Written confirmation from Authority that operational DIGA is in place (i.e. DIGA has the following functions in place: Finance, Scrutiny, Commercial, Contract and Senior Duty Holder)

Letters of Delegation for relevant DIGA personnel and Named Contractors.

The Authority is satisfied that an operational DIGA is in place.

Letters of Delegation have been issued to relevant DIGA personnel and Named Contractors.

Prior to completion of Mobilisation Period.

Page 157




Evidence required Testing and Timeline evaluation methodology

posts in DIGA, to include the following functions: Finance, Scrutiny, Commercial, Contract and Senior Duty Holder

putting in place Letters of Delegation for relevant DIGA personnel and Named Contractors

AUT 002

Authority Authority to notify its reporting requirements regarding the Contractor and DIDO (including financial and operational reporting) to the Contractor.

List and (where appropriate) templates of documents required for reporting process.

Authority has provided relevant evidence to the Contractor.


AUT 003

Authority Authority to establish terms of reference for the Monitoring Group.

Terms of reference for the Monitoring Group.



AUT Authority In accordance with the procedures Authority sponsorship on Authority has Within 5 Business

Page 158





004 laid out in JSP440, Director Business Partnering to sponsor all named contractors to have security certificates issued by Defence Business Services – National Security Vetting.

individual security clearance request forms.

provided all relevant certificates to the Authority’s nominated contact.

Days of Commencement Date.

AUT 005

Authority All Named Contractors to be issued with security passes to relevant Authority Sites.

Security passes for relevant Authority Sites for all Named Contractors.

All Named Contractors provided with security pass(es) for relevant Authority Site(s).

N.b. Pass will be required before any Named Contractor is permitted access to relevant Authority Sites.

Within 5 Business Days of Commencement Date.

AUT 006

Authority DII accounts established for all Named Contractors.

Written confirmation of DII account creation for all Named Contractors from

Authority has provided relevant evidence to the

Within 5 Business Days of Commencement

Page 159





Authority. Contractor.

DII accounts for all Named Contractors visible on the Global Address list.

Date.

AUT 007

Authority DII folder permissions to have been established for all Named Contractors.

Written confirmation of relevant folder permissions (including to relevant DII role folders, group folders and MOSS) for all Named Contractors from Authority.



AUT 008

Authority Access to DII provided to all Named Contractors.

Written confirmation of DII account activation for all Named Contractors from Authority.



AUT 009

Authority Authority to provide an up-to-date list of all mandatory training required.

N.b. List as at March 2013 attached at

List of mandatory training. Authority has provided relevant evidence to the Contractor.


Page 160





Annex A.

B. Induction

AUT 010

Authority Authority to identify key personnel and stakeholders for the Named Contractors to meet during the Mobilisation Period.

Key personnel and stakeholders list.



Page 161



Part B: Contractor Mobilisation Activities



Timeline

A. Integration Plan

CON 001

Contractor Completion of all activities relevant to the Mobilisation Period set out in the Integration Plan.

Written confirmation of completion of all Mobilisation Period activities identified in Integration Plan, with supporting evidence.

Completion of all Mobilisation Period activities identified in Integration Plan to the Authority’s reasonable satisfaction.

Completion of all Mobilisation Period activities in accordance with timeline set out in Integration Plan, and at the latest, prior to completion of Mobilisation Period.

B. Compliance

Page 162





CON 002

Contractor All Named Contractors to accept responsibilities set out in relevant Letters of Delegation and to demonstrate understanding of responsibilities, including compliance requirements.

N.b. A list of the key compliance requirements as at March 2013 is attached at Annex B.

Written confirmation from all Named Contractors that Letters of Delegation responsibilities accepted and understood.

Written confirmation from all Named Contractors that key compliance requirements have been reviewed and understood, together with documented procedures and practices for ensuring compliance.

All Letters of Delegation signed and received by the Authority.

Contractor has provided relevant evidence to the Authority, and the Authority is reasonably satisfied that requirements have been understood and that procedures and practices are appropriate.


Page 163



SENSITIVE - COMMERCIAL



Page 164

OFFICIAL

CON003

Contractor Contractor to carry out Rehearsal of Concept (ROC) Drill exercises with Authority teams for the key DIDO services, processes and organisation, relevant to the performance of the Contractor’s obligations under this Contract. This should model the key interactions between DIDO and DIGA, customers and suppliers.

DIGA to agree with the Contractor (at the Mobilisation Monitoring Group) a reasonable sample list of scenarios covering a range of activities that the Contractor-led DIDO will be expected to manage from Effective Date. DIGA and the Contractor to determine together a detailed timeline for the satisfactory completion of the scenario and to agree the satisfaction criteria for the evaluation of the Contractor. DIDO teams and the Contractor to develop a joint plan for each scenario pertaining to a workstream or division, incorporating existing DIO process and practice and Contractor IIP.

Contractor to co-ordinate and run the scenarios with the support of DIDO teams through the process agreed with the Authority, via the Mobilisation Monitoring Group.

The Contractor to provide a written record of each scenario run as a Rehearsal of Concept.

Each report will be presented to The Monitoring Group. The Authority will accept these reports as sufficient evidence.

To be completed prior to the end of the Mobilisation Period.




C. Administration

CON 004

Contractor Agree TOR with the Authority for the Monitoring Group (if any).

Terms of reference developed for the Monitoring Group.

Agreed TOR for the Monitoring Group.


CON 005

Contractor Contractor to prepare a risk issues and opportunities escalation process that is compatible with the Authority’s risk and issues processes as described in the Acquisition Operating Framework and the DIO Enhanced Operating Enhanced Operating Model Processes and demonstrate such process.

Documented escalation process.

Contractor has provided relevant evidence to the Authority, and the process has been demonstrated to the Authority’s reasonable satisfaction through a process agreed with the Authority.


Page 165





CON 006

Contractor Contractor to appoint an Operating Duty Holder within DIDO responsible for the delivery of a ‘safe place’ for infrastructure for health, safety and environment.

Letter of Delegation for Operating Duty Holder to be in place.

Contractor has provided relevant evidence to the Authority.


CON 007

Contractor All Named Contractors to sign two copies of Official Secrets Act (one held by Authority, one retained by individual).

Two signed copies of Official Secrets Act from all Named Contractors.



Page 166





CON 008

Contractor All Named Contractors to have submitted a valid application for Security Clearance (SC) to DBS National Security Vetting.

All Named Contractors to have SC in place.

Regarding application for SC, evidence of submission of application from all Named Contractors.

Regarding SC itself, proof of SC for all Named Contractors.


Regarding application for SC, within 10 Business Days of Commencement Date.

Regarding SC itself, prior to completion of Mobilisation Period.

Page 167





CON 009

Contractor All Named Contractors to have a training plan in place to undertake mandatory training, to include (but is not limited to) the training identified in Annex A.

Training plan for all Named Contractors.

For the avoidance of doubt, the Authority may waive any requirement to undertake mandatory training (including the training identified in Annex A) where the Contractor provides adequate evidence to the Authority that such (or, where appropriate, equivalent) training has already been undertaken by that Named Contractor. Whether or not such evidence is adequate for the Authority’s purposes shall be at the Authority’s sole discretion.

Contractor has provided relevant evidence to the Authority, and Authority is reasonably satisfied that training plan is acceptable.


Page 168





CON 010

Contractor For those Named Contractors without extant SC, BPSS is required to be in place whilst the SC process is undertaken.

Proof of BPSS for all Named Contractors requiring SC.


Prior to Commencement Date.

D. Induction

CON 011

Contractor All Named Contractors to undertake:

a series of office calls / introduction visits with all key Authority personnel and relevant stakeholders

series of site familiarisation visits to key DIO locations

Schedule of meetings with key Authority personnel (as agreed with the Authority) and plan to visit key Authority Sites during Mobilisation Period.

Written confirmation that all scheduled meetings have taken place.

Contractor has provided relevant evidence to the Authority, and Authority is reasonably satisfied that schedule of meetings is acceptable.

Contractor has attended all scheduled meetings.


Page 169



Page 170




Timeline

CON 012

Contractor Named Contractors to undertake a series of introductory briefing events to all Authority Personnel at key Authority Sites to engage workforce and outline new arrangements.

Plan in place for engagement sessions with Authority Personnel within the Mobilisation Period.

Written confirmation that engagement sessions have taken place.

Contractor has provided relevant evidence to the Authority, and Authority is reasonably satisfied that schedule of engagement sessions is acceptable.



ANNEX A TO SCHEDULE 2

Subject Who? When? What? Refreshment/Notes Duration

Selection Interviewing

All Named Contractors with Line Management responsibilities

Prior to taking any part in the civilian sifts or interview process.

CSL – Face to face training. Managing People - Recruitment & Selection. Managing People - Recruitment and Selection for Senior Managers.

DA Text Based Distance Learning (TBDL) package ‘Recruitment – Getting it Right’, Reference G066 for those who wish to refresh or when identified as a developmental or business need. Course pre-requisition – Equality and Diversity Training. DLP e-learning package ‘E&D Awareness – Clued Up?’ Reference VR008N.

1 Day

Armed Forces Appraisal

All Named Contractors with military line management responsibilities

Prior to undertaking appraisals on Service Personnel.

DA - One day workshop. ‘Military Appraisal Writing for Civilian Reporting Officers’. Reference R084

When identified as a developmental or business need.

1 Day

Managing People in Defence

All Named Contractors with Line Management responsibilities

ASAP after joining (within 6 months)

DA - Face to face workshop. New to Managing People in Defence – Course Code

When identified as a developmental or business need.

4 Days

Page 171


https://civilservicelearning.civilservice.gov.uk/









https://knowledge.chris.r.mil.uk/PPPA/index?page=content&id=FA3977



R064

Equality & Diversity (E&D)

All Named Contractors upon joining

Within first 6 months DLP e-learning package ‘E&D Awareness – Clued Up? Reference VR008N

When identified as a development or business need. The CSL course can be used as refresher training. The DLP course is used as the mandatory course as it covers service and civilian personnel.

Approx. 3 Hours

Equality & Diversity (E&D)

All Named Contractors at B1/above or equivalent grade.

As soon as practicable after appointment

DA at Shrivenham ‘Senior Officer E&D Awareness Day’- Reference R057 Plus DLP e-learning package as above.

Refreshed every 3 years. 1 Day (plus 3 hours)

Health & Safety (H&S)

All Named Contractors upon joining.

Named Contractors with Line Management responsibility need

H&S training relevant to your role and responsibilities. Line Managers to determine what training is required to fulfil H&S legislation. H&S Training Strategy and Competence Annex

Courses available: CSL e-learning package; H&S Awareness – All Staff H&S Awareness for Managers

Refresh as required locally. Approx. 1 Hour (per course)

Page 172


https://civilservicelearning.civilservice.gov.uk/learning-opportunities/elearning/Introduction%20to%20Diversity%20and%20Equality






https://civilservicelearning.civilservice.gov.uk/learning-resources/health-safety-fire-awareness-and-first-aid









to complete the H&S awareness for managers course.

located in JSP 375 Vol. 1 - Annex B refers.

Within first 2 months

Fire Safety All Named Contractors upon joining.

Within 1 month

CSL -Basic Fire Awareness for all staff – Course code – BSFM01

Annually

This training does not replace any local fire awareness training which has been mandated by the unit.

Approx. 35 Minutes

Office Safety All Named Contractors upon joining.

Within first 2 months DLP online course ‘Office Safety’ VL 386

Annually

Security All Named Contractors upon joining.

Within first 3 months General threat brief run by site/TLB.

Annually Varies by location. MB Approx. 2 Hours

Display Screen Equipment


Within first 2 months V397 Display Screen Equipment

DSE refresher training should be undertaken at least every two years or when there is a significant change to the DSE, workstation or software.

Approx 1.5 Hours

Page 173








Information Security


ASAP after joining (but within 3 months)

DLP e-learning package -MOD Basic IT Security Code: TOC1-V2.1 Defence Document Handling Security - Code: DDHS-01

Training to be undertaken before access to IT.

Varies Includes assessment.



ASAP after joining Responsible for Information (Listed as Protecting Information Level 1)

Version covers staying safe online & small Fraud Module

Approx 1 hour With Assessment


All Named Contractors with Line Management responsibility.

Annually

ASAP after first appointment to line management post.(but within 6 months)

Responsible for Information (Listed as Protecting Information Levels 2/3)

Version covers IA family, IA Risk/Threat & Reporting, staying safe online & small Fraud module

Approx 1 hour

A revised Role Based product for Training Year 13/14 With Assessment

Page 174

















Staff with an IA role (e.g. SIRO, NEDs and Board Level Directors)

All Named Contractors at SCS or above.

Role based training on appointment followed by relevant annual training.

ASAP after joining (but within 6 months)

Responsible for Information (Listed as Protecting Information Level 3)

Version covers Threat/Cyber Security, Risk & a small Fraud module

Approx 40 mins

A revised Role Based Product for Training Year 13/14 With Assessment

Business Continuity

All Named Contractors upon joining

ASAP after joining but within 6 months

CSL – e-learning BCSP001 -'Business Continuity’

Every 5 years or as a business need.

Approx 1 Hour

Defence Strategic Leadership Programme

All Named Contractors at SCS or equivalent grade


Defence Strategic Leadership Programme (DSLP). Face to face workshop.

Contact the HRD SCS Management Team who will arrange attendance on this programme.

2 x 4 days

Cabinet Office SCS Induction Event

New appointments to SCS

All Named Contractors at SCS or equivalent grade

On appointment to SCS


SCS Base Camp - Taking leadership to the next level. Face to face workshop.

Contact the HRD SCS Management Team who will arrange attendance on this programme.

1.5 Days

Page 175








https://civilservicelearning.civilservice.gov.uk/learning-opportunities/elearning/business-continuity





ANNEX B TO SCHEDULE 2

Page 176



Page 177



Page 178



Page 178



SCHEDULE 3

INFRASTRUCTURE IMPLEMENTATION PLAN


Page 179


THIS PAGE IS INTENTIONALLY LEFT BLANK


Page 180


SCHEDULE 4

EXIT PLAN

1. INTRODUCTION

1.1 The purpose of this Schedule is to define the arrangements for exit management prior to, and following, the end of the Contract Period.

1.2 The provisions of this Schedule shall operate at any time, whether before or after commencing retendering this Contract, and irrespective of whether exit is a result of expiry or termination of this Contract.

1.3 The Contractor shall perform its obligations as described in this Schedule 4 at no additional cost to the Authority, notwithstanding the Contractor’s rights to request contract adjustments for partial termination in accordance with Clause 36.12 of the Contract, and the provision of services post expiry or termination described in paragraph 5 of this Schedule 4.

2. PREPARATION OF EXIT PLAN

2.1 The Exit Plan (attached as Annex A to this Schedule 4) will be updated by the Contractor within 90 Business Days following the end of the Transformation Period and thereafter in accordance with Clauses 36.4 and 36.5 of the Contract.

3. RE-PROCUREMENT PERIOD

3.1 On request or within a maximum of 30 Business Days following the start of the Re-Procurement Period, the Contractor shall provide access to personnel and data identified in the Exit Plan. Provided that the exercise of such access rights by the Authority and its representatives and advisers, does not unduly interfere with the continuing provision of the services supplied under this Contract.

4. PARTIAL TERMINATION EXIT PLAN

4.1 A Partial Termination Exit Plan will be prepared in the same manner as the full Exit Plan, with the same deliverable and requirements defined therein. The primary difference being the inclusion of materials associated specifically with the partial termination.

5. POST EXPIRY

5.1 Where the Contractor is required to comply with Clause 36.17 of the Contract the Authority shall reimburse the Contractor with any direct costs which the Contractor incurs for permitting or making available the items set out in Clause 36.17 or cooperating with the Authority or Follow-On-Contractor.


Page 513


ANNEX A TO SCHEDULE 4 THE EXIT PLAN

1 PURPOSE AND SCOPE

The purpose of this plan is to establish a method for the organised closeout of the project or any partial closeout based on a request for a partial termination plan. The scope of this plan includes the provisions needed to enable the Contractor to cease providing the services supplied under this Contract at the Expiry Date or Termination Date and to permit the Authority or a Follow-On Contractor to commence provision of those services while minimising any disruption to or deterioration of the performance of the services supplied under this Contract during and after the retendering period or partial termination. The plan provides for the definition of the exit assistance services that the Contractor will perform to ensure a successful transfer to the Authority or a Follow-On Contractor with no or minimal disruption or deterioration to the services supplied under this Contract.

It is important to note that the Contractor will be providing management services to the Authority through DIDO. This Exit Plan is written to organise the actions needed to turnover and/or complete the requirements of this management team. There is no intention to discuss actions needed to turnover various works and contracts, activities and projects that are managed directly by the Authority staff under the management of the Contractor personnel in DIDO. This plan specifically will address only those activities under the direct control of the Named Contractors.

2 [NOT USED]

3 Exit Timeline

3.1 Initial Development of Exit Plan

Activity 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18Complete Initial Transformation ▼

Submit final Contract Exit PlanDIGA ReviewFinal Exit PlanNotification of Intent to Terminate/Recompete ▼

Handover Plan CompletionHandover ActivitiesContract Termination Date ▼

Post Termination Support Team ▼

Month

This Exit Plan will be updated within ninety (90) calendar days following the completion of the Short Term Transformation Period. The initial Exit Strategy Succession Planning Documents and the Initial checklists in the Handover plan will be brought up to date and actions required by the contractor will be updated for delivery to the Authority, for the Authority’s consideration and comment.

The Authority shall respond with written comments to the Contractor within 30 Business Days following receipt of the draft Exit Plan.


Page 514


The Contractor shall submit a final version of the Exit Plan to the Authority for approval within thirty (30) Business Days of receipt by the Contractor of the Authority’s written comments on the Exit Plan and, provided such final version properly addresses the comments of the Authority, the Authority shall reasonably approve the plan.

3.2 Updates to Exit Plan

The Exit Plan shall be reviewed by the Contractor on an annual basis following the approval of the plan identified in Section 3.1. Where updates are required, the Exit Plan shall be updated and submitted to the Authority for consideration, comment and approval as part of the annual review process.

4 Critical Deliverables in the Exit Plan

4.1 Exit Strategy Succession Plan

Included with the original Exit Plan delivery is a succession plan for the Named Contractors. Each Named Contractor will develop a unique succession planning chain for their position which will be reviewed annually (following the initial submission after the Short Term Transformation Period) by the Talent Management team and the CEO. This succession plan will be developed in accordance with the annual talent management program referred to in paragraph 2.5 of Part 10 of Schedule 3.

4.2 Handover Plan

The Handover Plan will describe the physical documents, deliverables, data, software, manuals, equipment, etc., that will be turned over from the Contractor to the Authority Staff or named agent of the Authority. These items will be defined initially following the Short Term Transformation period, but will need to be updated annually as new data elements and new items are developed and/or identified by the Contractor. This plan will consist of the following elements:

Description of Turnover packages

Demobilisation Checklist

Named Contractors responsible for the Exit Plan

5 Critical Controls

This plan is owned by the CEO of DIDO. All requests for Retendering Data based on a notice from the Authority to the Contractor that the Authority intends to retender this Contract (a Notice of Intent to Retender), or Exit Data related to a partial termination, will be requested through the CEO of DIDO. All changes to the document or any part of this document will be approved by signature by the CEO of DIDO.

6 Transfer of Retendering Materials and/or Exit Data


Page 515


Retendering Materials and any Exit Data will be transferred to DIGA upon written request, or as defined in the Handover Plan. All requests will be delivered within 30 Business Days of the request unless otherwise specified. Confidential data will be marked as such or redacted to protect proprietary information related to the Contractor.

7 Exit Assistance Services

The following exit assistance services are available to the Authority. Unless otherwise requested by the Authority, the services are delivered in accordance with this Exit Plan or as requested for early termination or after a Notice of Intent to Retender. Any services beyond this list are available following a request through Schedule 12 of the Contract:

Succession planning within DIDO to replace the Named Contractors at contract termination or expiry

On the Job training and knowledge transfer to Authority personnel or other named contractors if required at termination or expiry

Retendering or Exit Data retrieval, packaging and delivery to requested Authority designated personnel at termination or expiry

Handover planning and contract termination services as defined in the Handover Plan

8 Continuity of Services

The Contractor will maintain the Named Contractors in position and they will execute the final exit strategy in accordance with timelines developed in the Handover Plan. The removal of resources will occur in a planned sequence in full cooperation with the Authority. Furthermore, the Contractor will identify personnel available to support any transition (full or partial termination) following the Expiry Date or Termination Date.

9 Work in Progress

It is the nature of this project that there will be work in progress and therefore, definition of orderly transfer of open work is limited to the turnover of work under the direct control of Named Contractors, notwithstanding the work being implemented by Authority personnel working as subordinates to the Named Contractors. The Turnover of work in progress will be detailed in the Handover Plan as this work is unknown at this time.

10 Identification of Named Contractors

Named Contractors who are responsible for the delivery of exit services are identified in the Handover Plan.

11 Minimise Costs due to Partial Termination


Page 516


The Contractor will work closely with the Authority at all times to minimise cost. When a request for partial termination or Notice of Intent to Retender is provided to the CEO, an action officer will be appointed and all interaction with the Authority will be coordinated with this one individual. The action officer will manage the response, maintaining control of the cost and schedule to provide the response and assure to the CEO that the requirement will be met with minimal disruption and cost impact to the overall project.


Page 517


ANNEX B TO SCHEDULE 4 EXIT STRATEGY SUCCESSION PLAN

The purpose of the Exit Strategy succession planning program in the DIDO is to ensure a ready supply of internal talent for key positions at the time of contract expiry or termination. It is the intent of the Contractor to help the Authority develop Authority Personnel to the full extent of their potential and, to the extent possible for the organisation, to help them achieve realistic career goals that satisfy both individual and organisational requirements. The Contractor organisation is firmly committed to helping Authority Personnel develop their potential so that they are prepared and qualified to assume positions in line with individual career goals and organisational requirements.

At least once each year, the CEO will sponsor as part of the annual performance and development process:

A succession planning activity that will assess how well the organisation is positioned to meet replacement requirements by promotions or other personnel movements from within

Individual performance appraisal to assess how well individuals are meeting their current job requirements

Individual potential assessment to assess how well individuals are presently equipped for future advancement. Unlike performance appraisal—which is typically focused on past or present performance—the focus of individual potential assessment will be on the future, and

Individual development planning to provide the means for action plans to help individuals narrow the developmental gap between what they already know or can do and what they must know or do to qualify for advancement.

To prepare for the eventual replacement of Named Contractors with Authority personnel by the expiry of the contract, we will work within the MOD's Talent Management Strategy, to identify those individuals with the potential to replace our Named Contractors and, with their line managers, help them to develop individual action plans.

The output from the performance and potential assessments will be collated and presented for review by the senior teams in DIGA and DIDO. The senior teams will review and discuss those staff identified as ‘star performers’ and ‘high potential’ staff. An example of the output we will produce is shown below:


Page 518


Potential assessment of number of Grades 6 and 7 ready for promotion

This annual review with the senior staff team facilitates cross-departmental review of individuals, in an effort to gain full knowledge of the staff available for promotion. The team will recommend various annual developmental tasks for the high potential staff such as:

secondments to the wider Capita Team companies (Capita, URS or PA Consulting) in order to provide access specialist market knowledge and broaden experience

stretch assignments in-house training external training, and cross governmental secondments.


Page 519


ANNEX C TO SCHEDULE 4 HANDOVER PLAN

The Handover plan contains a brief description of the knowledge, data, materials, and specific items that will be handed over upon termination or expiry of the Contract. The plan will define all work in progress, documents, deliverables, books, items and equipment that must be handed over to the Authority and/or to the Authority’s named designate. This plan is updated annually as information is developed and data items are created or disposed from the Project. A final handover plan is developed at one year from the Expiry Date or within 30 Business Days of the Authority’s notice of termination or Notice of Intent to Retender is planned. This final handover plan will contain the data elements required for turnover to the Authority.

Structure and Purpose

The Handover Plan is structured into a series of Turnover Packages. Each package is focused on a particular topic and each package will be owned by a Named Contractor. There will be minor differences in the content of each package between the incorporated and unincorporated models, but the concept remains the same. During the life-cycle of the Contract, as items are identified that will require turnover or a defined exit strategy, they are listed in the package and materials are defined and developed for eventual turnover.

Turnover Package Definition

The current packages are defined as:

1. Contract Deliverables

a. Exit Strategy Succession Plan

b. Handover Plan

2. Active Subcontracts managed directly by the Contractor

a. URS Subcontract

b. PA Consulting Subcontract

3. Claims or Disputes

a. Item

b. Item

4. Exit Data/Retender Data

a. Statutory Records


Page 520


b. Regulatory Records

c. Books of Account

d. Other

5. Contract Items

a. Change orders (Schedule 12)

b. Partial Termination Records

6. Personnel Records

a. Authority Personnel Records under DIDO control

b. Contractor Personnel Records being transferred under TUPE’d to the Authority

7. Financial Records

a. Incentive Fees paid

b. Outstanding incentive fees

c. Pending Payments

d. Payments in Arrears

e. Final Invoice

f. Release of Retention

8. Demobilisation

a. Facilities Turnover

b. Vehicles Turnover

c. Equipment Turnover

d. Keys/Access Cards/Badges/Parking permits

Package Completion Checklist

This checklist will document the final turnover of work in progress related items that are being managed directly by the Contractor which will require a turnover or exit strategy resulting in some transfer of knowledge or equipment such as, technical data, equipment, facilities and other items or other knowledge. This checklist will be modified annually to maintain configuration control of the required items.


Page 521


Contact Details for Named Contractors responsible for each package in the Handover Period

Listing of Named Contractors who are responsible for the completion of Handover Activities


Page 522


Demobilisation Checklist

Res

pons

ible

Par

ty

Dat

e of

Tur

nove

r

Acc

eptin

g fo

r A

utho

rity

Dat

e of

Acc

epta

nce

Com

men

t

Contract Deliverables

Succession Plan

Handover Plan

Active Subcontracts Managed Directly by the Contractor

URS Subcontract

PA Consulting Subcontract

Claims or Disputes

Item

Item

Exit Data/Retender Data

Statutory Records

Regulatory Records

Books of Account

Other Item

Contract Items

Change Orders (Schedule 12)


Page 523


Res

pons

ible

Par

ty

Dat

e of

Tur

nove

r

Acc

eptin

g fo

r A

utho

rity

Dat

e of

Acc

epta

nce

Com

men

t

Partial Termination Records

Personnel Records

Authority Personnel Records under DIDO Control

Contractor Personnel Records under TUPE consideration

Financial Records

Incentive Fees Paid

Outstanding Incentive Fees

Schedule of Pending Payments

Service Deductions

Payment in Arrears

Final Invoice

Release of Retention

Demobilisation

Facilities Turnover

Vehicles Turnover


Page 524


Res

pons

ible

Par

ty

Dat

e of

Tur

nove

r

Acc

eptin

g fo

r A

utho

rity

Dat

e of

Acc

epta

nce

Com

men

t

Equipment Turnover

Keys

Access Cards

Badges

Parking Permits


Page 525


Named Contractors Responsible for Package Handover Activities

Package Name Office Telephone Mobile Phone

Contract Deliverables

Active Subcontracts managed directly by the Contractor

Claims or Disputes

Exit Data/Retender Data

Contract Items

Personnel Records

Financial Records

Demobilisation


Page 526


SCHEDULE 5

GOVERNANCE

1. GENERAL

1.1 The following diagram illustrates the hierarchy of governance entities relevant to DIDO:

Secretary of State for Defence

Defence Board

Defence Infrastructure Board

Authority (represented by

DIGA)

Named Contractors

2. MONITORING GROUP

2.1 The Parties shall establish a Monitoring Group to review and discuss the Contractor’s performance under this Contract. The Monitoring Group shall comprise of:

(a) the Representatives;

(b) the Authority’s Commercial Officer;

(c) the following representatives of the Contractor:


Page 527


(i) Chief Operations Officer;

(ii) Director of Finance and Commercial; and

(iii) Director of Asset Strategy and Portfolio; Director of Transformation and Change; and

(d) any other person the Authority or the Contractor requires.

2.2 The Monitoring Group shall only be quorate if representatives of the Authority form the majority of the attendees.

2.3 The Monitoring Group shall meet monthly throughout the Contract Period (excluding the Mobilisation Period) and at such other times as may be required by the Authority’s Representatives, save that the Monitoring Group shall not be required to meet in any month in which a Transformation Review or Annual Performance Review take place.

2.4 The Authority’s Representative shall convene and chair meetings of the Monitoring Group, and the Contractor’s Representative shall:

(a) prepare an agenda for each meeting of the Monitoring Group and provide the agenda to the Monitoring Group members at least five Business Days before each meeting (and if the Authority’s Representative disagrees with the agenda, make such amendments as may be necessary in order to reach agreement);

(b) take minutes of meetings held by the Monitoring Group (such minutes to include amongst other things, actions arising from the meetings);

(c) provide a draft of such minutes to the Authority’s Representative;

(d) if the Authority’s Representative disagrees with the draft minutes, make such amendments as may be necessary to reach agreement. Where the Parties are unable to agree draft minutes they shall refer the matter to the next meeting of the Monitoring Group for resolution; and

(e) provide the Monitoring Group members with a copy of the agreed minutes.

2.5 At least five Business Days before each meeting of the Monitoring Group, the Contractor shall procure that DIDO provides a monthly report which is in a form approved by the Authority and which includes:

(a) the information required under Clause 9.4 of the Contract;

(b) the reports required under Clause 24.6 of the Contract; and

(c) without limiting Clauses 26 and 27 of the Contract, such other information as the Authority may require to comply with the Authority’s statutory duties and/or to exercise its departmental functions including duties and obligations in respect of FOIA, EIR and Parliamentary Business.


Page 528


2.6 The Authority reserves the right to request further information or an amendment to the reports provided under paragraph 2.5 if it considers the reports to be incomplete and/or inaccurate. Such request shall be made within a reasonable time after the relevant monthly meeting.

2.7 Notwithstanding the contents of the reports provided under paragraph 2.5, each Party shall be entitled to notify the other Party of additional items to be discussed at each meeting of the Monitoring Group, provided that such notice is given at least five Business Days before the appropriate meeting.

3. [NOT USED]

4. GENERAL SCHEME OF GOVERNANCE

4.1 The Named Contractors shall be responsible for the overall direction, supervision and management of DIDO in accordance with the Infrastructure Implementation Plan, which shall align with the Authority’s Command Plan, Control Totals and Footprint Strategy.

4.2 The interrelationship of the Plans is set out in the diagram below. In the event of inconsistency between the Plans, the Plan set out higher in the diagram shall prevail to the extent of the inconsistency.]

Command Plan

Footprint Strategy

Infrastructure Implementation Plan

Prepared by the Authority with support from DIDO.

Plan

Prepared by DIDO for approval by the Authority.

Plan

4.3 The Contractor shall be entitled to participate in the following:

(a) the Owners Strategy Board (chaired by DG HOCS) which shall provide strategic direction, support and challenge to the Monitoring Group and DIDO; and

(b) the Infrastructure Joint Committee (chaired by DCDS(MilCap)), which shall be responsible for understanding and prioritising the Head Office and Front


Page 529


Line Command demands for infrastructure, aligning infrastructure planning and opportunities against other capability investment planning.

4.4 The extent to which the Named Contractors will be entitled to participate in the Owners Strategy Board and the Infrastructure Joint Committee shall be established in terms of reference to be determined.

5. MATTERS RESERVED FOR DECISION OF THE AUTHORITY

5.1 The Authority, represented by DIGA (which the Authority shall procure shall remain part of the Authority throughout the Contract Period), shall be solely responsible for the following activities, and each Party shall, so far as it is legally able, exercise all powers (direct or indirect) available to it to procure that no action or decision is taken or purported to be taken by DIDO in respect of the following activities:

(a) approving any extension to the Contract Period by up to one year in accordance with Clause 2.4 of the Contract;

(b) exercising an Option in accordance with Clause 5 of the Contract;

(c) appointing the Authority Representative in accordance with Clause 6.5 of the Contract;

(d) establishing DIGA and DIDO within the Mobilisation Period;

(e) setting DIDO’s strategy, including by development of the Command Plan and Control Totals;

(f) approving the Infrastructure Implementation Plan on an annual basis in accordance with the process set out in Clause 12 of this Contract (including approving variations to the Payment Mechanism and/or Base Case required as a result of any changes to the Infrastructure Implementation Plan in accordance with Clauses 12.24(d)(ii) or (iii);

(g) approving Funding Initiatives in accordance with Clause 13 of this Contract;

(h) monitoring the performance of both the Contractor and DIDO under this Contract in accordance with Clause 14 of the Contract;

(i) provision of the Authority Dependencies;

(j) approving additional or replacement Named Contractors and/or Contractor Key Personnel in accordance with Clause 17.7 or 17.9 of the Contract;

(k) approving any amendments to the Base Case in accordance with Clause 18 of the Contract;

(l) paying the Contractor sums due to it under this Contract in accordance with Clause 19 of the Contract;


Page 530


(m) approving any Changes to this Contract in accordance with Schedule 12 of the Contract;

(n) retendering of the Contract;

(o) approving Sub-Contractors, including the terms of the Sub-Contracts in accordance with Clause 39.8 of the Contract;

(p) approving DIDO entering into any contracts on behalf of the Secretary of State, save where the Contractor has been granted appropriate authority pursuant to a Letter of Delegation and that all required approvals have been granted in accordance with Authority Policy Rules and Guidance;

(q) approving amendments to the Authority Policy Rules and Guidance in accordance with Schedule 6; and

(r) issuing Letter(s) of Delegation to Named Contractors; and

(s) giving or withholding consent or approval as required by the terms of this Contract.

5.2 If the Authority’s approval is required for any of the activities referred to in this Contract, the Contractor shall procure that the Contractor’s Representative (on behalf of the Named Contractors) seeks approval from the Authority in accordance with the relevant terms of the Contract. Where no approval process is required for an activity listed above, the Contractor shall procure that the Contractor’s Representative complies with the following process:

(a) the Contractor’s Representative shall give written notice to the Authority, identifying itself as a notice served pursuant to this Schedule 5, and containing such information as is reasonably necessary for the Authority to consider the matter contained in the notice;

(b) within five Business Days of receipt of a notice pursuant to paragraph 5.2(a), or such other period as may be agreed between the Parties, the Authority shall give written notice to the Contractor’s Representative stating:

(i) the Authority’s consent to the matter contained in the notice; or

(ii) the Authority’s refusal to consent to the matter contained in the notice, including where possible the reasons for such refusal;

(c) the Authority may, at any time, request further information from the Contractor to allow it to consider the matter contained in the notice.

6. OBLIGATIONS OF THE CONTRACTOR AND DIDO

6.1 The Contractor shall procure that DIDO does not:

(a) make any political donations; or


Page 531


(b) make any non-commercial payments, except where the Authority has given its prior written approval.

6.2 The Contractor shall procure that DIDO:

(a) provides adequate and sufficient management information to the Authority, to allow the Authority to undertake performance monitoring of DIDO;

(b) provides to the Authority any documents provided to the Monitoring Group;

(c) has due regard to relevant Authority Policy Rules and Guidance when tendering for any goods or services; and

(d) provides such assets, services, advice or assistance as is required to ensure that the Authority can comply fully and promptly with any function or obligation imposed on it by virtue of any statutory requirement (which includes any and all legislation, statutes, statutory instruments, orders, rules, regulations or other subordinate legislation whether in force or enacted as at the date of this contract and any amendment, variation, consolidation, extension or replacement of such matters from time to time, whether before or after the date of this contract).

6.3 Nothing in this Schedule 5 shall have effect so as to require the Contractor or DIDO to take any action or omit to take any action where such action or omission would, in the reasonable opinion of the Contractor, give rise to:

(a) criminal liability on the part of the Contractor or DIDO; or

(b) any other liability for breach of any statutory or common law or regulatory duty or requirement.

6.4 The Contractor shall procure that DIDO keeps under review potential opportunities to implement the Ministerial mandate described in the Memorandum of Understanding between the Ministry of Defence and the Cabinet Office in respect of common goods and services dated 29 April 2014 (details of such Ministerial mandate to be provided by the Authority to the Contractor as soon as reasonable practicable).

7. EHS DUTY HOLDER CONSTRUCT

7.1 The DIO Duty Holder Construct (or such replacement Authority policy, rule or procedure established from time to time in accordance with Schedule 6) shall apply to DIDO in respect of any Regulatory Requirement under Environmental Legislation which imposes a duty on DIDO, provided that for the purposes of that DIO Duty Holder Construct:

(a) from time to time, the Authority shall identify to the Contractor a person within the Authority who will act as the Senior Duty Holder; and

(b) the Contractor shall ensure that at all times during the term of the Contract, a Contractor employee who is suitably qualified and experienced, and approved


Page 532


in advance by the Authority, is identified to the Authority and acts as the EHS Operating Duty Holder.

7.2 Subject always to the provisions of paragraph 7.1 above, the Contractor shall procure that the EHS Operating Duty Holder complies with the requirements of an Operating Duty Holder identified in the DIO Duty Holder Construct in respect of DIDO’s operations, or such replacement policy, rule or guidance established from time to time in accordance with Schedule 6, including without limitation:

(a) complying with requirements in the DIO Duty Holder Construct to provide reports to the Authority’s Senior Duty Holder; and

(b) procuring compliance by DIDO with any directions from the Authority’s Senior Duty Holder issued in accordance with the DIO Duty Holder Construct.


Page 533


SCHEDULE 6

AUTHORITY POLICY RULES AND GUIDANCE

1. GENERAL OBLIGATION

1.1 In accordance with Clause 9.1(k)(iv) of the Contract and subject to paragraph 8 of this Schedule 6, the Contractor shall procure that DIDO complies with all Authority Policy Rules and Guidance, save where the Authority has granted a derogation from compliance in accordance with this Schedule 6.

2. REVIEW EXERCISE

2.1 Within six months of the Effective Date, the Contractor shall procure that DIDO carries out a review of the Authority Policy Rules and Guidance and provides a report to the Authority identifying those Authority Policy Rules and Guidance which are:

(a) set, owned and managed by entities other than the Authority;

(b) set, owned and managed by the Authority (other than DIDO); and

(c) set, owned and managed by DIDO.

2.2 If the Contractor or DIDO becomes aware of Authority Policy Rules and Guidance throughout the Contract Period, which are not included in the report produced pursuant to paragraph 2.1, the Contractor shall procure that DIDO:

(a) notifies the Authority of such policy or procedure; and

(b) updates the report produced pursuant to paragraph 2.1.

2.3 Unless a derogation from compliance is granted by the Authority in accordance with this Schedule 6, the general obligation referred to in paragraph 1.1 shall apply to any Authority Policy Rules and Guidance.

3. AMENDMENTS TO AUTHORITY POLICY RULES AND GUIDANCE

3.1 Throughout the Contract Period, the Contractor shall procure that DIDO proactively promotes the development of Authority Policy Rules and Guidance, and makes proposals for improving them or withdrawing them as appropriate.

3.2 In order to request an amendment to, or withdrawal of, any Authority Policy Rules and Guidance, the Contractor shall procure that DIDO submits a written application to the Authority, providing such details as would reasonably be necessary for the Authority to fully consider the proposed amendment or withdrawal.

3.3 Within 40 Business Days of receipt of a request for an amendment or withdrawal pursuant to paragraph 3.2, the Authority shall consider the request in its absolute discretion and provide written notice to DIDO that:


Page 534


(a) the amendment or withdrawal is permitted, in which case the Authority may state in the notice that the amendment or withdrawal is to take effect from a certain date; or

(b) the amendment or withdrawal is not permitted.

4. NEW AUTHORITY POLICY RULES AND GUIDANCE

4.1 The Authority shall be entitled to create new Authority Policy Rules and Guidance.

4.2 Where paragraph 4.1 applies, the Authority shall take reasonable steps, where appropriate and practicable, to give DIDO advance notice of any new Authority Policy Rules and Guidance and to allow DIDO to make representations on any new Authority Policy Rules and Guidance before they come into effect. The Authority shall in any event take reasonable steps to draw any new Authority Policy Rules and Guidance to DIDO’s attention following such Authority Policy Rules and Guidance coming into effect.

5. DEROGATIONS FROM COMPLIANCE

5.1 DIDO may apply for a derogation from compliance with any Authority Policy Rules and Guidance by sending a written request to the Authority, together with details as to the reasons for the derogation requested.

5.2 The Authority shall have absolute discretion as to whether or not to grant any derogation. Where requested by the Authority, the Contractor shall procure that DIDO provides additional information supporting the request for a derogation.

5.3 Derogations may be granted on a temporary or permanent basis. A temporary derogation shall state the date by which compliance with the relevant policy or procedure must be achieved.

6. REGISTER OF AMENDMENTS, WITHDRAWALS AND DEROGATIONS

6.1 The Contractor shall procure that DIDO maintains:

(a) a register of amendments to, or withdrawals of, any Authority Policy Rules and Guidance made in accordance with this Schedule 6, which shall record the basis upon which it was determined that the amendment or withdrawal should be permitted; and

(b) a register of derogations granted in accordance with this Schedule 6, which shall record the basis upon which it was determined that the derogation should be granted.

7. DISPUTES

7.1 The Authority’s authorisation, confirmation or refusal to authorise:


Page 535


(a) an amendment to, or withdrawal of, any Authority Policy Rules and Guidance; or

(b) the grant of a derogation against any Authority Policy Rules and Guidance,

shall be final and binding on the Contractor and DIDO, and shall not be challenged nor referred to dispute resolution, except upon the grounds that the procedures of this Schedule 6 have not been followed.

7.2 For the avoidance of doubt, any decision of the Authority referred to in paragraph 7.1 shall be binding upon the Contractor and DIDO pending any determination made in accordance with the dispute resolution procedure.

8. CONTRACTOR RELIEF FOR DIDO NON-COMPLIANCE

8.1 For the period starting on the Commencement Date until a date falling six months after the end of the Transformation Period the Authority shall grant the Contractor relief from the Contractor’s obligation to procure that DIDO complies at all times with Clause 9.1(k) of the Contract where there is reasonable evidence that there is a corresponding non-compliance of any of the Sub-Clauses 9.1(k) (i) to (v) which can reasonably be shown to have pre-dated the Effective Date, provided that the Contractor:

(a) promptly upon becoming aware identifies such a non-compliance and notifies the Authority of such non-compliance at the next Monitoring Group meeting (and in any case identifies all such non-compliances prior to the end of the Transformation Period); and

(b) where the non-compliance relates to:

(i) Sub-Clauses 9.1(k) (iv) and (v), the Authority may, in its absolute discretion:

(A) grant an on-going derogation in accordance with paragraph 5; and/or

(B) require the Contractor to propose an outline rectification plan to address non-compliance within a timescale to be agreed between the Parties; or

(ii) Sub-Clauses 9.1(k) (i) to (iii), the Authority may, in its absolute discretion:

(A) grant an on-going waiver of the Contractor’s obligation to procure DIDO complies with such item; and/or

(B) require the Contractor to propose an outline rectification plan to address the non-compliance within a timescale to be agreed between the Parties.


Page 536


8.2 If the Contractor has complied with its obligations pursuant to paragraph 8.1 above then:

(a) the Authority shall not be entitled to exercise its right to terminate this Contract for Contractor Default under Clause 34.10; and/or

(b) to the extent that the Contractor’s failure to comply with its obligations under the Contract arises as a result of such non-compliance any such failure shall be deemed not to have occurred so that the Contractor shall be entitled to payment under the Contract as if there has been no such failure.


Page 537


SCHEDULE 7

PAYMENT MECHANISM

Part A – Introduction and Definitions

1. INTRODUCTION

1.1 The payment due to the Contractor under this Contract is made up of a number of elements described in this Schedule 7, which are as follows:

(a) a Transformation Fee, determined in accordance with Part B;

(b) a Management Fee, determined in accordance with Part C;

(c) an Operational Cash RDEL Incentive Fee, determined in accordance with paragraph 3.1 of Part D (including both a sustainable and non-sustainable element);

(d) a Utilities Cash RDEL Incentive Fee, determined in accordance with paragraph 4.1 of Part D (including both a sustainable and non-sustainable element);

(e) a Capital Projects Incentive Fee, determined in accordance with paragraph 5.1 of Part D; and

(f) a Disposals Incentive Fee, determined in accordance with paragraph 6 of Part D.

1.2 A number of adjustments and deductions are made from the incentive fee elements referred to in paragraph 1.1(c) to (f) above (and in the case of Service Deductions, from the Management Fee also), which are:

(a) a Balancing Payment, determined in accordance with paragraph 7 of Part D; and

(b) Service Deductions, determined in accordance with Part E.

1.3 For the purposes of this Schedule 7 any reference to:

(a) the “first to third Quarters” shall be deemed to exclude any Quarter which is the last Quarter of this Contract; and

(b) a “fourth Quarter” shall be deemed also to refer to any Quarter which is the last Quarter of this Contract.

2. DEFINITIONS

2.1 In this Schedule 7, unless the context otherwise requires:


Page 538


Actual Operational Costs means in respect of any Financial Year the sum of all Operational Costs evidenced by the Contractor in accordance with Clause 24 as having been properly incurred by DIDO during such Financial Year plus an adjustment amount equal to the value of all Non-Sustainable Operational Cash RDEL Savings realised in such Financial Year

Actual Operational Overspend

means in respect of any Operational Overspend Year the:

(a) Audited Actual Operational Costs for such Operational Savings Year; less

(b) Operational Cash RDEL Financial Baseline (adjusted in accordance with paragraph 8.1 of Part D) for such Operational Savings Year

Actual Operational Saving means in respect of any Operational Savings Year the:

(a) Operational Cash RDEL Financial Baseline (adjusted in accordance with paragraph 8.1 of Part D) for such Operational Savings Year; less

(b) Audited Actual Operational Costs for such Operational Savings Year

Actual Utilities Costs means in respect of any Financial Year the sum of all Utilities Costs evidenced by the Contractor in accordance with Clause 24 as having been properly incurred by DIDO during such Financial Year plus an adjustment amount equal to the value of all Non-Sustainable Utilities Cash RDEL Savings realised in such Financial Year

Actual Utilities Overspend means in respect of any Utilities Overspend Year the:

(a) Audited Actual Utilities Costs for such Utilities Savings Year; less

(b) Utilities Cash RDEL Financial Baseline (adjusted in accordance with paragraph 8.1 of Part D) for such Utilities Savings Year

Actual Utilities Saving means in respect of any Utilities Savings Year the:

(a) Utilities Cash RDEL Financial Baseline (adjusted in accordance with paragraph 8.1 of Part D) for such Financial Year; less


Page 539


(b) Audited Actual Utilities Costs for such preceding Financial Year

Amortised Voluntary Early Release Costs

has the meaning given in paragraph 3.3 of Part D

Applicable Benchmark means in respect of any Capital Project the standard against which a Capital Project of that particular type may be compared, including a construction cost benchmark by geography for each type of construction involved in such Capital Project

Assumptions at Authority Risk

means the DIGA Key Assumptions

Audited Accounts means in respect of any Financial Year the DIDO books of account for such Financial Year as audited by the National Audit Office and, following Incorporation, in respect of DIDO Ltd by the appointed auditors

Audited Actual Operational Costs

means, in respect of any Financial Year, the sum of all Operational Costs actually incurred in that Financial Year as evidenced by the relevant Audited Accounts plus an adjustment amount equal to the value of all Non-Sustainable Operational Cash RDEL Savings realised in such Financial Year

Audited Actual Projects Costs

means, in respect of any Financial Year, the sum of all Projects Costs actually incurred in that Financial Year as evidenced by the relevant Audited Accounts

Audited Actual Utilities Costs

means, in respect of any Financial Year, the sum of all Utilities Costs actually incurred in that Financial Year as evidenced by the relevant Audited Accounts plus an adjustment amount equal to the value of all Non-Sustainable Utilities Cash RDEL Savings realised in such Financial Year

Balancing Payment means the payment determined in accordance with paragraph 7 of Part D

Budgeted Cost means in respect of any Capital Project the costs budgeted in the final approved business case or approved review note for such Capital Project as to be incurred by DIDO in achieving successful completion of the same (including any amounts included in such budget by way of provision against contingent risks)


Page 540


Cap Increase Request has the meaning given in paragraph 9.2 of Part D

Capital Project means a capital works project identified in the Infrastructure Implementation Plan

Capital Projects Incentive Fee

means the fee payable by the Authority to the Contractor determined in accordance with paragraph 5.1 of Part D

Capital Projects Incentive Fee Cap

means the Capital Projects Incentive Percentage multiplied by the sum of:

1.15 times the Projects Baseline (i.e. 15% above) plus

1.0 times any CDEL expenditure related to disposal proceeds used for re-provisioning work

Capital Projects Incentive Percentage

means 0.85%

Capital Projects Service Deductions

means the amounts set out in paragraph 5.1 of Part D under the CPSDyn abbreviation

Cash RDEL means all current expenditure such as pay, contractual and other running costs but excluding depreciation, amortisation or impairment charges in respect of non current assets which are included in Non Cash RDEL

CP Baseline means in respect of any Capital Project a scope of work, Budgeted Cost, User Acceptance Criteria and a schedule of activities required in order to successfully complete such Capital Project each supported by a work breakdown structure and cost forecast sufficient to support analysis on an “earned value management” basis such that going forward work and costs can be tracked against such detailed schedule of activities in order to identify and measure time and cost shortfalls or discrepancies as they arise

Disposal Costs means in respect of any Estate Disposal any and all costs expenses and liabilities incurred by the Authority (including DIGA and/or DIDO) as a result of or in relation to such Estate Disposal, including but not limited to costs in relation to the:

(a) advertising, marketing and publicising of the Estate Disposal;

(b) drafting, negotiation and execution of any


Page 541


documents or agreements;

(c) the preparation and issue of any report on or certificate of title or building survey, the obtaining of any land or building quality or environmental assessment and of searches and enquiries of public bodies and other third parties, and the commissioning of any other vendor due diligence, appraisal or feasibility report (whether or not made available to any third party);

(d) obtaining of or making of appeals in relation to any permits, licences, permissions, consents, approvals, certificates and authorisations (whether statutory or otherwise);

(e) cancellation, variation or registration of any land or property rights or title;

(f) services of professional advisers including but not limited to valuers, property or sales agents and surveyors, measurement, building and quantity surveyors, legal, financial technical and other advisers;

(g) exercise of any legal rights or remedies including costs of enforcement;

(h) making safe or securing any asset, structure or site including by means of private security equipment or personnel;

(i) additional RDEL expenditure (other than Rebasing Cash RDEL and RDEL expenditure relating to the Existing Disposals Programme);

(j) additional CDEL expenditure (other than Rebasing CDEL and CDEL expenditure relating to the Existing Disposals Programme);

(k) any expenditure incurred with a view to enhancing the value of the Estate Asset which is the subject of the relevant Estate Disposal; and/or

(l) incurral of any liability in relation to any Tax (including the costs of assessing or disputing any such liability),


Page 542


in each case arising by reason of the relevant Estate Disposal

Disposals Incentive Fee means the fee payable by the Authority to the Contractor determined in accordance with paragraph 6 of Part D

Disposals Incentive Fee Cap

means 1.4 times the projected Disposals Incentive Fee for such year, calculated using the Disposals Incentive Fee tiered banding/percentages set out in the table contained in paragraph 6.3 of Part D and the total net disposal receipts targeted by the Authority for that year, as set out in the Infrastructure Implementation Plan

Disposal Proceeds means the proceeds received or receivable by DIDO which are:

(a) in respect of an Estate Disposal;

(b) accounted for in accordance with International Accounting Standard 18;

(c) irrevocable and unconditional,

which proceeds shall:

(d) include any amount of clawback and overage payments where and to the extent such payments are irrevocably and unconditionally receivable; and

(e) exclude in each case any amounts that on completion of an individual Estate Disposal would create a debtor for DIDO in an amount greater than £20 million which debtor would be due for payment more than one calendar year from the date of such completion (provided that such amounts shall cease to be so excluded once irrevocably and unconditionally received)

Disposal Proceeds Percentage

means the amounts set out in paragraph 6.3 of Part D

Evidence Letter means the letter (and, where appropriate, report) sent by the Contractor to the Authority in accordance with Clause 19.2

Existing Disposals means the list of existing sites and projected disposal dates for sites already identified by the Authority for


Page 543


Programme disposal prior to the Commencement Date and as detailed in the Footprint Strategy

Excess Deductions has the meaning given in paragraph 3.4 of Part C

Fee Cap means each of the Operational Cash RDEL Incentive Fee Cap, Utilities Cash RDEL Incentive Fee Cap, Capital Projects Incentive Fee Cap and Disposals Incentive Fee Cap

Handover means in respect of any Capital Project that capital works in relation to the built asset or assets comprising such Capital Project have been completed (subject to snagging) and that such asset or assets have been tested against the applicable User Acceptance Criteria and accepted into operation and handed over for use by end users (whether or not actually used by such users)

Index Corrected Utilities Cash RDEL Financial Baseline

means the Utilities Cash RDEL Financial Baseline as indexed according to the following Department of Energy & Climate Change publication: https://www.gov.uk/government/publications/quarterly-energy-prices using Table 3.1.3 “Annual prices of fuels purchased by manufacturing industry” in the UK for a “Large” consumer for each of the relevant fuel types

KPI Table has the meaning given in paragraph 2.2(a) of Part E

Main Gate means the review and approval process to which all Capital Projects (among other things) are subject, commonly referred to as “Main Gate”;

Management Fee means the fee payable to the Contractor for providing DIDO’s management function as such fee is profiled at the date hereof and as specified in paragraph 1.1 of Part C

Net Disposal Proceeds means in respect of any Estate Disposal the Disposal Proceeds less the Disposal Costs

Net Operational Savings means in respect of any Financial Year:

(a) the sum of the:

(i) Operational Cash RDEL Financial Baseline (adjusted in accordance with paragraph 8.1 of Part D) for such Financial Year; less


Page 544

https://www.gov.uk/government/publications/quarterly-energy-prices





(ii) the Net Prior Year Operational Savings as calculated in respect of each previous Financial Year which was an Operational Savings Year; less

(b) the sum of:

(i) Audited Actual Operational Costs for such Financial Year; less

(ii) Voluntary Early Release Costs incurred by DIDO (if any) in such Financial Year

Net Operational Savings Delta

means in respect of any Financial Year the additional amount of Net Operational Savings which would have been achieved but for the Net Prior Year Operational Savings in such Financial Year being a negative amount

Net Prior Year Operational Savings


Net Prior Year Utilities Savings


Net Utilities Savings means in respect of any Financial Year:

(a) the sum of the:

(i) Index Corrected Utilities Cash RDEL Financial Baseline for such Financial Year; less

(ii) Net Prior Year Utilities Savings as calculated in respect of each previous Financial Year which was a Utilities Savings Year; less

(b) the Audited Actual Utilities Costs for such Financial Year

Net Utilities Savings Delta means in respect of any Financial Year the additional amount of Net Utilities Savings which would have been achieved but for the Net Prior Year Utilities Savings in such Financial Year being a negative amount

Non Cash RDEL means all depreciation, amortisation and impairment charges in respect of non current assets


Page 545


Non-Compliant Project means a Capital Project which has achieved Handover despite having failed (either wholly or in part) to satisfy all of the User Acceptance Criteria for such Capital Project

Non-sustainable Operational Cash RDEL Savings

means a discrete and non-sustained saving of Operational Cash RDEL, for example a rent free period at the commencement of a lease renewal

Non-sustainable Utilities Cash RDEL Savings

means a discrete and non-sustained saving of Utilities Cash RDEL, for example a provision of free energy supply at the commencement of a new supply arrangement

On-boarded means the completion of the process through which DIDO reviews “in-flight” Capital Works Projects against reported actual costs and reported schedule accomplishments, validates CP Baselines, adjusts budgeted cost, adjusts budgeted schedules and adjusts End User Acceptance Criteria (where necessary).

Operational Cash RDEL Balancing Payment

means the payment specified as such in, and determined in accordance with, paragraph 7 of Part D

Operational Cash RDEL Financial Baseline

means in respect of any Financial Year the Cash RDEL expenditure identified as such in the Base Case and as anticipated to be incurred by DIDO in such Financial Year, and excluding any amounts included within the Utilities Cash RDEL Financial Baseline

Operational Cash RDEL Incentive Fee


Operational Cash RDEL Incentive Fee Cap

means an amount which in any given Financial Year is 1.19 times the Operational Cash RDEL Incentive Fee as projected for that year

Operational Costs means all Cash RDEL expenditure incurred by DIDO which, were it included in the Base Case, would constitute part of the Operational Cash RDEL Financial Baseline

Operational Overspend Year

means any Financial Year in which Audited Actual Operational Costs were greater than the Operational Cash RDEL Financial Baseline (adjusted pursuant to paragraph 8.1 of Part D)


Page 546


Operational Savings Percentage

means OSPyn in paragraph 3.1 in Part D

Operational Savings Year means any Financial Year in which the Audited Actual Operational Costs were less than the Operational Cash RDEL Financial Baseline (adjusted pursuant to paragraph 8.1 of Part D)

Performance Levels means performance levels set out in “Performance Bands” in Table 2 in Appendix 2 to this schedule

Portfolio CPI means in respect of any Quarter the number determined by dividing:

(a) the cumulative Budgeted Cost for all work actually performed up to the end of that Quarter in delivery of all On-boarded Capital Projects; by

(b) the cumulative total cost actually incurred by DIDO for all work actually performed up to the end of that Quarter in delivery of all On-boarded Capital Projects

Portfolio SPI means in respect of any Quarter the number determined by dividing:

(a) the cumulative Budgeted Cost for all work actually performed up to the end of that Quarter in delivery of all Capital Projects which have been On-boarded; by

(b) the cumulative Budgeted Cost for the work scheduled to have been performed up to the end of that Quarter in delivery of such On-boarded Capital Projects (whether or not actually performed)

Projected Operational Savings Amount

means in respect of any Financial Year an amount equal to the:

(a) Operational Cash RDEL Financial Baseline for such Financial Year less the Net Prior Year Operational Savings for such Financial Year; less

(b) Operational Costs forecast in the Infrastructure Implementation Plan as to be incurred in such Financial Year plus an adjustment amount


Page 547


equal to the value of all Non-Sustainable Operational Cash RDEL Savings forecast as to be realised in such Financial Year

Projected Utilities Savings Amount

means in respect of any Financial Year an amount equal to the:

(a) Utilities Cash RDEL Financial Baseline for such Financial Year less the Net Prior Year Utilities Savings for such Financial Year; less

(b) Utilities Costs forecast in the Infrastructure Implementation Plan as to be incurred in such Financial Year plus an adjustment amount equal to the value of all Non-Sustainable Utilities Cash RDEL Savings forecast as to be realised in such Financial Year

Projects Baseline means in respect of any Financial Year the CDEL expenditure identified as such in the Base Case and as anticipated to be incurred by DIDO in such Financial Year

Projects Costs means all CDEL expenditure incurred by DIDO

Rebasing CDEL means CDEL expenditure identified as such in the Base Case and incurred in relation to the rebasing of personnel from Germany and any CDEL expenditure not in the Base Case but used to rebase personnel from any location to another location and funded through disposal proceeds

Rebasing Cash RDEL means RDEL expenditure identified as such in the Base Case and incurred in relation to the rebasing of personnel from Germany and any RDEL expenditure not in the Base Case but used to rebase personnel from any location to another location and funded through disposal proceeds

Required CPI means for each Quarter which falls within the Transformation Period an Portfolio CPI of at least 0.95 and for each Quarter that does not fall within the Transformation Period an Portfolio CPI of at least 1.0

Required SPI means for each Quarter which falls within the Transformation Period an Portfolio SPI of at least 0.95 and for each Quarter that does not fall within the Transformation Period an Portfolio SPI of at least 1.0


Page 548


Retention has the meaning given in the relevant part of paragraph 3.1 of Part D

Service Deduction means in respect of any Quarter the amount calculated in accordance with paragraph 2 of Part E

Service Deduction Table has the meaning given in paragraph 2.2(b) of Part E

Transformation Fee means the amounts payable by the Authority to the Contractor, as determined in accordance with Part B

Transformation Milestone means those milestones which are identified in the Transformation Plan as collectively comprising a “Transformation Requirement”

Transformation Milestone Completion Certificate

has the meaning given in Clause 4.6(a)

Transformation Milestone Fee

means in respect of each Transformation Milestone the amount set out against such Transformation Milestone in the column headed “Transformation Milestone Fee” of the table at paragraph 1.1 of Part B

Transformation Requirement Completion Certificate

has the meaning given in Clause 4.8

True Cost Variance has the meaning given in paragraph 8.1 of Part D

User Acceptance Criteria means the criteria agreed at Main Gate as meeting end user requirements for a built asset or assets comprising a Capital Project and against which the quality of such built asset or assets are measured

Utilities Cash RDEL Balancing Payment

means the payment specified as such in, and determined in accordance with, paragraph 7 of Part D

Utilities Cash RDEL Incentive Fee


Utilities Cash RDEL Incentive Fee Cap

means the amount which in any given Financial Year is a multiple of 1.39 times the Utilities Cash RDEL Incentive Fee as projected for that year

Utilities Cash RDEL Financial Baseline

means in respect of any Financial Year the Utilities Costs identified as such in the Base Case and as anticipated to be incurred by DIDO in such Financial Year


Page 549


Utilities Costs means all Cash RDEL expenditure incurred by DIDO in relation to the procuring of the supply of each Utility Service to the Estate where it is accounted for within the Utilities Cash RDEL Financial Baseline under the Utilities Sub-strategy classification, i.e. excluding Aquatrine PFI

Utilities Overspend Year means any Financial Year in which Audited Actual Utilities Costs were greater than the Utilities Cash RDEL Financial Baseline (adjusted pursuant to paragraph 8.1 of Part D)

Utilities Savings Percentage

means the amounts set out in paragraph 4.1(b) of Part D under the USPyn abbreviation

Utilities Savings Year means any Financial Year in which the Audited Actual Utilities Costs were less than the Utilities Cash RDEL Financial Baseline (adjusted pursuant to paragraph 8.1 of Part D)

Voluntary Early Release Costs

means any costs incurred by DIDO and/or the Authority as a result of the release from employment of persons employed by DIDO under and in accordance with the Authority’s “voluntary early release scheme” provided in each case that such release was carried out in line with all relevant Authority Policy Rules and Guidance

2.2 In this Schedule 7:

(a) any reference to a “Part” is to the relevant part of this Schedule 7; and

(b) unless otherwise stated, any reference to a “paragraph” is to the relevant paragraph within that Part.


Page 550


Part B – Transformation Fee

1. TRANSFORMATION FEE PROFILE

1.1 The Transformation Milestone Fee in respect of each Transformation Milestone shall be:

Transformation Milestone Fee Table (£s excluding VAT)

Milestone / Date MS1 MS2 MS3 MS4 MS5 MS6

TR1 Footprint Strategy n/a 1,973,431 628,313 628,313 471,129 471,129 4,172,316

TR2 Disposals – Existing DSG programme n/a n/a 194,699 n/a n/a n/a 194,699

TR3Prepare business cases for Whiteboard sites

n/a n/a n/a n/a n/a 438,035 438,035

TR4 Disposals – White Board sites n/a n/a n/a n/a n/a 25,512 25,512

TR5Soft FM future contracting strategy HESTIA enhancements

26,789 133,947 214,315 428,630 n/a 817,076 1,620,758

TR6Programme & Projects: collate data and recommend strategy for delivery of capital works.

n/a n/a 234,419 998,359 n/a 285,450 1,518,228

TR7Develop and implement a workforce plan for the IIP (enhanced from EOM) with regard to TUPE

n/a 1,161,769 n/a 868,643 17,510 17,510 2,065,433

26,789 3,269,147 1,271,747 2,923,945 488,640 2,054,713 10,034,981

Total

Total

1.2 The target dates for achieving the Transformation Milestone and high level requirements are as follows (with MS1 to MS6 inclusive being as set in the immediately following table):

Transformation Milestone target dates table

MS1 The last day of the third month after the Effective Date.

MS2 The last day of the sixth month after the Effective Date

MS3 The last day of the ninth month after the Effective Date.

MS4 The last day of the twelfth month after the Effective Date.

MS5 The last day of the fifteenth month after the Effective Date.

MS6 The last day of the Transformation Period.

Transformation Milestone requirements table (clause 4 refers)

1.3 The Transformation Milestone requirements table and the Test On Completion table (which shall comprise test, evaluation & acceptance points) for each Transformation Milestone is contained within Part 2 of Schedule 3 along with a detailed description of activities.


Page 551


These Test Points do not take precedence over the more detailed descriptions set out in the Short-term Transformation plan within Schedule 3, Part 2 - they are instead intended to act as interim test points leading towards the final ultimate test on the last row of the Test on Completion table.

2. TRANSFORMATION MILESTONE FEES

2.1 Upon issue by the Authority of a Transformation Milestone Completion Certificate pursuant to Clause 4.6(a), the Contractor shall be entitled to submit to the Authority an Evidence Letter (for the purposes of which, the relevant evidence shall be the Transformation Milestone Completion Certificate) in accordance with Clause 19.2 immediately for the Transformation Milestone Fee for the relevant Transformation Milestone.

2.2 Except where all Transformation Milestones have been accepted for a Transformation Requirement, where the Contractor does not receive a Transformation Requirement Completion Certificate in respect of any Transformation Requirement by the date of expiry of the Transformation Period, the Authority shall be entitled at its election either to:

(a) deduct an amount equal to 50% of all the Transformation Milestone Fees previously paid to the Contractor in respect of such Transformation Requirement (the Applicable Deduction); or

(b) commission a third party to deliver such Transformation Requirement in which case the Authority shall be entitled to deduct an amount equal to the lower of the Applicable Deduction and the combination of the reasonable actual and forecast additional costs incurred by the Authority as a result of the commissioning of such third party to deliver such Transformation Requirement,

in each case from subsequent monthly instalments of Management Fee or the subsequent Quarterly Payments (as applicable).


Page 552


Part C - Management Fee

1. MANAGEMENT FEE

1.1 Subject to indexation in accordance with paragraph 1.2 below, the Management Fee shall be as set out below and shall be payable in a single instalment during the period to the Effective Date and in monthly instalments for each 12 month period from the Effective Date thereafter in accordance with paragraphs 3.1 and 3.2 respectively:

Year

Year End Date

Annual £ Excluding

VAT

Monthly £ Excluding

VAT

Comments

0

Period to the

Effective Date

3,066,606 3,066,606 One off payment on the Effective Date for mobilisation

1

12 months from but

not including

the Effective

Date

11,248,156 937,346 12 monthly equal instalments

2

12 months from but

not including the first

anniversary of the

Effective Date


3

12 months from but

not including the second anniversary

of the Effective

Date


4

12 months from but

not including the third

anniversary



Page 553


of the Effective

Date

5

12 months from but

not including the fourth

anniversary of the

Effective Date


6

12 months from but

not including the fifth

anniversary of the

Effective Date


7

12 months from but

not including the sixth

anniversary of the

Effective Date


8

12 months from but

not including

the seventh anniversary

of the Effective

Date


9

12 months from but

not including the eighth

anniversary of the

Effective Date



Page 554


10

The period from but

not including the ninth

anniversary of the

Effective Date

3,044,233 338,248

Monthly equal instalments for each month during such period

10 year total 59,354,099

11

Up to three months from the

tenth anniversary

of the Effective

Date

Up to 1,014,744 338,248

Monthly equal instalments for each of the first 3 months of the optional extension year for which an option is granted

11

Up to nine months

from but not

including the end of the third

month from the tenth

anniversary of the

Effective Date

Up to 3,044,233 338,248

Monthly equal instalments for each of the last 9 months of the optional extension year for which an extension is granted

Extension year total 4,058,977

1.2 The Management Fee shall be indexed for each year on the anniversary of the Commencement Date by reference to the Consumer Price Index. Such indexation will be derived by reference to (A/B) expressed as a percentage, where: A = the index for the relevant month; and B = the index for the Contract signature month. The index in each case will be the monthly CPI index.


Page 555


2. [NOT USED]

3. PAYMENT OF THE MANAGEMENT FEE

3.1 The Management Fee for the period ending on the Effective Date shall be payable in a single payment in accordance with the table above, which the Contractor shall be entitled to include within an Evidence Letter on the Effective Date.

3.2 Following the Effective Date the Management Fee for each 12 month period from the Effective Date shall be payable in monthly instalments in accordance with the table set out in paragraph 1.1 above, each of which the Contractor shall be entitled to include within the Evidence Letter for each month.

3.3 The Contractor shall not be entitled to include instalments of Management Fee within any Evidence Letter:

(a) for any month falling within the Mobilisation Period, but rather shall include such instalments within the Evidence Letter provided to the Authority in the first month following the Mobilisation Period (together with the instalment for such Payment Period); or

(b) subject to Clause 3.14, where any Contractor Mobilisation Activities have not been satisfied or waived.

3.4 The Authority shall be entitled to deduct from the third monthly instalment of Management Fee in any Quarter any amount of Service Deductions accruing in respect of such Quarter. In the event the amount of Service Deductions in any month are greater than the instalment of Management Fee payable in such month (such excess sum, the Excess Deductions) the Authority shall be entitled to deduct an amount equal to the Excess Deductions from subsequent monthly instalments of Management Fee or the subsequent Quarterly Payments (as applicable).


Page 556


Part D – Quarterly Payment

1. QUARTERLY PAYMENT CONCEPTS

1.1 The Quarterly Payment consists of a number of incentive fee elements, each as set out in this Part D. These are:

(a) an Operational Cash RDEL Incentive Fee, determined in accordance with paragraph 3.1;

(b) a Utilities Cash RDEL Incentive Fee, determined in accordance with paragraph 4.1;

(c) a Capital Projects Incentive Fee, determined in accordance with paragraph 5.1; and

(d) a Disposals Incentive Fee, determined in accordance with paragraph 6.1.

1.2 A number of adjustments and deductions are made from the above incentive fee elements. These are:

(a) Service Deductions (save for Capital Projects Incentive Fee), determined in accordance with Part E; and

(b) a Balancing Payment, determined in accordance with paragraph 7.1.

1.3 Paragraph 2 below sets out the overall formula for determining the Quarterly Payment for any given Quarter. Paragraphs 3 to 8 set out how each individual component of the formula is calculated. Paragraph 9 sets out certain caps that apply to the fees described in paragraph 1.1 above.

2. QUARTERLY PAYMENT FORMULA

2.1 The Quarterly Payment in respect of a particular Quarter “qn” shall be calculated in accordance with the following formulae:

(a) for each Quarter other than the fourth Quarter in any Financial Year “yn”,

QPqn = (OCRIFqn + UCRIFqn + CPIFqn + DIFqn) - (SDqn + BPqn); and

(b) for the fourth Quarter in any Financial Year “yn”,

QPqn = ((OCRIFq4 - OCRIF∑qn1-3) + (UCRIFq4 - UCRIF∑qn1-3) + (CPIFq4 - CPIF∑qn1-3) + DIFq4) - (SDq4 + BPqn),

where:

QPqn = the Quarterly Payment for the Quarter “qn”

OCRIFqn = the Operational Cash RDEL Incentive Fee for the Quarter “qn”,


Page 557


determined in accordance with paragraph 3.1

UCRIFqn = the Utilities Cash RDEL Incentive Fee for the Quarter ”qn”, determined in accordance with paragraph 4.1

CPIFqn = the Capital Projects Incentive Fee for the first, second or third Quarter (as the case may be) of the Financial Year ”yn”, determined in accordance with paragraph 5.1

DIFqn = the Disposals Incentive Fee for the first, second or third Quarter (as the case may be) of the Financial Year ”yn”, determined in accordance with paragraph 6.1

SDqn = the aggregate of all applicable Service Deductions for the first, second or third Quarter (as the case may be) of the Financial Year ”yn”, determined in accordance with Part E

OCRIFq4 = the Operational Cash RDEL Incentive Fee for the fourth Quarter in the Financial Year “yn”, determined in accordance with paragraph 3.1(b)

OCRIF∑qn1-3

= the aggregate of all amounts of Operational Cash RDEL Incentive Fee payable in respect of the first to third Quarters of the Financial Year “yn”

UCRIFq4 = the Utilities Cash RDEL Incentive Fee for the fourth Quarter in the Financial Year “yn”, determined in accordance with paragraph 4.1(b)

UCRIF∑qn1-3

= the aggregate of all amounts of Utilities Cash RDEL Incentive Fee payable in respect of the first to third Quarters in the Financial Year “yn”

CPIFq4 = the Capital Projects Incentive Fee for the fourth Quarter in the Financial Year “yn”, determined in accordance with paragraph 5.1

CPIF∑qn1-3 = the aggregate of all amounts of Capital Projects Incentive Fee payable in respect of the first to third Quarters of the Financial Year “yn”

DIFq4 = the Disposals Incentive Fee for the fourth Quarter in the Financial Year “yn”, calculated in accordance with paragraph 6.1

SDq4 = the aggregate of all applicable Service Deductions for the fourth Quarter in the Financial Year “yn”, determined in accordance with Part E

BPqn = the Balancing Payment for the Quarter “qn” of the Financial Year ”yn”, determined in accordance with paragraph 7.1

provided that:


Page 558


(c) where any Service Deductions are to be made in respect of any Quarter such Service Deductions shall be made following the application of any relevant Fee Cap(s); and

(d) the Incentive Fee in respect of any Quarter falling within the Mobilisation Period shall be zero, and in respect of any Quarter falling in part within the Mobilisation Period shall be reduced pro rata to that proportion of the relevant Quarter as falls outside the Mobilisation Period.

2.2 The Contractor shall calculate the Quarterly Payment due for each Quarter and shall be entitled to include such Quarterly Payment within the Evidence Letter for the second Payment Period of the immediately following Quarter. In the event the Authority does not agree with the Contractor’s calculation of any Quarterly Payment the provisions of Clause 19.10 to 19.13 shall apply.

3. OPERATIONAL CASH RDEL INCENTIVE FEE

3.1 The Operational Cash RDEL Incentive Fee in respect of a particular Quarter “qn” shall be:

(a) for each Quarter other than the fourth Quarter in any Financial Year “yn”, 90% x 25% of the Operational Savings Percentage(s) of the Projected Operational Savings Amount (with the remaining 10% x 25% of the Operational Savings Percentage(s) of the Projected Operational Savings Amount being retained (the Retention) and released in accordance with 3.1.(c); and

(b) for the fourth Quarter in each Financial Year “yn”, an amount calculated in accordance with the following formula:

OCRIFq4 = ((OSPyn((OCRFBAyn - NPYOSyn) – (AOCyn – VERCyn + AVERCyn))) + (NSOCRSyn x30%) x90% (with the remaining 10% being retained (the Retention) and released in accordance with paragraph 3.2 (and where this calculation would result in a negative amount the provisions of Clause 19.8 shall apply)

where:

OCRIFq4 = the Operational Cash RDEL Incentive Fee for the fourth Quarter in the Financial Year “yn”

OSPyn = the Operational Savings Percentage as determined by the following table

Operational Cash RDEL

Savings

Lower boundary

Upper boundary

Incentive fee %


Page 559


Band 1: £0M to £17.5M Savings

0 17,500,000 0.0%

Band 2: £17.5M to

£65M Savings

17,500,001 65,000,000 20.0%

Band 3: £65M to £105M Savings

65,000,001 105,000,000 30.0%

Band 4: £105M to

£145M Savings

105,000,001 145,000,000 40.0%

Band 5: £145M to

£185M Savings

145,000,001 185,000,000 50.0%

Band 6: £185M to

£225M Savings

185,000,001 225,000,000 55.0%

Band 7: Above £225M Savings

225,000,001 n/a 59.0%

OCRFBAyn

=

the Operational Cash RDEL Financial Baseline for the Financial Year “yn”, as adjusted in accordance with paragraph 7

NPYOSyn = the Net Prior Year Operational Savings for the Financial Year “yn”, determined in accordance with paragraphs 3.4 to 3.6

AOCyn = the Actual Operational Costs for the Financial Year “yn”


Page 560


VERCyn = the Voluntary Early Release Costs incurred by DIDO (if any) for the Financial Year “yn”

AVERCyn = the Amortised Voluntary Early Release Costs for the Financial Year “yn”, determined in accordance with paragraph 3.3

NSOCRSyn = the aggregate total of all Non-sustainable Operational Cash RDEL Savings for the Financial Year “yn” which Non-sustainable Operational Cash RDEL Savings were identified in the Infrastructure Implementation Plan for such Financial Year “yn” approved by the Authority in accordance with Clause 12.

3.1A Each Party agrees to:

(a) provide the other Party with all information reasonably required to enable the calculation of projected Operational Cash RDEL Incentive Fees using the risk adjusted Operational Costs savings as determined by the Authority during the tender evaluation;

(b) remove any Non-Sustainable Operational Cash RDEL Savings; and

(c) recalibrate the gain-share percentages set out in the table at paragraph 3.1 of Part D so that, following such recalibration, the combined total of the aggregate projected Operational Cash RDEL Incentive Fees and the projected Non-Sustainable Operational Cash RDEL Savings are the same as would have been payable prior to such removal,

in each case within 10 Business Days of the Commencement Date.

3.2 The Retention is payable immediately following National Audit Office approval of DIDO’s accounts for the previous Financial Year (in the event that the final audited numbers are different to the provisional numbers a credit/debit shall be generated as soon as is practical after the audited numbers are available in accordance with the Balancing Payments procedure in paragraph 7 of Part D) or, where such approval is delayed is payable as follows:

(a) where approval is still outstanding four months after the Financial Year end, 75% x the Retention (i.e. 7.5% of the Operational Savings Percentage(s) of the Actual Operational Saving) using provisional (unaudited) numbers;

(b) where approval is still outstanding 12 months after the financial year end, 25% x the Retention of the Operational Savings Percentage(s) of the Actual Operational Saving using provisional (unaudited) numbers.

Voluntary Early Release Costs

3.3 Where in any Quarter the Authority (including DIDO) incurs any Voluntary Early Release Costs in respect of Authority Personnel such costs shall be amortised


Page 561


over the Financial Years from and including the Financial Year in which such costs were incurred until and including the Financial Year in which the Expiry Date is scheduled to fall (each such amortised amount, the Amortised Voluntary Early Release Costs).

Net Prior Year Operational Savings

3.4 The Net Prior Year Operational Savings as calculated for the first Financial Year shall be zero.

3.5 The Net Prior Year Operational Savings for any Financial Year “yn” where every prior Financial Year up to and including Financial Year “yn-1” has been an Operational Savings Year shall be equal to the highest Actual Operational Savings achieved in any single Financial Year.

3.6 The Net Prior Year Operational Savings for any Financial Year “yn” after the first Financial Year where any prior Financial Year up to and including Financial Year “yn-1” was an Operational Overspend Year shall be an amount equal to:

(a) the sum of:

(i) the aggregate of the Actual Operational Overspend for each prior Financial Year which was an Operational Overspend Year (this calculation being performed on a cumulative basis such that, by way of example only, in determining the product of this limb (i) in Financial Year six, the Actual Operational Overspend for each of Financial Years one to five which was an Operational Overspend Year would be calculated individually and then combined to form an aggregate sum); and

(ii) the aggregate of the Net Operational Savings achieved in each prior Financial Year:

(A) which is an Operational Savings Year; and

(B) in which the product of the Operational Cash RDEL Incentive Fee calculation was an amount greater than zero,

(this calculation being performed on a cumulative basis such that, by way of example only, in determining the product of this limb (ii) in Financial Year six, the above calculation would be carried out in respect of each of Financial Years one to five which was both an Operational Savings Year and a year in which an Operational Cash RDEL Incentive Fee was potentially payable and the resulting Net Operational Savings for each such year would be combined into an aggregate sum),

less

(b) the Net Operational Savings Delta in each prior Financial Year:


Page 562


(i) which is an Operational Savings Year; and

(ii) in which the product of the Operational Cash RDEL Incentive Fee calculation was an amount equal to or less than zero,

(this calculation being performed on a cumulative basis such that, by way of example only, in determining the product of this limb (b) in Financial Year six, the above calculation would be carried out in respect of each of Financial Years one to five which was both an Operational Savings Year and a year in which an Operational Cash RDEL Incentive Fee was not potentially payable and the resulting Net Operational Savings Delta for each such year would be combined into an aggregate sum).

3.7 Worked examples of the calculation of Net Prior Year Operational Savings are attached for illustrative effect at Appendix 3. These worked examples are included in order to aid interpretation of paragraph 3.6 above, but are not intended of themselves to have operative effect.

4. UTILITIES CASH RDEL INCENTIVE FEE

4.1 The Utilities Cash RDEL Incentive Fee in respect of a particular Quarter “qn” shall be:

(a) for each Quarter other than the fourth Quarter in any Financial Year “yn”, 25% of the Utilities Savings Percentage of the Projected Utilities Savings Amount; and

(b) for the fourth Quarter in each Financial Year “yn”, an amount calculated in accordance with the following formula:

UCRIFq4 = (USPyn((ICUCRFByn - NPYUSyn) - AUCyn)) + (NSUCRSyn x30%) (and where this calculation would result in a negative amount the provisions of Clause 19.8 shall apply)

where:

UCRIFq4 = the Utilities Cash RDEL Incentive Fee for the fourth Quarter in the Financial Year “qn”

USPyn =

Utilities Cash RDEL Savings

Lower boundary

Upper boundary

Utilities Savings

Percentage

Band 1: £0M to £1.5M Savings

n/a 1,500,000 -

Band 2: £1.5M to £36.5M

1,500,001 36,500,000 20.0%


Page 563


Savings

Band 3: £36.5M to

£71.5M Savings

36,500,001 71,500,000 30.0%

Band 4: £71.5M to £106.5M Savings

71,500,001

106,500,000 40.0%

Band 5: £106.5M to

£141.5M Savings

106,500,001

141,500,000 50.0%

Band 6: £141.5M to

£176.5M Savings

141,500,001

176,500,000 55.0%

Band 7: Above £176.5M Savings

176,500,001 n/a 59.0%

ICUCRFByn

=

the Index Corrected Utilities Cash RDEL Financial Baseline for the Financial Year “yn”

NPYUSyn = the Net Prior Year Utilities Savings for the Financial Year “yn”, determined in accordance with paragraph 0 to 4.4

AUCyn = the four year rolling average of the Actual Utilities Costs for the Financial Year “yn”, being the average of the sum of all Actual Utilities Costs for each of the current and preceding three Financial Years (or, in the third Financial Year the current and preceding two Financial Years, in the second Financial Year the current and preceding Financial Year and in the first Financial Year that Financial Year only with no averaging applied)

NSUCRSyn = the aggregate total of all Non-sustainable Utilities Cash RDEL Savings for the Financial Year “yn” which Non-sustainable Utilities Cash RDEL Savings were identified in the Infrastructure Implementation Plan for such Financial Year “yn” approved by the Authority in accordance with Clause 12


Page 564


4.1A Each Party agrees to:

(a) provide the other Party with all information reasonably required to enable the calculation of projected Utilities Cash RDEL Incentive Fees using the risk adjusted Utilities Costs savings as determined by the Authority during the tender evaluation;

(b) remove any Non-Sustainable Utilities Cash RDEL Savings; and

(c) recalibrate the gain-share percentages set out in the table at paragraph 4.1 of Part D so that, following such recalibration, the combined total of the aggregate projected Utilities Cash RDEL Incentive Fees and the projected Non-Sustainable Utilities Cash RDEL Savings are the same as would have been payable prior to such removal,

in each case within 10 Business Days of the Commencement Date.

Net Prior Year Utilities Savings

4.2 The Net Prior Year Utilities Savings as calculated for the first Financial Year shall be zero.

4.3 The Net Prior Year Utilities Savings for any Financial Year “yn” where every prior Financial Year up to and including Financial Year “yn-1” has been a Utilities Savings Year shall be equal to the highest Actual Utilities Savings achieved in any single Financial Year.

4.4 The Net Prior Year Utilities Savings for any Financial Year “yn” after the first Financial Year where any prior Financial Year up to and including Financial Year “yn-1” was a Utilities Overspend Year shall be an amount equal to:

the sum of:

(i) the aggregate of the Actual Utilities Overspend for each prior Financial Year which was a Utilities Overspend Year (this calculation being performed on a cumulative basis such that, by way of example only, in determining the product of this limb (i) in Financial Year six, the Actual Utilities Overspend for each of Financial Years one to five which was a Utilities Overspend Year would be calculated individually and then combined to form an aggregate sum); and

(ii) the aggregate of the Net Utilities Savings achieved in each prior Financial Year:

(A) which is a Utilities Savings Year; and

(B) in which the product of the Utilities Cash RDEL Incentive Fee calculation was an amount greater than zero,


Page 565


(this calculation being performed on a cumulative basis such that, by way of example only, in determining the product of this limb (ii) in Financial Year six, the above calculation would be carried out in respect of each of Financial Years one to five which was both a Utilities Savings Year and a year in which a Utilities Cash RDEL Incentive Fee was potentially payable and the resulting Net Utilities Savings for each such year would be combined into an aggregate sum),

less

(b) the Net Utilities Savings Delta in each prior Financial Year:

(i) which is a Utilities Savings Year; and

(ii) in which the product of the Utilities Cash RDEL Incentive Fee calculation was an amount equal to or less than zero,

(this calculation being performed on a cumulative basis such that, by way of example only, in determining the product of this limb (b) in Financial Year six, the above calculation would be carried out in respect of each of Financial Years one to five which was both a Utilities Savings Year and a year in which a Utilities Cash RDEL Incentive Fee was not potentially payable and the resulting Net Utilities Savings Delta for each such year would be combined into an aggregate sum).

4.5 Worked examples of the calculation of Net Prior Year Utilities Savings are attached for illustrative effect at Appendix 3. These worked examples are included in order to aid interpretation of paragraph 4.4 above, but are not intended of themselves to have operative effect.

5. CAPITAL PROJECTS INCENTIVE FEE

5.1 The Capital Projects Incentive Fee in respect of a particular Quarter “qn” shall be: an amount calculated in accordance with the following formula:

CPIFqn = (((CPIPqn x PBAqn) – CPSDqn)/3) x QOM (provided that where this calculation would result in a negative amount the provisions of Clause 19.8 shall apply)

where:

QOM = in respect of any Quarter which is the first Quarter of this Contract or the Last Quarter of this Contract, the combined number of whole and part months in such Quarter, and for any other Quarter shall equal three

CPIFqn = the Capital Projects Incentive Fee for the Quarter “qn”

CPIPqn = the Capital Projects Incentive Percentage for the Quarter “qn”


Page 566


PBAqn = the Projects Baseline for the Quarter “qn”, as adjusted in accordance with paragraph 7.1 of Part D

CPSDqn = the sum of all Capital Projects Service Deductions for the Quarter “qn”, determined in accordance with the table below:

Element Criteria Applicable Capital Projects Service Deduction

Schedule Performance Index

Achievement of an Portfolio SPI equal to or better than the applicable Required SPI

For each Quarter “qn” a deduction of 2% of the Capital Projects Incentive Fee for such Quarter for each 0.01 by which the Portfolio SPI for that Quarter falls below the Required SPI for such Quarter, up to a maximum of 25% total deduction in such Quarter

Cost Performance Index

Achievement of an Portfolio CPI equal to or better than the applicable Required CPI

For each Quarter “qn” a deduction of 2% of the Capital Projects Incentive Fee for such Quarter for each 0.01 by which the Portfolio CPI for that Quarter falls below the Required CPI for such Quarter, up to a maximum of 25% total deduction in such Quarter

Benchmark requirement

93% of Capital Projects submitted to Main Gate in a Quarter are evidenced at such Main Gate to be costed at a level equal to or lower than the relevant Applicable Benchmarks for such Capital Projects.

For each Quarter “qn” a deduction of 2% of the Capital Projects Incentive Fee for such Quarter for each 1% increment by which the percentage of Capital Projects which were:

(a) submitted to Main Gate in such Quarter; and

(b) costed at a level equal to or below the relevant Applicable Benchmark for such Capital Projects,

falls below the required standard of at least 93% of all Capital Projects which were submitted to Main Gate in any Quarter being costed at a level equal to or below the relevant Applicable Benchmark for such Capital Projects, up to a maximum of 25% total deduction in such Quarter

By way of example only, if in a given Quarter ten Capital Projects were submitted to Main Gate of which one


Page 567


was costed at a level higher than its Applicable Benchmark, a deduction of 6% would apply (as only 90% of the ten submitted Capital Projects were costed at a level equal to or lower than their relevant Applicable Benchmarks which leads to a deduction of 6% after applying the rate of 2% for each 1% below 93%)

User satisfaction requirement

Achievement of User Acceptance Criteria

For each Quarter “qn” a deduction of 2% of the Capital Projects Incentive Fee for such Quarter for each 1% of the total number of Capital Projects which achieved Handover in such Quarter which were Non-Compliant Projects, up to a maximum of 25% total deduction in such Quarter

By way of example only, if in a given Quarter five Capital Projects achieve Handover and one of those Capital Projects is a Non-Compliant Project, a deduction of 25% would apply (as only 80% of the five Capital Projects which achieved Handover did so having achieved their User Acceptance Criteria. This would lead to a deduction of 40% after applying the rate of 2% for each 1% increment, therefore the cap would apply reducing the actual deduction to 25%)

Measurement and reporting

5.2 In respect of Capital Projects that have commenced prior to the Effective Date, during the Transformation Period and in any event no later than:

(a) 180 days following the Effective Date, the Contractor shall procure that DIDO determines a CP Baseline for each of the ten highest ranked Capital Projects (such ranking being as determined by the Authority, taking account of their strategic military importance and CDEL budget); and

(b) 270 days following the Effective Date, the Contractor shall procure that DIDO determines a CP Baseline for all remaining Capital Projects for which a CP Baseline has not already been determined.


Page 568


5.3 In respect of Capital Projects that commence on or following the Effective Date the Contractor shall procure that DIDO determines a CP Baseline for each such Capital Project on a timely basis.

5.4 In determining the CP Baseline for any Capital Project DIDO shall follow the “Project Review Boards” process described in paragraph 22.1 of Part 2 of Schedule 3.

5.5 Where a CP Baseline has not been determined for any Capital Project in accordance with the time requirements set out in paragraphs 5.2 or 5.3 (as applicable), the Authority shall be entitled to notify the Contractor of its estimate of the scope of work, cost budget and of activities for such Capital Project which estimate shall be deemed to be the CP Baseline (and which estimated cost budget shall be deemed to be the Budgeted Cost) for the purposes of calculating Capital Projects Service Deductions pursuant to paragraph 5.1 until such time as a CP Baseline has been determined.

5.6 The Contractor shall procure that DIDO provides to the Authority all reports and information required by the Authority in order to carry out the calculations required to determine in any Quarter whether any Capital Projects Service Deductions have accrued in such Quarter in respect of any Capital Projects, and in the absence of such reports and information the Authority shall be entitled to make such assumptions as to the actual performance of such Capital Projects as it considers appropriate.

Benchmarked Costs and User Acceptance Criteria

5.7 The Contractor shall procure that DIDO does not submit any Capital Projects to Main Gate for which the Authority has not yet approved Applicable Benchmarks and User Acceptance Criteria except with the prior written approval of the Authority to the contrary. The Parties agree that such Applicable Benchmarks can reasonably be provided, taking account in each case of relevant government and commercial data.

Applicable Benchmarks

5.8 The Contractor shall procure that DIDO:

(a) by the date falling six months from the Effective Date develops a schedule of Applicable Benchmarks and Applicable Benchmark component elements, which schedule shall be as detailed and comprehensive as is reasonably practicable having regard to the information available at any given time with respect to proposed Capital Projects and of relevant industry and other applicable standards;

(b) reviews and keeps current such schedule (having regard to relevant industry and other applicable standards and taking reasonable account of any comments provided by the Authority from time to time); and

(c) submits annually to the Authority and from time to time on the Authority’s reasonable request a copy of such schedule for Authority review and approval.


Page 569


6. DISPOSALS INCENTIVE FEE

6.1 Subject to paragraph 6.2, the Disposals Incentive Fee in respect of a particular Quarter “qn” shall be equal to the Disposal Proceeds Percentage of all Net Disposal Proceeds received in the immediately preceding Quarter.

6.2 Where and to the extent at the time of calculation of any Disposals Incentive Fee any Disposal Costs are known only on an estimated basis or are otherwise uncertain the Authority shall be entitled to make a reasonable assessment of such Disposal Costs and the Disposals Incentive Fee shall be calculated as if such assessment were the relevant Disposal Costs. Where subsequently the Disposal Costs which were the subject of such assessment are finally agreed or determined an amount shall be included in the next Disposals Incentive Fee amount as an increase or deduction to the same (as applicable) to reflect the difference between the amount of the assessed Disposal Costs and the amount of the actual Disposal Costs.

6.3 The Disposal Proceeds Percentage is found by reference to the Net Disposal Proceeds bands in the table below:

Net Disposals Payment Mechanism

Lower boundary £

Upper boundary £

Incentive fee %

Band 1: £1 to £500M Net Disposal

1 500,000,000 0.2%

Band 2: £500M to £750M Net Disposal

500,000,001 750,000,000 0.3%

Band 3: £750M to £1,000M Net Disposal

750,000,001 1,000,000,000

0.5%

Band 4: £1,000M to £1,500M Net Disposal

1,000,000,001

1,500,000,000

1.0%


1,500,000,001

1,750,000,000

2.0%


1,750,000,001

2,000,000,000

3.0%

Band 7: Above £2,000M 2,000,000,001

n/a 4.0%

7. BALANCING PAYMENT

7.1 Subject to the Retention in paragraphs 3.1 and 4.1 of Part D, the Balancing Payment for any Quarter:


Page 570


(a) which:

(i) immediately follows a Quarter in which the National Audit Office has audited DIDO’s accounts in respect of the Financial Year immediately preceding the then current Financial Year; or

(ii) is the last Quarter within the Contract Period,

shall be equal to the sum of the Operational Cash RDEL Balancing Payment and the Utilities Cash RDEL Balancing Payment, each calculated in accordance with the following formulae:

OCRBPqn = OSPyn(AOCyn – AAOCyn)

and

UCRBPqn = USPyn(AUCyn – AAUCyn)

where:

OCRBPqn = the Operational Cash RDEL Balancing Payment for the Quarter “qn”

OSPyn = the Operational Savings Percentage for the Financial Year “yn”

AOCyn = the Actual Operational Costs for the Financial Year “yn”

AAOCyn = the Audited cash Actual Operational Costs for the Financial Year “yn”

UCRBPqn = the Utilities Cash RDEL Balancing Payment for the Quarter “qn”

USPyn = the Utilities Savings Percentage for the Financial Year “yn”

AUCyn = the four year rolling average of the Actual Utilities Costs for the Financial Year “yn”, being the average of the sum of all Actual Utilities Costs for each of the current and preceding three Financial Years (or, in the third Financial Year the current and preceding two Financial Years, in the second Financial Year the current and preceding Financial Year and in the first Financial Year that Financial Year only with no averaging applied)

AAUCyn = the Audited Actual Utilities Costs for the Financial Year “yn”

which amount may be a negative amount; and

(b) for any other Quarter shall be zero. The Retention does not limit the Balancing Payment.


Page 571


8. TRUE COST VARIANCE

8.1 The Operational Cash RDEL Financial Baseline, Utilities Cash RDEL Financial Baseline and/or Projects Baseline (as applicable) shall be adjusted for the purposes of the calculations contained in paragraphs 3.1, 4.1 and 5.1 of Part D by an amount equal to the sum of:

(a) the aggregate total of all amounts identified by the Authority as having been erroneously included in the Operational Cash RDEL Financial Baseline, the Utilities Cash RDEL Financial Baseline and/or Projects Baseline and which have been agreed or determined to have been so erroneously included (including where such inclusion arises from an error in the annual profiling of the Projected NGEC Savings);

(b) any amount determined by the Authority (acting reasonably and having regard to the matters set out in Clauses 12.26 and 12.27) as being required to be added to or deducted from the Operational Cash RDEL Financial Baseline, Utilities Cash RDEL Financial Baseline and/or Projects Baseline (as applicable) in order to adjust for the effects of any Assumptions At Authority Risk proving materially incorrect;

(c) subject always to paragraphs 8.2 and 8.3 of this Part D, any amount by which, in any given Financial Year, the savings delivered by the Next Generation Estate Contracts (“NGEC”) are less than the Projected NGEC Savings for that Financial Year;

(d) any amount determined by the Authority as being required to be added to or deducted from the Operational Cash RDEL Financial Baseline, Utilities Cash RDEL Financial Baseline and/or Projects Baseline (as applicable) pursuant to Clause 12.24(d)(ii) or (iii);

(e) any amount which the Authority has determined (acting reasonably) is required to be deducted from the Projects Baseline in order to reflect Projects Baseline expenditure which was anticipated in the Base Case as to be incurred but which was agreed by the Parties should not be so incurred or which would have been incurred but for the Contractor's failure to act in accordance with the standard of care set out in Clause 9.1(h); and

(f) such other amounts as the Parties may agree are necessary to include in order to accurately compare the Audited Actual Operational Costs, Audited Actual Utilities Costs and Audited Actual Projects Costs for any Financial Year with the Operational Cash RDEL Financial Baseline, the Utilities Cash RDEL Financial Baseline and Projects Baseline for such Financial Year,

(the True Cost Variance Adjustment), provided in each case that the True Cost Variance for any Quarter “qn” shall not include any amount included in any True Cost Variance calculation for any previous Quarter.


Page 572


8.2 Within two months of the end of each Financial Year, the Contractor shall provide such information as the Authority requires to demonstrate to the Authority’s reasonable satisfaction:

(a) the actual savings delivered by NGEC for the previous Financial Year;

(b) where the savings referred to in (a) above are less than the Projected NGEC Savings for the Financial Year in question:

(i) an explanatory statement detailing the reasons for the shortfall; and

(ii) adequate supporting evidence to demonstrate that the Contractor has procured that DIDO has managed NGEC in accordance with the standard of care set out in Clause 9.1(h) during the Financial Year in question.

8.3 The Authority shall be entitled to make a reasonable adjustment to the amount by which the Operational Cash RDEL Financial Baseline, Utilities Cash RDEL Financial Baseline and/or Projects Baseline (as applicable) shall be adjusted pursuant to paragraph 8.1(c) to take into account any circumstances in respect of which the Contractor bears some responsibility, whether or not it amounts to liability for the purposes of this Contract. This shall include where the Authority, acting reasonably, does not accept that the Contractor has procured that DIDO has managed NGEC in accordance with the standard of care set out in Clause 9.1(h) during the Financial Year in question.

9. FEE CAPS

9.1 In any Financial Year the:

(a) Operational Cash RDEL Incentive Fee shall not be greater than the Operational Cash RDEL Incentive Fee Cap;

(b) Utilities Cash RDEL Incentive Fee shall not be greater than the Utilities Cash RDEL Incentive Fee Cap;

(c) Capital Projects Incentive Fee shall not be greater than the Capital Projects Incentive Fee Cap; and

(d) Disposals Incentive Fee shall not be greater than the Disposals Incentive Fee Cap,

in each case for such Financial Year.

9.2 If at any time the Contractor anticipates that:

(a) the aggregate of all Operational Cash RDEL Incentive Fee amounts (taking account of any relevant True Cost Variation Adjustments) in any Financial Year would exceed the Operational Cash RDEL Incentive Fee Cap for that Financial Year;


Page 573


(b) the aggregate of all Utilities Cash RDEL Incentive Fee amounts (taking account of any relevant True Cost Variation Adjustments) in any Financial Year would exceed the Utilities Cash RDEL Incentive Fee Cap for that Financial Year;

(c) the aggregate of all Disposals Incentive Fee amounts in any Financial Year would exceed the Disposals Incentive Fee Cap for that Financial Year,

the Contractor shall be entitled to request in writing that the Authority increase the Operational Cash RDEL Incentive Fee Cap, Utilities Cash RDEL Incentive Fee Cap and/or Disposals Incentive Fee Cap (as applicable) for such Financial Year (a Cap Increase Request).

9.3 On receipt of a Cap Increase Request the Authority shall be entitled (but not required) to increase the Operational Cash RDEL Incentive Fee Cap, Utilities Cash RDEL Incentive Fee Cap and/or Disposals Incentive Fee Cap (as applicable) for such Financial Year by such amount as the Authority may consider appropriate. Where the Authority considers such an increase appropriate the Authority shall similarly be entitled (but not required) to reduce the Operational Cash RDEL Incentive Fee Cap, Utilities Cash RDEL Incentive Fee Cap and/or Disposals Incentive Fee Cap (as applicable) for the next (or a subsequent) Financial Year by an equal or lesser amount.


Page 574


Part E - Service Deductions

1. INTRODUCTION

1.1 This Part E sets out the Service Deduction regime applicable to this Contract in the event of under achievement of the agreed Performance Levels.

1.2 The Parties acknowledge that the purpose of Service Deductions is to:

(a) incentivise the Contractor to meet the Performance Levels and to remedy any failure to meet the Performance Levels promptly; and

(b) provide a mechanism whereby the Authority can attain meaningful recognition of loss resulting from the Contractor’s failure to meet the Key Performance Indicators (KPIs).

1.3 During the period from the Commencement Date until the end of the Transformation Period, the Authority shall not apply Service Deductions to any KPI in respect of which relevant performance data is unavailable, provided that the Contractor and/or DIDO (as appropriate) has used reasonable endeavours to obtain such information, either through Authority systems or by other methods. Upon the expiry of the Transformation Period, Service Deductions shall be applied in respect of all KPIs in accordance with the remainder of this Part E.

2. SERVICE DEDUCTIONS

2.1 The Service Deductions to be included in the calculation of the Quarterly Payment (as set out in paragraph 2.1 of Part D) in respect of a particular Quarter “n-1” shall be equal to the sum of all individual Service Deductions made in respect of each KPI for such Quarter “n-1”, each such individual Service Deduction being as determined in accordance with paragraph 2.2.

2.2 The Service Deduction for each KPI shall be calculated as follows:

(a) comparing actual performance in respect of such KPI to the applicable performance target for such KPI (as set out in the column headed “Baseline performance targets” in Table 1 of Appendix 1 of this Schedule 7 (the KPI Table));

(b) if the actual performance in respect of such KPI does not meet the performance target for such KPI specified in the KPI Table, but instead falls into performance band 2, 3 or 4 (as set out in the column headed “Performance Bands” in Table 2 of Appendix 2 of this Schedule 7 (the Service Deduction Table)), a service deduction shall be applied (as set out in the column headed “Service Deduction Percentages” in the Service Deduction Table) corresponding to the relevant performance band (for example, if the relevant performance band is band 2, the corresponding service deduction shall be that in the column headed “Service Deduction Percentages” and “Band 2”; and


Page 575


(c) the appropriate service deduction percentage for such KPI (as identified in accordance with paragraph 2.2(b) above) shall then be multiplied by the escalation factor set out in the Escalation Factor Table below and for any Quarter forming part of the first two Contract Years after the Effective Date (but not thereafter) shall be further multiplied by a factor of 20%:

Escalation Factor Table

Quarterly measured

“Ratchet” KPIs (per Frequency

column in the KPI Table)

Number of repeat Quarters within a 3

year period in which performance for a KPI is below

Band 1 “Target Met”

Yearly & Half Yearly measured

KPIs (per Frequency column in the KPI Table ) Number of repeat Years within a 5

year period in which performance for a KPI is below


Binary KPIs (marked as

“Binary” in Service Deduction Table) Number of repeat

Quarters within a 2 year period in

which performance for a KPI is below


Escalation Factor (used to multiply Service

Deduction amount in

Service Deduction

Table)

1 1 n/a 1.0 2 n/a n/a 1.1 3 2 1 1.25

4+ 3+ 2+ 1.5

2.3 During the period from the Commencement Date until the Effective Date no Service Deductions shall apply. Thereafter Service Deductions shall apply subject to the provisions of this Part E.

2.4 Subject to Clause 30, the Authority shall grant relief from specific Service Deductions where a Relief Event occurs in respect of an Authority Dependency provided that such relief is limited to the extent described in Schedule 25 for the Authority Dependency in question.

2.5 The Service Deductions to be included in the calculation of the Quarterly Payment for any Quarter falling after the first two Contract Years after the Effective Date shall be subject to an overall cap equal to 50% of the maximum possible Service Deductions that could have been levied in respect of such Quarter.

3. KEY PERFORMANCE INDICATORS

3.1 The KPI Table sets out the KPIs which the Contractor is required to achieve in the performance of this Contract (which may relate to the performance of the Contractor or DIDO, as appropriate). The KPIs are categorised in the KPI Table into three colours:


Page 576


(a) Green: these KPIs are consistent with the historic levels achieved in the year prior to the Commencement Date. Service Deductions in respect of the KPIs categorised as green shall apply from the Effective Date.

(b) Amber: these KPIs require baselining in accordance with the process set out in paragraph 5 of this Part E on the basis that the relevant historic data is either missing or unreliable. This baselining shall be completed as soon as practicable following the Effective Date, and in any event within 12 months of the Effective Date. Service Deductions in respect of the KPIs categorised as amber shall apply immediately upon the completion of this baselining process.

(c) Red: these KPIs are currently unmeasured and require further collaborative development by the Parties to clearly define the “Smart Measures” and the relevant “Baseline performance targets” to be included in the KPI Table for such KPIs. The Parties shall cooperate in good faith to achieve this by the end of the Transformation Period following the process set out paragraph 5 of this Part E, failing which the Authority shall instruct such amendments to the KPIs categorised as red as it reasonably considers appropriate having regard to the principles set out in paragraph 6 of this Part E. Service Deductions in respect of the KPIs categorised as red shall apply immediately upon the completion of this development process.

3.2 Subject to the principles set out in paragraph 6 of this Part E:

(a) the Contractor shall be permitted to propose (and/or the Authority may require the Contractor to bring forward) adjustments to the KPIs in accordance with the process set out in paragraph 4 of this Part E;

(b) the Authority may instruct additional KPIs or adjustments to existing KPIs during the Transformation Period in accordance with paragraphs 5.1 to 5.2 of this Part E; and

(c) either party may propose an adjustment to the KPIs in accordance with paragraphs 5.3 to 5.4 of this Part E.

4. ANNUAL PROCESS FOR AGREEING THE KPIS

4.1 By no later than 31 January in each Financial Year the Contractor shall provide to the Authority:

(a) its proposal as to any amendments it reasonably considers are required to be made to the KPIs in order to ensure that the KPIs continue to effectively monitor and reflect DIDO’s activities and objectives during the Contract Period (the draft KPI Amendments Proposal), which draft KPI Amendments Proposal:

(i) may comprise any combination of the addition of new KPIs, the deletion of existing KPIs and/or the amendment of existing KPIs in each case subject to the principles set out in paragraph 6 of this Part E; and


Page 577


(ii) shall be consistent with the draft Infrastructure Implementation Plan provided to the Authority by DIDO on or about the same date pursuant to Clause 12.4 of the Contract;

(b) adequate details of

(i) the factual basis for each KPI addition, deletion or amendment and the specific reasons for, and benefits to be derived from implementation of, the same;

(ii) the Contractor’s assumptions underpinning the demonstration of its achievement of each existing KPI together with, in the case of any additional KPI, details of DIDO’s current and historic performance against such KPI to the extent known or available (and the Contractor shall if so requested by the Authority obtain and collate such data to the extent possible);

(iii) the criteria by which the Contractor or DIDO’s performance (as appropriate) would be measured were such draft KPI Amendments Proposal to be implemented, including full details of:

(A) the applicable Baseline Performance Target, Units and Frequency for each KPI;

(B) the applicable Performance Bands for each KPI;

(C) whether, in respect of each KPI, such KPI is a Binary or Ratchet KPI;

(D) the Service Deduction applicable to each KPI,

in each case following such implementation;

(iv) how the Contractor or DIDO’s performance under and in respect of each KPI (as appropriate) following implementation of the draft KPI Amendments Proposal would be recorded and measured; and

(v) in the case of any additional KPI, an assessment of any projected increase or decrease in deductions (identifying the resulting impact on each individually affected KPI and in aggregate across all KPIs) by reason of the addition of such KPI over the period of 24 months from the date on which Service Deductions could first be made against such KPI together with the projected consequential impact on each Quarterly Payment during such period.

For the purposes of this paragraph 4.1(b), whether or not the details provided are adequate will be at the Authority’s discretion.

4.2 Within 10 Business Days of receipt of the draft KPI Amendments Proposal pursuant to paragraph 4.1 of this Part E, the Authority (acting reasonably and having


Page 578


regard to the Infrastructure Implementation Plan, Command Plan, Footprint Strategy and Control Totals for the Financial Year to which the draft KPI Amendments Proposal relates and to the principles set out in paragraph 6 of this Part E) shall:

(a) provisionally approve all or part of the draft KPI Amendments Proposal;

(b) request that the Contractor provides supplemental information and/or meets with the Authority to discuss the draft KPI Amendments Proposal; or

(c) notify DIDO of any objections and/or proposed modifications to the draft Infrastructure Implementation Plan that are required in order to obtain the Authority’s approval of the draft KPI Amendments Proposal.

4.3 If the Authority proposes modifications to the draft KPI Amendments Proposal under paragraph 4.2(c) of this Part E, the Contractor shall modify and resubmit the draft KPI Amendments Proposal to the Authority and the procedure under paragraph 4.2 and this paragraph 4.3 shall apply until approval is given by the Authority.

4.4 The Contractor shall update the draft KPI Amendments Proposal provided pursuant to paragraph 4.1 of this Part E to reflect the final Command Plan and Control Totals by no later than 31 March in each Financial Year, and (subject to paragraph 4.5 of this Part E) the approval process set out in paragraphs 4.2 and 4.3 of this Part E shall then apply until the Authority has approved the final KPI Amendments Proposal.

4.5 If it is necessary for the approval process set out in paragraphs 4.2 and 4.3 of this Part E to be followed three or more times in one year before approval has been granted by the Authority, the Parties shall meet to discuss:

(a) the reason(s) why the draft KPI Amendments Proposal has not been approved in each case; and

(b) methods of minimising approval time for future KPI Amendments Proposals.

4.6 If the Authority has approved part of the KPI Amendments Proposal pursuant to paragraph 4.2(a) of this Part E:

(a) the Contractor shall implement the parts of the KPI Amendments Proposal which have been approved; and

(b) in respect of those parts of the KPI Amendments Proposal which have not been approved, the unamended KPIs for the forthcoming Financial Year shall apply unless and until approval of the relevant parts of the KPI Amendments Proposal is given by the Authority.

4.7 Subject to paragraph 4.8 of this Part E, any dispute as to the contents of the KPI Amendments Proposal shall be resolved in accordance with Clause 43, provided that the Contractor may only dispute whether the Authority is being reasonable in withholding any approval pursuant to paragraphs 4.2, 4.3 or 4.4 of this Part E.


Page 579


4.8 If the addition, deletion or amendment of any KPI has not been agreed within three months of receipt by the Authority of the draft KPI Amendments Proposal the Authority shall be entitled to determine (acting reasonably) whether such KPI is added, deleted or amended.

4.9 If at any stage (including during the process referred to in paragraphs 4.1 to 4.4 of this Part E) any of the circumstances contemplated in limbs (a) to (c) of Clause 12.17 of the Contract occur then the provisions of Clauses 12.18 to 12.23 shall apply save that references to variations or amendments to the Infrastructure Implementation Plan shall be deemed to be references to variations or amendments of the KPIs.

4.10 The provisions of Clauses 12.24 to 12.30 of the Contract shall apply to the KPI Amendments Proposal as if set out in this Part E save that for the purposes of this paragraph all references in such clauses to the Infrastructure Implementation Plan shall be deemed to be references to the KPI Amendments Proposal.

5. CHANGES TO KPIS DURING THE CONTRACT YEAR

Transformation Review

5.1 In addition to the process set out in paragraph 4 of this Part E, the Parties shall review progress against the KPIs in place as at the Commencement Date as part of the Transformation Review, and where necessary the Authority may propose:

(a) adjustments to the KPIs to reflect any greater clarity achieved in respect of the measurement of performance against KPIs and service levels achieved during the Transformation Period, so as to ensure that the KPIs are up to date and relevant for the remainder of the Contract Period; and

(b) additional KPIs or adjustments to the existing KPIs to ensure that the KPIs remain effective measurements of the Contractor or DIDO’s performance (as appropriate)for the remainder of the Contract Period,

(such proposed additional or adjusted KPIs being the Authority Adjusted KPIs).

5.2 The process for proposing the Authority Adjusted KPIs following the Transformation Period will be as set out in paragraph 4 of this Part E.

Material change

5.3 If a material change occurs to the assumptions underlying or relating to the KPIs, either Party may notify the other Party of the change and propose that one or more of the KPIs are adjusted in light of the change and the Authority shall consider whether any such proposed adjustments should be implemented or not. If the Authority considers that one or more of the KPIs should be adjusted pursuant to any such proposal the Authority shall instruct that the KPIs be adjusted accordingly and shall also instruct any redistribution of the Quarterly Payment between the KPIs required as a result of the adjustment.


Page 580


5.4 Disputes as to whether any adjustments to the KPIs instructed by the Authority pursuant to paragraph 5.3 are necessary in order to address the relevant material change in assumptions will be determined in accordance with Clause 43.

6. PRINCIPLES FOR ADJUSTMENT OF KPIS

6.1 It is expected that, unless and to the extent both Parties agree in writing to the contrary, the following principles shall apply to any adjustments to the KPIs pursuant to the process set out above:

(a) KPIs shall be based on information that is collected in the normal course of DIDO’s business and is either measured or readily measurable;

(b) such adjustments shall not make the KPIs more or less onerous overall (except those KPIs that include a pre-determined improvement target within the narrative of the “Baseline Performance Targets” column within the KPI Table or where it is agreed or determined that a particular KPI has proven materially more or less onerous that the Parties contemplated, and/or is not working as intended); and

(c) such adjustments shall not reduce the number of KPIs or to redistribute the Quarterly Payment between them in a way which increases the proportionate risk of the Contractor of losing its fee where the Contractor fails to meet one or more KPIs (for the avoidance of doubt, the intention of this restriction is not to prevent fee being redistributed between KPIs to reflect adjusted priorities).

7. TERMINATION

7.1 Where termination of this Contract occurs:

(a) in the first half of a Quarter, the Authority shall consider the level of abatement to the Quarterly Payment for the previous Quarter as a result of any Service Deductions. If there was such an abatement, the Authority shall base the abatement for the final Quarter on the abatement for the previous Quarter (pro–rated as appropriate); or

(b) in the second half of a Quarter, the Authority shall measure the Contractor’s progress against the relevant KPIs at the point of termination, and the KPI abatement for the final Quarter shall be based on that measurement.

8. AUTHORITY REMEDIES

8.1 Without prejudice to the Authority’s right under Clauses 34.10 or 44 of the Contract, Service Deductions shall be the sole financial remedy for the Contractor’s failure to procure that DIDO operates to the baseline performance targets set out in the KPI Table, and any costs to rectify the performance of DIDO to the baseline performance targets set out in the KPI Table shall be met out of the DIDO RDEL or CDEL budgets as appropriate.


Page 581


9. CHANGES TO CAPITAL PROJECTS KPIS

9.1 Following the end of the Transformation Period, the procedures for agreeing, changing and adjusting KPIs as set out in paragraphs 4, 5.3 and 6 of this Part E shall apply to the Capital Projects Service Deductions mechanisms contained in the table at paragraph 5 of Part D (the Capital Projects KPIs), mutatis mutandis and disregarding limbs (A) to (D) of paragraph 4.1(a)(iii), such that from such date the Capital Projects KPIs are agreed, changed and adjusted in accordance with those paragraphs.

9.2 Without prejudice to the principles set out in paragraph 6 of this Part E, where and to the extent the Authority is of the opinion in any Financial Year that the ranking of any Capital Project does not properly reflect the strategic military importance of such Capital Project, the Authority shall be entitled to take account of such proper ranking as part of the process for agreeing, changing and adjusting Capital Projects KPIs pursuant to paragraph 9.1 above.


Page 582


Part F - Windfall Gain Sharing

1. INTRODUCTION

1.1 This Part F sets out the Windfall Gain Sharing arrangements

1.2 In this Part F, unless the contact otherwise requires the following words shall have the following meanings:

Adjusted Windfall Gain shall have the meaning given in paragraph 2.1 below;

Exit Certificate shall have the meaning given in paragraph 2.2 below;

Gain means the monetary value (assessed on a fair and reasonable basis) received as consideration by the Contractor for disposing of its interest in the Contract; and

Windfall Gain means a sum of money equating to 30% of the Gain.

2. WINDFALL GAIN SHARING

2.1 Subject to Clauses 37 and 38, if the Contractor makes a Gain from:

(a) assigning or novating this Contract to a third party that is not a Contractor Affiliate; or

(b) a restructuring which results in the transfer of this Contract to a Contractor Affiliate which Contractor Affiliate is subsequently sold to a third party; or

(c) a restructuring which results in the transfer of this Contract to a Contractor Affiliate in which third party equity subsequently participates; or

(d) subsequently creating a special purpose vehicle (SPV) with third party investors and transfers this Contract into that SPV,

then the Contractor shall pay (in accordance with the remaining paragraphs below) the Windfall Gain to the Authority except where the Affiliate or SPV (being divested in accordance with sub-paragraphs (a) to (d)) supplies services to more than one customer under contract (including this Contract) then such Windfall Gain shall be multiplied by a ‘fair percentage’ (such fair percentage to be determined by a jointly appointed independent third party that has regard to the value of the other customer contracts) (the Adjusted Windfall Gain) and the Contractor shall instead pay (in accordance with the remaining paragraphs below) the Adjusted Windfall Gain to the Authority.

2.2 By the date falling no later than 30 Business Days from the date of any Gain the Contractor shall provide a certificate to the Authority's Representative stating details of:

(a) the sums received from the Gain; and


Page 583



Page 584

(b) the calculation of the Windfall Gain or the Adjusted Windfall Gain (subject to the fair percentage having been decided),

(the Exit Certificate).

2.3 The Contractor shall procure that the Exit Certificate is signed by two officers of the Contractor and the calculation of the Windfall Gain or the Adjusted Windfall Gain shall be confirmed in writing by the Contractor's auditor who shall provide a report addressed to the Authority on its review of such calculation.

2.4 By the date falling no later than five Business Days from the date of issue of the Exit Certificate the Contractor shall pay to the Authority an amount equal to the Windfall Gain or Adjusted Windfall Gain (as applicable).

2.5 In the event that the Contractor does not provide an Exit Certificate in accordance with paragraph 2.2, the Authority reserves the right to estimate the Windfall Gain or Adjusted Windfall Gain from the Gain and to issue an Exit Certificate, in which case paragraph 2.3 shall not apply but the Contractor shall remain subject to paragraph 2.4.

2.6 Any dispute arising in relation to paragraph 2.5 shall be determined in accordance with Clause 43.


SCHEDULE 7, APPENDIX 1

Table 1: Key Performance Indicators (KPIs) Table

Strategic objective

Performance Parameter

(ref to DIEC KPIs)

Ref

SMART Measures

(need to be controlled by the DIDO)

Baseline performance targets

Units Frequency

01 Actual provision of dedicated skilled technical services staff members in support of military operations, compared to requested number of skilled staff members each month.

100% of requested dedicated skilled resource in place in line with request, i.e. appropriate competency, experience and in line with timescales

% of people monthly Provide infrastructure support to enable success in Afghanistan and on other standing commitments

Provision of Professional Technical services/advice to operations and on standing commitments

Standing commitment

02 Customer satisfaction of the quality of standing operations advice provided by DIDO in relation to KPI 01, and measured on a six monthly

1% improvement in customer satisfaction survey each 6 months up to a maximum of 90%

Survey score improveme

Half yearly

DIO currently measures the requirements and supporting data is available

DIO currently measures the Requirements to some extent and data is available

DIO has identified the Requirements but does not measure its delivery/no data is available

This is a new requirement for the Contractor to deliver, related to its own performance

Page 585



Strategic objective


(ref to DIEC KPIs)

Ref

SMART Measures



Units Frequency

s basis, will commence immediately following the Transformation Period based on the following question - "How satisfied were you with the provision of the dedicated, skilled technical services staff members?", such question to be answered by the relevant TLB Lead for each of the provided staff members

customer satisfaction. nt %

1.4 Provision of UERs and support to UORs

Urgent Ops

03 Proportion of Urgent Operational Requirements (UORs) met compared to UORs requested on a monthly basis.

85% of Urgent Operational Requirements met.

Pre-determined improvement target of 100% of UORs met.

% of UORs Monthly

Provision of training facilities

Training

04 100% of Priority 1 training requirements met, safely, through the delivery of training estate and facilities, where Priority 1 training is as defined in JSP 907 and where such requirements are consistent with the Footprint

100% of training requirements met.

Priority 1 training requirements

Monthly


Page 586


Strategic objective


(ref to DIEC KPIs)

Ref

SMART Measures



Units Frequency

Strategy.

05 End Transient User satisfaction relating to the fit for purpose condition of the training facilities, where End Transient User means a military person who is undergoing training. The measure relates to the infrastructure facilities but not the training materials provided (i.e. course materials). The satisfaction questions are to be agreed during the Transformation Period.

At least 93% End User satisfaction in each 6 monthly survey.

Survey score

Half Yearly

Provide effective and coherent affordable infrastructur

3.5 Deliver Users/Defence Lines of Development (DLoD)

06 UK Hard FM – Statutory Compliance - Based on a rolling programme of asset inspections (with the frequency of inspections configured to ensure compliance with Authority Policy and legislation as appropriate) and save for surplus

96% of assets meeting SL3 standard.

Pre-determined improvement target of 100% of assets meeting

% Quarterly


Page 587


Strategic objective


(ref to DIEC KPIs)

Ref

SMART Measures



Units Frequency

and code 4&5 assets, the % of all Level 2 assets (where Level 2 is as defined in the Regional Prime Contracts / NGEC contracts or other relevant maintenance contracts), meeting minimum statutory compliance requirements (defined as service level 3, SL3).

SL3 standard. e solutions to support human capability

satisfaction with infrastructure support

User Satisfaction

07 UK Hard FM - Asset condition Save for surplus assets, the percentage of Level 2 assets at or above Target Asset Condition (where Level 2 assets and Target Asset Condition are as defined in the Regional Prime Contracts / NGEC contracts or other relevant maintenance contracts) and the percentage of Level 2 assets at or above Target Asset Condition but with worst Level 3 elements at C or D (as defined in the Regional Prime Contracts / NGEC contracts or other relevant maintenance contracts)

87% of Level 2 assets at or above Target Asset Condition and up to a maximum of 20% of the L2 assets at Target Asset Condition having elements at C or D.

Pre-determined improvement target of 90% of Level 2 assets at or above Target Asset Condition.

% Quarterly


Page 588


Strategic objective


(ref to DIEC KPIs)

Ref

SMART Measures



Units Frequency

08 UK Hard FM – Customer satisfaction - Quantum of complaints to the Helpdesk and average times taken to resolve complaints satisfactorily, where the target average time to resolve complaints is to be baselined during the Transformation Period. The Contractor shall put forward proposals to define resolution as part of the procedure in paragraph 5 of Part E where it is envisaged that service response times will be within 24 hours and the customer resolution timescales will be developed working with the customer and NGEC contractors (or other relevant third party contractors/suppliers), and take account of the severity of complaints.

In line with the procedure in paragraph 5 of Part E Contractor to work with NGEC contractors (or other relevant third party contractors/suppliers) and DIDO to review the last 3 years performance, establish a baseline and then set targets to reduce the quantum of complaints by 5% annually over the 5 years of the NGEC contracts (i.e. a reduction of 1.25% per Quarter in the volume of complaints and. in relation to

%Quarterly reduction in the volume of complaints; and average resolution times relative to the previous Quarter’s target performance

Quarterly


Page 589


Strategic objective


(ref to DIEC KPIs)

Ref

SMART Measures



Units Frequency

resolving complaints),

09 Soft FM – Availability of Catering, Retail and facilities - The Contractor shall put forward proposals as part of the procedure in paragraph 5 of Part E, with the measurement focus proposed to be food quality and availability of facilities.

Contractor to work with CRL contractors to review last 3 years performance to establish a baseline and then set targets to improve availability by 5% annually (1.25% per quarter relative to the previous quarter’s Target performance) over the 5 years of the HESTIA contracts

% Quarterly improvement relative to the previous quarter’s target performance

Quarterly


Page 590


Strategic objective


(ref to DIEC KPIs)

Ref

SMART Measures



Units Frequency

10 Soft FM – Customer satisfaction – Quantum of complaints to the Helpdesk and average times taken to resolve complaints satisfactorily where the target average time to resolve complaints is to be baselined during the Transformation Period. The Contractor shall put forward proposals to define resolution as part of the procedure in paragraph 5 of Part E.

Contractor to work with HESTIA contractors and DIDO to review last 3 years performance, establish a baseline and then set targets to reduce the quantum of complaints by 5% annually (1.25% per quarter relative to the previous quarter’s Target performance) over the 5 years of the HESTIA contracts. In relation to resolving complaints satisfactorily, we will look to provide a customer response within 24 hours and develop customer resolution

% Quarterly improvement relative to the previous quarter’s target performance

Quarterly


Page 591


Strategic objective


(ref to DIEC KPIs)

Ref

SMART Measures



Units Frequency

timescales working with both the customer and HESTIA contractors depending on severity of complaints.

11 UK Accommodation – SFA condition - Proportions of SFA at SfC1 and SfC2 grades.

95% of SFA at SFC2 or better and subject to a minimum of 45% at SfC1

% Quarterly

11a Overseas Accommodation – SFA condition - Proportions of SFA at SfC1 and SfC2 grades.

The Contractor shall put forward proposals in line with paragraph 5 of Part E to establish a baseline target during the Transformation Period

% Quarterly

12 UK Accommodation – SFA upgrades - Proportion of SFA upgrades completed in line

100% of SFA upgrades completed in line with

% Quarterly


Page 592


Strategic objective


(ref to DIEC KPIs)

Ref

SMART Measures



Units Frequency

with scheduled programmes.

scheduled programmes.

12a Overseas Accommodation – SFA upgrades - Proportion of SFA upgrades completed in line with scheduled programmes.


% Quarterly

13 UK Accommodation – Voids – Proportion of UK SFA categorised as void (excluding properties held deliberately void, including the impact of Future Basing requirements).

11% or less void rate maintained

Pre-determined improvement target of 10% or less void rate maintained.

% Quarterly


Page 593


Strategic objective


(ref to DIEC KPIs)

Ref

SMART Measures



Units Frequency

13a Overseas Accommodation – Voids – Proportion of UK SFA categorised as void (excluding properties held deliberately void, including the impact of Future Basing requirements).


% Quarterly

14 UK Services Family Accommodation - Maintenance response rates: percentage of Emergency, Urgent and Routine response repairs carried out within the contractually agreed times.

The definitions of Emergency, Urgent and Routine have the same meaning as set out in the Authority’s existing contracting arrangements with the maintenance provider(s).

Emergency 99-%

Urgent 93% or higher

Routine 97% or higher

The Contractor shall, as appropriate, put forward proposals as part of the procedure in paragraph 5 of Part E for a new category of Critical

% Monthly


Page 594


Strategic objective


(ref to DIEC KPIs)

Ref

SMART Measures



Units Frequency

concurrent with the ability to flow this down into the maintenance contracting arrangements and a baseline being created.

14a Overseas Services Family Accommodation - Maintenance response rates: percentage of Emergency, Urgent and Routine response repairs carried out within the contractually agreed times.

The definitions of Emergency, Urgent and Routine have the same meaning as set out in the Authority’s existing contracting arrangements with the maintenance provider(s).

The Contractor shall put forward proposals as part of the procedure in paragraph 5 of Part E to develop equivalent KPI measurements and targets for a) Overseas SFA, b) UK SLA and c) Overseas SLA

% Monthly


Page 595


Strategic objective


(ref to DIEC KPIs)

Ref

SMART Measures



Units Frequency

15

UK Accommodation – Customer satisfaction - Quantum of complaints to the Helpdesk and average times taken to resolve complaints satisfactorily where the target average times to resolve complaints is to be baselined within 12 months from the Effective Date. The Contractor shall put forward proposals to define resolution as part of the procedure in paragraph 5 of Part E where it is envisaged that customer response times will be within 24 hours and the customer resolution timescales will be developed working with the customer and NGEC contractors (or other relevant third party contractors/suppliers) and take account of the severity of complaints.

Contractor to work with NGEC contractors (or other relevant third party contractors/suppliers) and DIDO to review the last 3 years performance, establish a baseline and then set targets to reduce quantum of complaints by 5% annually (1.25% per quarter relative to the previous quarter’s target performance) over the 5 years of the NGEC.

% quarterly improvement relative to the previous quarter’s target performance

Quarterly

15a Overseas Accommodation – Customer satisfaction - Quantum of complaints to the Helpdesk and average times taken to resolve complaints satisfactorily where the target

The Contractor shall put forward proposals in line with paragraph 5 of Part E to establish a baseline

% Quarterly


Page 596


Strategic objective


(ref to DIEC KPIs)

Ref

SMART Measures



Units Frequency

average times to resolve complaints is to be baselined within 12 months from the Effective Date. The Contractor shall put forward proposals to define resolution as part of the procedure in paragraph 5 of Part E where it is envisaged that customer response times will be within 24 hours and the customer resolution timescales will be developed working with the customer and NGEC contractors or other relevant third party contractors/suppliers and take account of the severity of complaints.

target during the Transformation Period

16 Overseas - Statutory compliance (as set out in English Law or the relevant jurisdiction that applies if not English Law) - % of Level 2 assets (excluding any surplus assets) meeting minimum Statutory Compliance requirements (defined as Service Level 3)

where Level 2 assets are as defined in the

95% of assets meeting SL3 standard.

Pre-determined improvement target of 100% of assets meeting SL3 standard.

% Quarterly


Page 597


Strategic objective


(ref to DIEC KPIs)

Ref

SMART Measures



Units Frequency

overseas maintenance contracts

17 Overseas - Asset condition Save for Germany, the percentage of Level 2 assets at or above Target Asset Condition where Level 2 assets and Target Asset Condition are as defined in the maintenance contracts and the % Level 2 assets at or above Target Asset Condition but with worst Level 3 elements at C or D as defined in the maintenance contracts

90% of Level 2 assets at or above Target Asset Condition and up to a maximum proportion of those assets to be baselined of the L2 assets at Target Asset Condition having elements at C or D. The Baselining of condition elements C and D is to be established in line with the procedure in paragraph 5 of Part E.

% Quarterly

18 Overseas – Customer satisfaction - Complaints to the Helpdesk and average times taken to resolve complaints satisfactorily where the target average time to resolve complaints is to

Contractor to work with contractors and DIDO to review the last 3 years performance, establish a

%Quarterly improvement relative to the

Quarterly


Page 598


Strategic objective


(ref to DIEC KPIs)

Ref

SMART Measures



Units Frequency

be baselined during Transformation. The Contractor shall put forward proposals to define resolution as part of the procedure in paragraph 5 of Part E where it is envisaged that customer response times will be within 24 hours and the customer resolution timescales will be developed, working with the customer and NGEC contractors (or other relevant third party contractors/suppliers), and take account of the severity of complaints.

baseline and then set targets to reduce quantum of complaints by 5% annually anually (1.25% per quarter relative to the previous quarter’s target performance) over the 5 years of the NGEC.

previous quarter’s target performance in , average resolution times

19 Programme and Projects Delivery - Supporting the MOD to achieve its Government Construction Strategy target.

20% reduction in construction costs by 2015 (with reference to 2010 costs) per the Government Construction Strategy as applied to MOD

%

Annual assessment up to 2015


Page 599


Strategic objective


(ref to DIEC KPIs)

Ref

SMART Measures



Units Frequency

20 Programme and Projects Delivery - proportion of projects completed to Time, Cost and Quality parameters.

This is a summary measure of paragraph 5.1 of Part D which sets out 100% success rate and 100% of the Capital projects fee at risk.

%

Quarterly

21 Programme and Projects Delivery - Proportion of projects achieving a Value for Money score of 70% or greater

100% of projects achieving a Value for Money score greater than or equal to 70%.

%

Quarterly

22 Programme and Projects Delivery - Percentage reduction in Construction Waste. Measured as the percentage of construction waste sent to landfill in the UK (to be baselined).

To reduce construction waste to landfill (% over time) against 07/08 baseline, target 80% recycled. The Contractor shall put forward KPI review proposals under paragraph 5 of Part E so as to achieve the higher

% Quarterly


Page 600


Strategic objective


(ref to DIEC KPIs)

Ref

SMART Measures



Units Frequency

of 80% recycled or upper quartile for Government Construction based output or higher.

23 Provision of updated Infrastructure Implementation Plans (IIPs) in a form capable of timely acceptance by the Authority.

Each IIP provided in a form capable of approval approved by the Authority before the start of the relevant IIP period or as otherwise agreed with DIGA.

n/a Annually Deliver business efficiency in the management and delivery of defence infrastructure

4.1 Deliver performance of the Defence Infrastructure Programme

Performance - DIP

24 Delivery of the IIP Milestones (such Milestones to be the Transformation Milestones during the Transformation Period, and thereafter those milestones included within the IIP as a result of the annual update pursuant to Clauses 12.9 to 12.18).

Delivery of all (100%) IIP Milestones

% of milestones

Quarterly


Page 601


Strategic objective


(ref to DIEC KPIs)

Ref

SMART Measures



Units Frequency

25 Compliance with DIGA reporting requirements as required in accordance with the Contract.

Full compliance with DIGA reporting requirements.

n/a Quarterly

4.8 Understanding and managing the risks DIDO holds

Risk

26 Maintenance of appropriate risk registers and the Contractor shall produce a summary of DIDO risks to the Authority at Quarterly intervals.

Risk registers maintained in accordance with Authority Policy, Rules and Guidance JSP 892.

n/a Quarterly

5. Provide sustainable,

5.1 Meeting the statutory

27 Fatalities attributable to Health and Safety failures.

Zero Fatalities # of fatalities

Quarterly


Page 602


Strategic objective


(ref to DIEC KPIs)

Ref

SMART Measures



Units Frequency

28 Number of occurrences of Major Injuries (as defined in the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations (RIDDOR) for DIO

Less than 57 injuries per 100,000 employees

Pre-determined improvement target of less than 45 injuries per 100,000 employees per annum by the end of the Transformation Period and less than 33 injuries per 100,000 employees per annum by the end of the third year after the Effective Date or sooner if possible.

# of RIDDOR incidents

Quarterly safe and legally compliant infrastructure to Defence

commitments

Statutory Commitments

29 DIO contractors to reduce rate of occurrence of Major Injuries (as defined in RIDDOR) for their employees on DIO Business

Less than 184 injuries per 100,000 employees, save where it is proven that the Contractor has taken reasonable action

# of RIDDOR incidents

Quarterly


Page 603


Strategic objective


(ref to DIEC KPIs)

Ref

SMART Measures



Units Frequency

to comply with this performance level

30 Number of Crown Improvement / Enforcement / Prohibition Notices2 or Crown Censures served following the Effective Date, save where such notices relate to conditions that existed prior to the Effective Date where the process set out in paragraph 5 of Schedule 6 shall apply

Zero Crown Improvement Notices (INs) and Censures,

# of Crown INs and Censures

Quarterly

31 Completion rates of mandatory employee training,

No more than 5% outstanding mandatory training requirements

# of outstanding training requirements

Quarterly


Page 604


Strategic objective


(ref to DIEC KPIs)

Ref

SMART Measures



Units Frequency

32 Number of Environmental Warning Notices (EWNs) issued each quarter excluding any EWNs where the EWN is issued as a result of military users actions

Zero EWNs subject to relief from any Service Deduction for one such EWN every 24 months

# of EWNs Quarterly

33 Compliance with findings and recommendations of external and financial Audit and Assurance reviews (as approved / amended by the Audit & Assurance Committee) within 12 months of the date of such a recommendation having been notified to DIDO or any other timescales agreed with DIGA.

Full compliance with findings and recommendations.

n/a Quarterly

5.2 Delivery of sustainable infrastructure solutions

34

Proportion of Defence Related Environmental Assessment Methodology (DREAM) assessment rating at or above target for new builds / major refurbishments

95% of all projects to achieve target rating at the survey stage; New Builds – Excellent; Refurbishments – Very Good,

% Quarterly


Page 605


Strategic objective


(ref to DIEC KPIs)

Ref

SMART Measures



Units Frequency

Working with DIGA the Contractor shall put forward proposals for equivalent baseline performance targets for the design, construction and operation stages.

Sustainability

35 Reduction in the level of non-operational energy consumption across the MOD estate

Reduce MOD non-operational energy consumption (kwh) by 25% by 2014/15 compared to a baseline set in 2009/10. A baseline is included within the IIP and Financial Model for KwH for each year of the Contract

%

Annually


Page 606


Strategic objective


(ref to DIEC KPIs)

Ref

SMART Measures



Units Frequency

36 Compliance with the procedural requirements of relevant data protection regulations and information management requirements, including DPA, FOIA, EIR, PQs and general confidentiality

97% of requests dealt within the statutory timescales. Compliance with all relevant procedural requirements of data protection regulations and information management requirements.

Pre-determined improvement target of 100% of requests dealt within the statutory timescales.

%

Quarterly

5.4 Meeting our security commitments

Security commitments

37 Compliance with MOD Security Requirements (other than compliance with JSP 440 in relation to the property infrastructure of the Authority’s

No more than 3 security breaches requiring investigation

# of security breaches requiring

Quarterly


Page 607


Strategic objective


(ref to DIEC KPIs)

Ref

SMART Measures



Units Frequency

38 premises which is covered below).

Compliance with JSP 440 in relation to the property infrastructure of the Authority’s premises

Pre-determined improvement target of 0 security breaches requiring investigation.

All premises shall comply except for pre-existing non-compliances in accordance with the procedure set out in Schedule 6.

investigation

Annually


Page 608


SCHEDULE 7, APPENDIX 2

TABLE 2: PERFORMANCE BANDS AND ASSOCIATED SERVICE DEDUCTIONS

Performance Bands Service Deduction Percentages

Band 1 Band 2 Band 3 Band 4 Band 1 Band

2 Band 3 Band 4

KPI

ref Type

Max Service

Deduction including

repeat failure

Target Met Minor

Shortfall Moderate Shortfall

Major Shortfall

Target Met

Minor Shortf

all

Moderate

Shortfall

Major Shortfa

ll

1. Binary 6.00% 100% or above Below Band 1 n/a n/a 0.00% 4.00% 4.00% 4.00%

2. Ratchet

4.00% 1% or above 0.5% to 0.99% 0% to 0.49% below 0% 0.00% 0.70% 1.30% 2.70%

3. Binary 10.00% 85% or above Below Band 1 n/a n/a 0.00% 6.70% 6.70% 6.70%

4. Ratchet

3.00% 85% or above 80% to 84.99% 75% to 79.99% below 75% 0.00% 0.50% 1.00% 2.00%


Page 609




2 Band 3 Band 4

KPI

ref Type

Max Service

Deduction including

repeat failure

Target Met Minor


Major Shortfall

Target Met

Minor Shortf

all

Moderate

Shortfall

Major Shortfa

ll

5. Ratchet

2.00% 93% or above 87% to 92.99% 85% to 86.99% below 85% 0.00% 0.30% 0.70% 1.30%

6. Binary 4.00% 96% or above

Below Band 1 n/a n/a 0.00% 2.70% 2.70% 2.70%

7. Ratchet 3.00%

87% or above

82.5% to 86.99% 80% to 82.49% below 80% 0.00% 0.50% 1.00% 2.00%

8. Ratchet

3.00% to calibrate per the procedure in paragraph 5 of Part E 0.00% 0.50% 1.00% 2.00%

9. Ratchet

6.00% 99% or above of the agreed

97% to 98.99% or above of the

95% to 96.99% or above of the

below 95% or above of the

0.00% 1.00% 2.00% 4.00%


Page 610




2 Band 3 Band 4

KPI

ref Type

Max Service

Deduction including

repeat failure

Target Met Minor


Major Shortfall

Target Met

Minor Shortf

all

Moderate

Shortfall

Major Shortfa

ll

Target agreed Target agreed Target agreed Target

10.

Ratchet


11.

Ratchet 2.25%

45%or above at SFC1 and

94% or above at SFC2

up to 1% less than the target

numbers

up to 3% less than the target

numbers

up to 5% less than f the

target numbers 0.00% 0.35% 0.75% 1.50%

11a

TBC 0.75% to calibrate per the procedure in paragraph 5 of Part E 0.00% 0.15% 0.25% 0.50%

12.

Binary 0.75% 100% or above Below Band 1 n/a n/a 0.00% 1.50% 1.50% 1.50%


Page 611




2 Band 3 Band 4

KPI

ref Type

Max Service

Deduction including

repeat failure

Target Met Minor


Major Shortfall

Target Met

Minor Shortf

all

Moderate

Shortfall

Major Shortfa

ll

12a


13.

Ratchet

2.25% 11% or less

13% to 11.01% 15% to 13.01% above 15% 0.00% 0.35% 0.75% 1.5%

13a

TBC to calibrate per the procedure in paragraph 5 of Part E 0.00% 0.15% 0.25% 0.50%

14.

Ratchet 2.25%

99% or above of the Baseline Performance

targets

95% to 98.99% of the Baseline Performance

targets

90% to 94.99%of the

Baseline Performance

targets

below 90% of the Baseline Performance

targets 0.00% 0.35% 0.75% 1.50%


Page 612




2 Band 3 Band 4

KPI

ref Type

Max Service

Deduction including

repeat failure

Target Met Minor


Major Shortfall

Target Met

Minor Shortf

all

Moderate

Shortfall

Major Shortfa

ll

14a


15.

Ratchet


15a


16.

Binary 2.00% 95% or above

Below Band 1 n/a n/a

0.00% 1.30% 1.30% 1.30%

17.

Ratchet

2.00% 90% or above

(subject to baseline)

84% to 89.99% (subject to baseline)

80% to 83.99% (subject to baseline)

below 80%(subject to baseline) 0.00% 0.30% 0.70% 1.30%


Page 613




2 Band 3 Band 4

KPI

ref Type

Max Service

Deduction including

repeat failure

Target Met Minor


Major Shortfall

Target Met

Minor Shortf

all

Moderate

Shortfall

Major Shortfa

ll

18.

Ratchet


19.

Binary 0.00% The weighting may be re-distributed to other measures by the

Authority 0.00% 0.00% 0.00% 0.00%

20.

Ratchet

0.00% The weighting may be re-distributed to other measures by the

Authority 0.00% 0.00% 0.00% 0.00%

21.

Ratchet

0.00% The weighting may be re-distributed to other measures by the

Authority 0.00% 0.00% 0.00% 0.00%

22.

Ratchet


23. Binary 5.00% Approved Below Band 1 Below Band 1 Below Band 1 0.00% 3.30% 3.30% 3.30%


Page 614




2 Band 3 Band 4

KPI

ref Type

Max Service

Deduction including

repeat failure

Target Met Minor


Major Shortfall

Target Met

Minor Shortf

all

Moderate

Shortfall

Major Shortfa

ll

24. Ratche

t 5.00% 95% or above 90% to 94.99% 85% to 89.99% below 85% 0.00% 0.80% 1.70% 3.30%

25. Binary 5.00% 100% or above Below Band 1 Below Band 1 Below Band 1 0.00% 3.30% 3.30% 3.30%



28. Binary 1.00% Less than 57 Below Band 1 Below Band 1 Below Band 1 0.00% 0.70% 0.70% 0.70%

29. Binary 1.00% Less than 184 Below Band 1 Below Band 1 Below Band 1 0.00% 0.70% 0.70% 0.70%

30. Binary 1.00% 0% Below Band 1 Below Band 1 Below Band 1 0.00% 0.70% 0.70% 0.70%

31. Binary 1.00% 5% or less Below Band 1 Below Band 1 Below Band 1 0.00% 0.70% 0.70% 0.70%


Page 615




2 Band 3 Band 4

KPI

ref Type

Max Service

Deduction including

repeat failure

Target Met Minor


Major Shortfall

Target Met

Minor Shortf

all

Moderate

Shortfall

Major Shortfa

ll


33. Binary 1.00%

Full Compliance

inside 12 months

Below Band 1 Below Band 1 Below Band 1 0.00% 0.70% 0.70% 0.70%

34. Ratche

t 3.00% 95% or above 90% to 94.99% 85% to 89.99% below 85%% 0.00% 0.50% 1.00% 2.00%

35. Ratche

t 0.00%

The weighting may be re-distributed to other measures by the Authority

0.00% 0.00% 0.00% 0.00%

36. Binary 1.50% 97% or above



Page 616




2 Band 3 Band 4

KPI

ref Type

Max Service

Deduction including

repeat failure

Target Met Minor


Major Shortfall

Target Met

Minor Shortf

all

Moderate

Shortfall

Major Shortfa

ll

37. Binary 1.50% 3 or below


38. To develop To develop To develop To develop To develop 0.00% 1.00% 1.00% 1.00%

0.0% 41.7% 50.0% 66.7%


Page 617


SCHEDULE 7, APPENDIX 3 INCENTIVE FEE BANDS WORKED EXAMPLES

Scenario Name Commentary A: In year 1 the final outturn spend is £60m less than the Operational Cash RDEL Baseline.

The first £17.5m savings are at 0% incentive fee. The next £42.5m all falls into band 2 and is subject to 20%, generating £8.5m incentive fee. The following year’s Baseline is reduced by the £60m year 1 savings to create an adjusted baseline

SUSTAINABLE SAVINGS EACH YEAR

B: SUSTAINABLE SAVINGS EACH year (ALTERNATIVE PROFILE)

Similar to the above scenario with different yearly amounts of savings to demonstrate how the model is intended to work

C: OVERSPENDS IN YEARS 2 AND 4

There are no savings in year 1 In year 2 the Baseline is exceeded / overspent by £30m In year 3 the original Baseline is under spent by £90m however this is treated as a £60m saving as the previous overspend of £30m is offset against this saving

D: PER SCENARIO B WITH NON-SUSTAINABLE SAVING IN YEAR 4

In year 4 there is a saving of £2m incremental over the previous years cumulative incremental savings

This example will be updated in accordance with paragraph 3.1A of Part D

In year 4 it is assumed that £1m of the £2m increment relates to a non-sustainable (“one-off”) initiative. At the end of year 4 the True Cost Variance process is used to agree the actual outturn expenditure related to that “one-off” initiative and consequently this is not counted as a net prior year operational saving in so far as calculating the adjusted baseline is concerned for the following year. This is demonstrated by reducing year 4’s £112m cumulative incremental savings to £111m in year 5. This also means that in year 4, the £1m one-off saving is included together with the £1m sustainable saving within fee band 4 to calculate £0.8m of Incentive Fee, i.e. £2m x 40% It should be noted that the £1m non-sustainable (“one-off”) saving is not reversed out of the fee band cumulative saving (the hopper remains at the maximum level previously reached)


Page 618


SCENARIO A: SUSTAINABLE SAVINGS EACH YEAR

Period From 01-Apr-14 01-Apr-15 01-Apr-16 01-Apr-17 01-Apr-18Period To 31-Mar-15 31-Mar-16 31-Mar-17 31-Mar-18 31-Mar-19Authority Financial Year 1 2 3 4 5Months In Period 12 12 12 12 12

Operational Cash RDEL Incentive Fee Summary

Operational Cash RDEL Fee Summary

Operational Cash RDEL (OCRFBAyn) 26,003.0 2,575.0 2,652.0 2,732.0 2,814.0 2,898.0

Previous Years Net Savings (excluding overspends) = NPYOSyn (873.3) - (60.0) (70.0) (85.0) (112.0)Previous Years non sustainable savings added back (actual sum agreed as part of TCV) - - - - - - Previous Years Net Savings excluding Non Sustainable savings and overspends NPYOSyn (873.3) - (60.0) (70.0) (85.0) (112.0)

Adjusted baseline excluding previous years non sustainable savings (OCRFBAyn - NPYOSyn) 25,129.8 2,575.0 2,592.0 2,662.0 2,729.0 2,786.0

Operational Cash RDEL (OCRFBAyn) 26,003.0 2,575.0 2,652.0 2,732.0 2,814.0 2,898.0 RDEL (Savings) / Overspends (988.3) (60.0) (70.0) (85.0) (112.0) (115.0)Current Year RDEL Cost (Excluding One Off Savings) = AOCyn 25,014.8 2,515.0 2,582.0 2,647.0 2,702.0 2,783.0

o/b including (Overspends) / Savings - 60.0 70.0 85.0 112.0 Incremental Savings = ((OCRFBAyn - NPYOSyn) - AOCyn) 115.0 60.0 10.0 15.0 27.0 3.0 c/b including (Overspends) / Savings 60.0 70.0 85.0 112.0 115.0

Change in c/b excluding overspends 60.0 10.0 15.0 27.0 3.0 Cumulative incremental savings excluding overspends 60.0 70.0 85.0 112.0 115.0

Incremental Savings Shared

1. Band 1: £0M to £25M Savings 25.0 25.0 25.0 25.0 - - - - 2. Band 2: £25M to £65M Savings 65.0 40.0 40.0 35.0 5.0 - - - 3. Band 3: £65M to £105M Savings 105.0 40.0 40.0 - 5.0 15.0 20.0 - 4. Band 4: £105M to £145M Savings 145.0 40.0 10.0 - - - 7.0 3.0 5. Band 5: £145M to £185M Savings 185.0 40.0 - - - - - - 6. Band 6: £185M to £225M Savings 225.0 40.0 - - - - - - 7. Band 7: Above £225M Savings n/a n/a - - - - - -

Total Savings 115.0 60.0 10.0 15.0 27.0 3.0

Fee

1. Band 1: £0M to £25M Savings - - - - - - - 2. Band 2: £25M to £65M Savings 20.0% 8.0 7.0 1.0 - - - 3. Band 3: £65M to £105M Savings 30.0% 12.0 - 1.5 4.5 6.0 - 4. Band 4: £105M to £145M Savings 40.0% 4.0 - - - 2.8 1.2 5. Band 5: £145M to £185M Savings 50.0% - - - - - - 6. Band 6: £185M to £225M Savings 55.0% - - - - - - 7. Band 7: Above £225M Savings 59.0% - - - - - -

Total Fee 24.0 7.0 2.5 4.5 8.8 1.2


Page 619


SCENARIO B: SUSTAINABLE SAVINGS EACH YEAR (ALTERNATIVE PROFILE)





Previous Years Net Savings (excluding overspends) = NPYOSyn (898.3) - (60.0) (70.0) (110.0) (112.0)Previous Years non sustainable savings added back (actual sum agreed as part of TCV) - - - - - - Previous Years Net Savings excluding Non Sustainable savings and overspends NPYOSyn (898.3) - (60.0) (70.0) (110.0) (112.0)


Operational Cash RDEL (OCRFBAyn) 26,003.0 2,575.0 2,652.0 2,732.0 2,814.0 2,898.0 RDEL (Savings) / Overspends (1,013.3) (60.0) (70.0) (110.0) (112.0) (115.0)Current Year RDEL Cost (Excluding One Off Savings) = AOCyn 24,989.8 2,515.0 2,582.0 2,622.0 2,702.0 2,783.0




1. Band 1: £0M to £25M Savings 25.0 25.0 25.0 25.0 - - - - 2. Band 2: £25M to £65M Savings 65.0 40.0 40.0 35.0 5.0 - - - 3. Band 3: £65M to £105M Savings 105.0 40.0 40.0 - 5.0 35.0 - - 4. Band 4: £105M to £145M Savings 145.0 40.0 10.0 - - 5.0 2.0 3.0 5. Band 5: £145M to £185M Savings 185.0 40.0 - - - - - - 6. Band 6: £185M to £225M Savings 225.0 40.0 - - - - - - 7. Band 7: Above £225M Savings n/a n/a - - - - - -

Total Savings 115.0 60.0 10.0 40.0 2.0 3.0

Fee

1. Band 1: £0M to £25M Savings - - - - - - - 2. Band 2: £25M to £65M Savings 20.0% 8.0 7.0 1.0 - - - 3. Band 3: £65M to £105M Savings 30.0% 12.0 - 1.5 10.5 - - 4. Band 4: £105M to £145M Savings 40.0% 4.0 - - 2.0 0.8 1.2 5. Band 5: £145M to £185M Savings 50.0% - - - - - - 6. Band 6: £185M to £225M Savings 55.0% - - - - - - 7. Band 7: Above £225M Savings 59.0% - - - - - -

Total Fee 24.0 7.0 2.5 12.5 0.8 1.2


Page 620


SCENARIO C: OVERSPENDS IN YEARS 2 AND 4





Previous Years Net Savings (excluding overspends) = NPYOSyn (446.3) - - - (90.0) - Previous Years non sustainable savings added back (actual sum agreed as part of TCV) - - - - - - Previous Years Net Savings excluding Non Sustainable savings and overspends NPYOSyn (446.3) - - - (90.0) -


Operational Cash RDEL (OCRFBAyn) 26,003.0 2,575.0 2,652.0 2,732.0 2,814.0 2,898.0 RDEL (Savings) / Overspends (421.3) - 30.0 (90.0) 70.0 (75.0)Current Year RDEL Cost (Excluding One Off Savings) = AOCyn 25,581.8 2,575.0 2,682.0 2,642.0 2,884.0 2,823.0

o/b including (Overspends) / Savings - - (30.0) 60.0 (100.0)Incremental Savings = ((OCRFBAyn - NPYOSyn) - AOCyn) (25.0) - (30.0) 90.0 (160.0) 75.0 c/b including (Overspends) / Savings - (30.0) 60.0 (100.0) (25.0)

Change in c/b excluding overspends - - 60.0 - - Cumulative incremental savings excluding overspends - - 60.0 60.0 60.0


1. Band 1: £0M to £25M Savings 25.0 25.0 25.0 - - 25.0 - - 2. Band 2: £25M to £65M Savings 65.0 40.0 35.0 - - 35.0 - - 3. Band 3: £65M to £105M Savings 105.0 40.0 - - - - - - 4. Band 4: £105M to £145M Savings 145.0 40.0 - - - - - - 5. Band 5: £145M to £185M Savings 185.0 40.0 - - - - - - 6. Band 6: £185M to £225M Savings 225.0 40.0 - - - - - - 7. Band 7: Above £225M Savings n/a n/a - - - - - -

Total Savings 60.0 - - 60.0 - -

Fee

1. Band 1: £0M to £25M Savings - - - - - - - 2. Band 2: £25M to £65M Savings 20.0% 7.0 - - 7.0 - - 3. Band 3: £65M to £105M Savings 30.0% - - - - - - 4. Band 4: £105M to £145M Savings 40.0% - - - - - - 5. Band 5: £145M to £185M Savings 50.0% - - - - - - 6. Band 6: £185M to £225M Savings 55.0% - - - - - - 7. Band 7: Above £225M Savings 59.0% - - - - - -

Total Fee 7.0 - - 7.0 - -


Page 621



Page 622





Previous Years Net Savings (excluding overspends) = NPYOSyn (898.3) - (60.0) (70.0) (110.0) (112.0)Previous Years non sustainable savings added back (actual sum agreed as part of TCV) 1.0 - - - - 1.0 Previous Years Net Savings excluding Non Sustainable savings and overspends NPYOSyn (897.3) - (60.0) (70.0) (110.0) (111.0)


Operational Cash RDEL (OCRFBAyn) 26,003.0 2,575.0 2,652.0 2,732.0 2,814.0 2,898.0 RDEL (Savings) / Overspends (1,013.3) (60.0) (70.0) (110.0) (112.0) (115.0)Current Year RDEL Cost (Excluding One Off Savings) = AOCyn 24,989.8 2,515.0 2,582.0 2,622.0 2,702.0 2,783.0




1. Band 1: £0M to £25M Savings 25.0 25.0 25.0 25.0 - - - - 2. Band 2: £25M to £65M Savings 65.0 40.0 40.0 35.0 5.0 - - - 3. Band 3: £65M to £105M Savings 105.0 40.0 40.0 - 5.0 35.0 - - 4. Band 4: £105M to £145M Savings 145.0 40.0 11.0 - - 5.0 2.0 4.0 5. Band 5: £145M to £185M Savings 185.0 40.0 - - - - - - 6. Band 6: £185M to £225M Savings 225.0 40.0 - - - - - - 7. Band 7: Above £225M Savings n/a n/a - - - - - -

Total Savings 116.0 60.0 10.0 40.0 2.0 4.0

Fee

1. Band 1: £0M to £25M Savings - - - - - - - 2. Band 2: £25M to £65M Savings 20.0% 8.0 7.0 1.0 - - - 3. Band 3: £65M to £105M Savings 30.0% 12.0 - 1.5 10.5 - - 4. Band 4: £105M to £145M Savings 40.0% 4.4 - - 2.0 0.8 1.6 5. Band 5: £145M to £185M Savings 50.0% - - - - - - 6. Band 6: £185M to £225M Savings 55.0% - - - - - - 7. Band 7: Above £225M Savings 59.0% - - - - - -

Total Fee 24.4 7.0 2.5 12.5 0.8 1.6

SCENARIO D: PER SCENARIO B WITH NON-SUSTAINABLE SAVING IN YEAR 4


SCHEDULE 8 BASE CASE

The Base Case details the Cash RDEL Financial Baseline, the Disposals Baseline and the Projects Baseline

(£m) 14/15 15/16 16/17 17/18 18/19 19/20 20/21 21/22 22/23 23/24 24/25

RDEL

Cash RDEL Operational Cash RDEL Financial Baseline 2,468 2,313 2,205 2,172 2,139 2,170 2,195 2,228 2,278 2,322 2,373 Ring-fenced Baseline adjustments 8 37 32 40 53 57 59 62 65 57 59 Operational Cash RDEL Financial Baseline (unspecified projects) 3 2 49 54 54 52 55 57 47 48 49 Total Operational Cash RDEL Financial Baseline 2,480 2,352 2,286 2,266 2,246 2,280 2,308 2,347 2,391 2,427 2,481 Utilities Cash RDEL Financial Baseline 343 360 333 306 306 300 303 306 308 314 321 Cash RDEL Financial Baseline 2,823 2,712 2,620 2,572 2,552 2,580 2,611 2,653 2,698 2,742 2,802

Financial Baseline (RDEL) 2,823 2,712 2,620 2,572 2,552 2,580 2,611 2,653 2,698 2,742 2,802 RDEL Control Totals 2,654 2,398 2,456 2,342 2,257 2,261 2,250 2,228 2,229 2,240 2,289 Cash RDEL CT "delta" (169) (314) (164) (230) (295) (319) (361) (424) (469) (502) (513)

CDEL

Baseline Projects Financial Baseline 965 875 997 993 1,015 738 501 560 637 632 624 Disposals Financial Baseline (179) (179) (184) (250) (197) (178) (179) (182) (80) (60) (40) Financial Baseline (CDEL) 787 696 812 743 819 560 322 378 557 572 584

Note 2 Note 2 Note 2 Note 2 Note 2

Comparison to CTs Projects and Disposals 787 696 812 743 819 560 322 378 557 572 584 CDEL Control Totals 787 696 812 743 819 560 322 378 557 572 584

Page 623



Notes: 1. As Control Totals have only been issued for 10 years to DIO, figures for 24/25 are based on 23/24 uplifted by 2.2% 2. Disposal targets and CDEL funding from 20/21onwards are still subject to

discussion and further agreement with DG Fin. The disposal targets are currently derived from the final issued ABC14 CDEL Control Totals

3. "unspecified projects". The Authority to approve expenditure against this funding has not been delegated by the Authority to DIDO. Delegation to approve expenditure against this funding will be given when requirements are confirmed.

The Authority shall make available additional funding (in addition to that contained within the Base Case) of £20m to fund any additional costs directly related to implementation of DIDO’s Information Management System (“IMS”). Subject always to the Contractor having procured that DIDO has managed the implementation of the IMS system in accordance with standards required by Clause 9.1(h) such funding shall be available to be drawn down by DIDO as and when needed for such purposes. The Parties acknowledge and agree that the full costs of IMS implementation cannot be predicted with certainty and that, in the event that additional funds above £20m are required, the Contractor shall be entitled to submit business cases for any additional funding which may be required to complete the implementation of the IMS system (such cases to be considered by the Authority acting reasonably). For the avoidance of doubt, this does not constitute any form of commitment on the part of the Authority to approve any such business cases.

Page 624



SCHEDULE 9

PARENT COMPANY GUARANTEE

CAPITA PLC

and

THE SECRETARY OF STATE FOR DEFENCE

GUARANTEE

Page 625



THIS GUARANTEE is made on 2014

BETWEEN:

(1) CAPITA PLC, (registered number 2081330), a company incorporated in England, whose registered office (and address for correspondence) is 71 Victoria Street, Westminster, London, SW1H 0XA (the Guarantor); and

(2) THE SECRETARY OF STATE FOR DEFENCE (the Authority).

WHEREAS:

(A) Capita Busines Services Ltd (Contractor), and the Authority have entered into an agreement on [____] pursuant to which the Contractor has agreed to place an executive management team into the Defence Infrastructure Delivery Organisation (DIDO) and transform DIDO into a world class public sector infrastructure delivery organisation (the Contract).

(B) It is a condition of the Contract that the Contractor procures the execution and delivery to the Authority of a guarantee in the form set out herein.

(C) The Guarantor has agreed to guarantee the due performance of the Contract by the Contractor in accordance with the terms and conditions of this Guarantee.

IT IS AGREED:

1. DEFINITIONS AND INTERPRETATION

1.1 Words and expressions defined in the Contract have the same meaning when used in this Guarantee unless the context otherwise requires or unless otherwise defined or provided for in this Guarantee.

2. GUARANTEE

2.1 In consideration of the Authority entering into the Contract (a copy of which the Guarantor acknowledges having received) with the Contractor, the Guarantor hereby irrevocably and unconditionally:

(a) guarantees to the Authority, as a continuing obligation, the due, proper and punctual observance and performance by the Contractor, of each and all of the obligations, warranties, duties and undertakings of the Contractor under, or pursuant to, the Contract (the Guaranteed Obligations) as and when such Guaranteed Obligations shall become due in accordance with the terms of the Contract;

(b) undertakes to provide all resources and facilities, whether financial or otherwise, to enable the Contractor to fulfil the Guaranteed Obligations; and


Page 626


(c) undertakes to pay to the Authority, if the Contractor fails to pay the Authority when due, all such unpaid amounts whatsoever which the Contract provides are to be paid by the Contractor. Any such amounts shall be due from the Guarantor as principal debtor and not merely as surety.

2.2 The Guarantor shall perform:

(a) its Guaranteed Obligations under this Guarantee within five Business Days or such period as is reasonable in the circumstances; and

(b) its payment obligations under this Guarantee within five Business Days,

in each case, after receipt of written notice from Authority in accordance with clause 14, provided only that the Authority shall have first made a demand in writing for performance of the relevant obligation(s) to the Contractor.

3. INDEMNITY

The Guarantor, as principal obligor and as a separate and independent obligation and liability from its obligations and liabilities under clause 2.1, undertakes that if any of its obligations or liabilities under clause 2.1 are or become unenforceable, invalid or illegal for any reason whatsoever attributable to any act or omission of the Guarantor or the Contractor (whether or not they are aware of the same), the Guarantor will separately indemnify and keep indemnified the Authority on demand against any and all losses, actions, claims, proceedings, liabilities, expenditure or costs suffered or incurred by the Authority arising out of or in connection with such unenforceability, invalidity or illegality. The amount payable by the Guarantor under this indemnity will be equal to the amount it would have had to pay under clause 2 had the relevant obligations not been unenforceable, invalid or illegal.

4. VARIATION TO THE CONTRACT

The Guarantor hereby authorises the Authority and the Contractor to make any changes, modifications or variations to the Contract, including a Change under and in accordance with the Contract, and the Guarantor irrevocably agrees:

(a) that any such change, modification and variation, including a Change under and in accordance with the Contract, shall be binding on the Guarantor in all circumstances;

(b) to guarantee the due and punctual performance of the Guaranteed Obligations, as so amended, modified and varied; and

(c) to perform its obligations in accordance with the terms of this Guarantee, notwithstanding that such amendment, modification or variation may increase or otherwise affect the liability of the Guarantor under this Guarantee.

OFFICIAL SENSITIVE – COMMERCIAL Page 627


5. UNDERTAKINGS

5.1 The Guarantor waives any right it may have to require the Authority (or any agent on its behalf) to demand, proceed against or enforce any other right or claim for payment against the Contractor or any other person before claiming from the Guarantor under this Guarantee, save only for the making of a demand to the Contractor in accordance with clause 2.2.

6. LIMITATION OF LIABILITY AND DEFENCES

6.1 The Guarantor may:

(a) raise hereunder all objections and defences the Contractor has or would have under the Contract; and

(b) assume all rights of set-off, defence, counterclaim, limitation and/or exclusion of liability as the Contractor may have against the Authority under the Contract,

save for any such rights, objections and defences that arise on grounds of any of the events or matters set out in clause 6.4.

6.2 The liability of the Guarantor pursuant to this Guarantee shall not exceed (when taken together with any other amount recovered under the Contract and/or this Guarantee, the value of any Guaranteed Obligation performed or procured by the Guarantor, and/or from any other security provided under or pursuant to the terms of the Contract (excluding any such security provided by the Contractor to the Authority)) the limits of liability set out in Clause 45 of the Contract.

6.3 The Authority shall not be entitled to receive and retain any amount paid under this Guarantee to the extent that the Authority has already received payment in respect of the same claim, whether such payment was made under the Contract or any other guarantee or security issued to the Authority in respect of the obligations of the Contractor under the Contract. Any amount received by the Authority which, in accordance with this clause 6.3, the Authority is not entitled to receive and retain shall be held by the Authority on trust for the Guarantor, and shall be promptly returned to the Guarantor, upon the Authority becoming aware that it is not entitled to receive and retain such amount.

6.4 Save as expressly stated in this Guarantee, the obligations and liability of the Guarantor under this Guarantee shall remain in full force and effect notwithstanding any act, omission, event or matter whatsoever, whether or not known to the Guarantor, the Contractor or the Authority (other than irrevocable payment to the Authority of amounts under and in accordance with this Guarantee and performance in full of all Guaranteed Obligations), and nothing shall affect, impair, discharge, release or otherwise exonerate the Guarantor from any of its liabilities or obligations under this Guarantee, including the following:

(a) anything (other than such rights, objections and defences of the Contractor under the Contract as the Guarantor is entitled to raise or assume in



accordance with clause 6.1) which would have discharged, reduced or otherwise adversely affected the liability of the Guarantor, whether as surety, co-obligor or otherwise, or which would have afforded the Guarantor any legal or equitable defences;

(b) the existence, validity, obtaining or renewal of any other guarantee, security or right of recourse, set-off or other right or interest held by the Authority in relation to the Contract or any other document entered into pursuant to the Contract or any demand or enforcement, failure to demand or enforce or the release or waiver of any such guarantee, security, right of recourse, set-off or other right or interest;

(c) any amendment, variation, assignment, novation, modification or waiver (express or implied and however substantial or material), to the Contract or any other document relating to the Contract (which shall be binding upon the Guarantor in all circumstances, notwithstanding that such amendment, variation, assignment, novation, modification or waiver may increase or otherwise affect the liability of the Guarantor);

(d) any release of or granting of time or any other indulgence to the Contractor or any third party;

(e) any winding up, insolvency, dissolution, reconstruction, reorganisation, legal limitation, disability, incapacity or lack of corporate power or authority or other circumstances of, or any change in the constitution or corporate identity by, the Contractor or any other person; and

(f) any circumstances which might render illegal, invalid, void, voidable or unenforceable the obligations of the Contractor under the Contract or which might affect the Authority’s ability to recover amounts from the Contractor, unless the same effect would also have applied had the Guarantor been party to the Contract instead of the Contractor.

6.5 The Authority shall be entitled to make multiple claims under this Guarantee in accordance with clause 16.

7. CONDITIONAL DISCHARGE

7.1 Any release, compromise, discharge or settlement by the Guarantor and the Authority in relation to this Guarantee shall be conditional on no right, security, disposition or payment to the Authority by the Guarantor, the Contractor or any other person being avoided, set aside or ordered to be refunded pursuant to any enactment or law relating to breach of duty by any person, bankruptcy, liquidation, administration, protection from creditors generally or insolvency for any other reason.

7.2 If any such right, security or disposition is avoided, set aside or ordered to be refunded, the Authority shall be entitled subsequently to enforce this Guarantee as if such release, compromise, discharge or settlement had not occurred and any such security, disposition or payment had not been made.



8. EXPIRY

8.1 The obligations and liabilities of the Guarantor under this Guarantee shall constitute and be continuing obligations and shall remain in full force and effect until the date on which all the obligations and liabilities of the Contractor under the Contract have been satisfied or performed in full in accordance with the Contract, notwithstanding any intermediate satisfaction or performance of such obligations by the Contractor, the Guarantor or any other party.

8.2 The expiry of this Guarantee in accordance with clause 8.1 shall not affect any liabilities or obligations of the Guarantor which have arisen or accrued or are related or attributable to matters occurring prior to the date of expiry of this Guarantee.

9. REPRESENTATIONS

The Guarantor represents and warrants to the Authority that:

(a) it is duly organised, validly existing and in good standing under the law of the jurisdiction of its organisation;

(b) it has all necessary requisite power and authority, and has taken all necessary corporate action, to enable it to enter into this Guarantee and perform its obligations under this Guarantee;

(c) its obligations under this Guarantee shall, when executed, constitute valid and legally binding obligations of the Guarantor;

(d) the Guarantor does not require the consent, approval or authority of any other person to enter into or perform its obligations under this Guarantee;

(e) it has no contemplation of filing, and has not filed for, insolvency or any other form of analogous proceedings;

(f) it is not engaged in any actions, litigation or arbitration proceedings or investigations which may impair its capacity or ability to perform its obligations and duties under this Guarantee and, to its knowledge, no such actions, litigation or arbitration proceedings or investigations have been threatened or are pending against it;

(g) it has not been subject to any fines, penalties, injunctive relief or any other civil or criminal liabilities which have or may adversely effect its ability to perform its obligations and duties under this Guarantee;

(h) the execution of this Guarantee (and the performance of all obligations contained in the Guarantee) does not and will not constitute a breach of, or a default under, any law, regulation or official directive to which the Guarantor is subject or any agreement by which the Guarantor is bound and the Guarantee will be valid, binding and enforceable in accordance with the terms of all such agreements;



(i) to the best of its knowledge, there are no pending notices of violation of any rules, decrees, awards, permits or orders which may have a material effect on its ability to perform its obligations under this Guarantee;

(j) it has taken all necessary action to perform the obligations it is assuming pursuant to the terms of this Guarantee; and

(k) it has not entered into this Guarantee in reliance on any representation, warranty or undertaking which is not set out in this Guarantee.

10. PAYMENTS

10.1 All sums payable by the Guarantor under this Guarantee shall be paid, no later than the time required under clause 2.2, in full to the Authority without any set-off or counterclaim and free and clear of any present or future deduction or withholding on account of taxes, duties, levies, assessments and/or charges of any kind (except for those required by any law or regulation binding on the Guarantor), in freely transferable, cleared funds in Sterling.

10.2 If any deduction or withholding is required to be made by law or regulation binding on the Guarantor, the Guarantor shall pay that additional amount which is necessary to ensure that the Authority receives a net amount equal to the full amount which it would have received if the payment had been made without the deduction or withholding.

10.3 If the Guarantor fails to pay any amount payable by it under this Guarantee on its due date in accordance with clause 2.2, interest shall accrue on the overdue amount from the date on which it fell due up to the date of actual payment (both before and after judgment) at the Prescribed Rate, but without any double-counting with any interest accruing on the relevant overdue amount under Clause 19.21 of the Contract. Any interest accruing under this clause shall be immediately due and payable by the Guarantor on demand by the Authority. Notwithstanding the foregoing, no interest under this clause 10.3 shall accrue or be payable in addition to interest accruing on the relevant overdue amount in accordance with Clause 19.21 of the Contract.

10.4 Any certificate or determination by the Authority of the amount due under this Guarantee shall, in the absence of any manifest error, be conclusive evidence of the matters to which it relates.

11. COSTS

The Guarantor shall, on a full indemnity basis, pay to the Authority on demand the amount of all costs and expenses (including reasonable legal and out of pocket expenses and any value added tax on those costs and expenses) which the Authority incurs in connection with:

(a) any discharge or release under this Guarantee; and

(b) the preservation, exercise or enforcement of any rights under or in connection with this Guarantee or any attempt to (an Enforcement Action), provided that:



(i) the Guarantor takes any action to perform any of the Guaranteed Obligations in respect of such Enforcement Action; or

(ii) the Guarantor makes any payment in connection with the Contract in respect of such Enforcement Action;

(iii) any court, arbitration or other dispute resolution process finds that the Guarantor is required to perform any of the Guaranteed Obligations or make any payment in connection with the Contract, in respect of such Enforcement Action.

12. ASSIGNMENT

12.1 The Guarantor shall not, without the Authority’s prior written consent (such consent to be granted at the absolute discretion of the Authority), assign, novate or otherwise transfer its rights or obligations under this Guarantee.

12.2 The Authority may assign, transfer or novate all or any of its rights, title and interest in this Guarantee to any person to whom its rights, title and interest in the Contract is or are assigned, transferred or novated in accordance with Clause 37.1 of the Contract. The Authority hereby undertakes to notify the Guarantor in writing of any such assignment, transfer or novation.

12.3 In the event that this Guarantee should become invalid or otherwise cease to exist as a result of:

(a) the exercise by the Authority of its rights under Clause 37.1 of the Contract to assign, transfer or novate its rights, title and interest in the Contract; or

(b) the accession of another person to the Contract as Authority thereunder in accordance with the terms of the Contract,

the Guarantor undertakes to replace this Guarantee with a valid guarantee on the same terms and conditions as this Guarantee in respect of the remainder of the term of this Guarantee.

12.4 Clause 12.3 shall survive any termination or expiration of this Guarantee that occurs as a result of any of the events described in paragraphs (a) and (b) of clause 12.3, and shall remain valid and enforceable by the Authority and/or any person to whom the relevant rights, title or interest are assigned or transferred or who accedes to the Contract as described therein, at any time up to the expiry of this Guarantee in accordance with clause 8.1.

13. FURTHER ASSURANCE

The Guarantor agrees to perform (or procure the performance of) all further acts and execute and deliver such further documents, as may be required by law or as may be reasonably necessary, to implement and/or give effect to this Guarantee and the matters set out herein.



14. NOTICES

14.1 All notices under, or in connection, with this Guarantee shall, unless otherwise stated, be given in writing by hand or recorded delivery to the relevant party at the address for service set out below, or to such other address in the United Kingdom as each party may specify by notice in writing to the other party.

14.2 The address details of the Guarantor and the Authority are as follows (or such other address details which may be subsequently notified by the relevant party):

Guarantor: Address: 71 Victoria Street, Westminster, London, SW1H 0XA

Name: Mr Lawrence Eaton

Title: Head of Legal and Commercial Group

Authority: Address: Building 18, Piave Lines, Catterick Garison

Name: Mrs R. Pearson

Title: Authority’s Commercial Officer

14.3 Any such notice or other communication shall be deemed to have been received by the party to whom it is addressed when delivered, provided that, if any such notice, demand or other communication would otherwise be deemed to be given or made later than 17.00 hours (London time), such notice, demand or other communication shall be deemed to be given or made at 09.00 hours (London time) on the next Business Day.

15. WAIVER

15.1 No delay or omission by the Authority in exercising any right, power or privilege under this Guarantee shall impair or be construed as a waiver of such right, power or privilege nor shall any single or partial exercise of any such right, power or privilege preclude any further exercise of such right, power or privilege or the exercise of any other right, power or privilege.

15.2 A waiver or variation given or consent granted by the Authority under this Guarantee shall be effective only if given in writing, signed by the Authority and then only in the instance and for the purpose for which it is given.

16. RIGHTS CUMULATIVE AND CONTINUING

The Authority’s rights under the Guarantee are cumulative and may be exercised as often as the Authority considers appropriate. This Guarantee is a continuing guarantee for the payment of all Guaranteed Obligations and shall not be satisfied by any intermediate payment or discharge of the Guaranteed Obligations in whole or in part.




17. PARTIAL INVALIDITY

The invalidity, illegality or unenforceability in whole or in part of any of the provisions of this Guarantee, in any respect under any law, shall not affect the validity, legality and enforceability of the remaining part or provisions of this Guarantee.

18. ENTIRE AGREEMENT

This Guarantee sets out the entire agreement and understanding between the parties in respect of this Guarantee. It is agreed that:

(a) no party has entered into this Guarantee in reliance upon any representation, warranty or undertaking of any other party which is not expressly set out or referred to in this Guarantee;

(b) (except for any breach of any express warranty under this Guarantee) no party shall have any claim or remedy under this Guarantee in respect of misrepresentation (whether negligent or otherwise, and whether made prior to or in this Guarantee) or untrue statement made by any other party; and

(c) this clause shall not exclude liability for fraudulent misrepresentation.

19. COUNTERPARTS

This Guarantee may be executed in any number of counterparts and by the parties to it on separate counterparts, each of which shall be original but all of which together shall constitute one and the same instrument.

20. CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999

Subject to clause 12.4, a person who is not a party to this Guarantee shall have no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any of its terms.

21. GOVERNING LAW

This Guarantee (including any non-contractual obligations arising out of or in connection with it), and any dispute or claim arising out of or in connection with it or its subject matter, is governed by and shall be construed in accordance with the laws of England and Wales and the parties irrevocably agree that the courts of England and Wales are to have exclusive jurisdiction to settle any disputes which may arise out of or in connection with this Guarantee (including any non-contractual obligations arising out of or in connection with it).



IN WITNESS whereof this Guarantee has been executed as a deed and delivered on the day and date referred to above.

Executed as a deed, but not delivered until the first date specified on page 1, by CAPITA PLC by a director in the presence of a witness:

)))) Signature

Name (block

capitals)

Director Witness signature

Witness name (block capitals)

Witness address The Corporate Seal of the ) SECRETARY OF STATE ) hereto affixed is authenticated by: ) ……………………………….



SCHEDULE 10

INSURANCE

1. THIRD PARTY PUBLIC & PRODUCTS LIABILITY INSURANCE

1.1 Insured

Contractor

1.2 Interest

To indemnify the Insured in respect of all sums which the Insured shall become legally liable to pay as damages, including claimant's costs and expenses, in respect of accidental:

(a) death or bodily injury to or sickness, illness or disease contracted by any person; and

(b) loss of or damage to property,

happening during the Period of Insurance and arising out of or in connection with the Contract.

1.3 Limit of Indemnity

Not less than £10,000,000 in respect of any one occurrence, the number of occurrences being unlimited, but £10,000,000 any one occurrence and in the aggregate per annum in respect of products and pollution liability.

1.4 Territorial Limits

Worldwide

1.5 Jurisdiction and choice of law relating to policy interpretation

English Courts and in accordance with the laws of England & Wales

1.6 Period of Insurance

From the Commencement Date for the duration of this Contract and renewable on an annual basis unless agreed otherwise.

1.7 Cover Features and Extensions

Indemnity to principals clause.

1.8 Principal Exclusions

(a) War and related perils.

(b) Nuclear and radioactive risks.



(c) Liability for death, illness, disease or bodily injury sustained by employees of the Insured during the course of their employment.

(d) Liability arising out of the use of mechanically propelled vehicles whilst required to be compulsorily insured by legislation in respect of such vehicles.

(e) Liability in respect of predetermined penalties or liquidated damages imposed under any contract entered into by the Insured.

(f) Liability arising out of technical or professional advice other than in respect of death or bodily injury to persons or damage to third party property.

(g) Liability arising from the ownership, possession or use of any aircraft or marine vessel.

(h) Liability arising from seepage and pollution unless caused by a sudden, unintended and unexpected occurrence.

1.9 Maximum Deductible

Not to exceed £750 for each and every third party property damage claim (personal injury claims to be paid in full).

2. PROFESSIONAL INDEMNITY INSURANCE

2.1 Insured

Contractor

2.2 Interest

To indemnify the Insured for all sums which the Insured shall become legally liable to pay (including claimant’s costs and expenses) as a result of claims first made against the Insured during the Period of Insurance by reason of any negligent act, error and/or omission arising from or in connection with the Contract.

2.3 Limit of Indemnity

Not less than £10,000,000 in respect of any one claim and in the aggregate per annum.

2.4 Territorial Limits

Worldwide

2.5 Jurisdiction and choice of law relating to policy interpretation

English Courts and in accordance with the laws of England & Wales

2.6 Period of Insurance



From the Commencement Date for the duration of this Contract and renewable on an annual basis unless agreed otherwise and a period of six years following the Expiry Date or Termination Date, whichever occurs earlier.

2.7 Cover Features and Extensions

Retroactive cover to apply to any claims made policy wording in respect of this Contract or retroactive date to be no later than the date of this Contract.

2.8 Principal Exclusions

(a) War and related perils

(b) Nuclear and radioactive risks

2.9 Maximum Deductible

Not to exceed £500,000 each and every claim.

3. UNITED KINGDOM COMPULSORY INSURANCES

3.1 The Contractor is required to meet its United Kingdom, and all other statutory insurance obligations in full. Insurances are required to comply with all statutory requirements including, but not limited to, United Kingdom employers' liability insurance and motor third party liability insurance.

3.3 The employers' liability insurance shall contain an indemnity to principals clause under which the Authority shall be indemnified in respect of claims made against the Authority arising from the acts or omissions of, or the performance by, the Contractor of the services under this Contract.



SCHEDULE 11

OPTIONS

In this Schedule 11, unless the context otherwise requires:

Asset Strategy & Portfolio Directorate

means the directorate established within DIDO by the Contractor at the Effective Date to manage all matters relating to footprint, strategic asset management and disposals

Commercial function means the function established within DIDO by the Contractor at the Effective Date to manage commercial matters both in relation to DIDO and the Contractor

Customers means end users, service personnel, civilian support staff or any individual or group receiving Soft FM services from DIDO or DIDO’s Industry Partners

Defence End Users means Installation Commanders, Commanding Officers and senior site managers

DIDO Academy means the mechanism by which the Contractor will supplement existing Authority training and development courses with targeted approaches and training interventions to provide a dedicated learning and development resource to give managers advice and co-ordinate learning activities across DIDO

Director of Service Delivery

means a Named Contractor established to manage the resources and the delivery of all service functions in training, Hard FM, Soft FM, utilities and accommodation. The position will report to the COO of DIDO

Evaluation Point means the meeting to be scheduled by the Authority three months after the Effective Date to evaluate the success of the first three months of DIDO

Finance Function means the function established within DIDO by the Contractor at the Effective Date to manage financial matters both in relation to DIDO and the Contractor

Finance & Commercial Directorate

means the directorate established within DIDO by the Contractor at the Effective Date to manage financial and commercial matters both in relation to DIDO and the Contractor

HESTIA means the Authority’s change programme to consolidate existing



Soft FM contracts into nine multi-activity regional contracts

Industry Partners means any contractor supporting the delivery of services to DIDO, excluding the Contractor

Infrastructure Management System (IMS)

means the Authority’s information management system based on the IBM Tririga technology platform

JSPs means Joint Service Publications

MGS means MoD Guarding Services

Operations Development & Coherence

means the function retained within DIDO by the Contractor at the Effective Date within the Operations directorate to ensure that all services delivered by DIDO are joined up and integrated and that projects and programmes are best designed to meet the requirements of the Defence End User and Customer

Operations Directorate means the directorate established within DIDO by the Contractor at the Effective Date to manage and deliver service in Hard and Soft FM, Training, Accommodation, Capital Projects & Programmes, PFI, Contingency Operations and Operations Development & Coherence

Regional Service Delivery Matrix

means the organisational plan for service delivery describing heads of function and regional service delivery

Strategic Initiatives Function

means the function established within the Transformation & Change directorate within DIDO by the Contractor at the Effective Date to lead continuous improvement and innovation across DIDO

Strategic Stakeholder Engagement & Communications

means the function established within DIDO by the Contractor at the Effective Date to manage internal and external communications and stakeholder management matters across DIDO

Total FM Service Line means the combined resources and service delivery functions of the current Hard FM and Soft FM work streams

VERs means the MOD Voluntary Early Release scheme as described in the MOD Agreement on Managing Staff Surpluses document of that title dated 9 January 2012 as provided in the Data Room and as may be amended by the MOD from time to time

Workforce Plan means the output from the workforce planning activities



1. GENERAL PRINCIPLES

1.1 The Contractor shall, and shall procure that DIDO will implement requirements to deliver the Options such that:

(a) services to deliver options will be integrated into the proposed top-level DIDO organisation structure with no additional Named Contractors required services;

(b) services will be provided through the proposed service delivery matrix within DIDO, in the Service Delivery function of the Operations directorate under the Chief Operating Officer and Head of Service Delivery;

(c) best practices proposed within other IIP sub-strategies (e.g. Soft FM, Hard FM, training) will be adopted, as appropriate, in the provision of the options services;

(d) services will be provided by the most efficient and effective means, exploiting the expertise and capabilities of Industry Partners were possible; and

(e) all key stakeholder groups and individuals impacted by exercising the Option are identified and consulted with to ensure that changes are designed and implemented in a considered manner.

1.2 The Authority shall, upon execution of any Option, revise the Financial Baseline to account for the expanded scope of services, the increased number of staff brought into DIDO to provide the service, and any existing efficiency plans.

1.3 The Contractor shall, and shall procure that DIDO will manage surplus staff, staff outsourcing and VERS in accordance with the provisions of Schedule 3 Part 10 Workforce planning, development and staff engagement.

2. OPTION 1 - UNARMED GUARDING

2.1 The Contractor shall, and shall procure that DIDO will, in order to implement the requirement of the exercised option:

(a) within three months of the option being exercised:

(i) retain the guarding service within DIDO as a directly employed service;

(ii) establish the unarmed guarding service office within Operations Development & Coherence;

(iii) integrate the existing MGS management team into DIDO’s service delivery structure retaining the existing Head of MOD Guard Services to fulfil the unarmed guard service line lead role;

(b) from the end of the Transformation Period or within three months of the option being exercised, whichever is the sooner:

(i) integrate the unarmed guard service into the Regional Service Delivery Matrix as a service line alongside other service lines of Total FM, Accommodation, Training and Energy, Utilities & Sustainability;



(c) within 24 months of the date at which the option is exercised:

(i) analyse guarding requirements, manning levels, technology solutions and the application of JSP440 across the Defence Estate through a security review and design with Security Services Group/seek approval from DIGA for guarding requirements for each site;

(ii) integrate these requirements with the Defence Estate disposals requirements as defined in Schedule 3 Part 5 Strategic Asset Management and Disposals;

(d) from the point at which the new HESTIA contracts are procured, include modifications to allow unarmed guarding services to be integrated into the Soft FM contracts in the future;

(e) within 48 months of the date at which the option is exercised:

(i) have completed the programme of physical updates to security across the Defence Estate as approved in the security review in 2.1(c);

(ii) integrate the unarmed guard service into the Total FM service line;

(iii) make the Director of Service Delivery accountable for the provision of unarmed guarding services and the assurance to the Chief Operating Officer that the unarmed guarding service is efficient, adequate and meeting the policy requirements established by DIGA throughout the transition and then ultimately, in an enduring manner throughout the Contract Period;

(iv) deliver unarmed guarding services through Industry Partners procured through HESTIA contract modifications, subject to the development and approval by the Authority of a suitable business case;

(v) transfer MGS staff to Industry Partners; and

(vi) liaise with local Heads of Establishment through local service delivery teams to ensure that the service being provided by Industry Partners is meeting their requirements.

2.2 The Contractor shall, and shall procure that DIDO will, in order to implement the requirement of the exercised option, adjust the Infrastructure Implementation Plans as shown below:

IIP component Modification

Hard/Soft FM sub-strategy (inc. short term transformation)

Modification to Soft FM HESTIA contracts will be required to include unarmed guarding services (model to be agreed with relevant Soft FM supplier)

PFI sub-strategy Modification to PFI sites that operate guarding contracts

Accommodation sub-strategy

Modification to NHP NGEC contract to include unarmed guarding into new contract

Training sub-strategy Modification to Soft FM modules of NTEP contract will be required to include unarmed guarding (where training estate is



IIP component Modification standalone outside of main defence estate and has its own guarding requirement)

Programme & projects delivery (inc. short term transformation)

Security review and assessment could reasonably require minor facility modifications which would need to be delivered through appropriate contract mechanisms

Strategic asset management/disposals (inc. short term transformation)

Consideration to the resources deployed for guarding services will be required in the plan for strategic asset management and disposals, acquisitions and base optimisation (e.g. can the lay down of a base be refined to reduce its guarding requirement)

Workforce planning, development and staff engagement (inc. short term transformation)

Modification to Workforce Plan, both updating the plan to include MGS and ensuring that the MGS lead is involved in the workforce planning process through the Director of Service Delivery

Modification to skills strategy and plan - whilst MGS have some Authority-provided 'special to role' training courses, we will ensure that they are able to access the additional development opportunities offered by the DIDO Academy and review the offerings of the Academy to ensure they meet their needs

Modification to talent management and succession planning - identification of C1 grades' (and above) potential and/or absorption of any existing MGS succession planning approach

Modification to engagement and communications - inclusion of MGS staff in all engagement and staff communication activities and interventions, tailored where necessary to meet any lack of easy access to IT, and

Modification to performance management - inclusion in the planned intervention to help line managers to use performance management processes, tools and techniques to build high performance and a clear line of sight to mission readiness

Managing the day to day recruitment, retirement or redundancy of transferred personnel must be considered; and the actions required in respect of the eventual TUPE process, including consultation, to support the transfer to an industry partner must be planned

SBP resource and management

Modifications to team structure are as defined in 2.1 Modifications to integration and transformation:

o Head of MOD Guard Service to be integrated into the new proposed Service Delivery function within Operations directorate as part of the DIDO top-level organisational structure of Named Contractors and Authority Personnel staff and include the Head of MOD Guard Service in the wider DIDO leadership team

o Director of Service Delivery to understand the increase in scope of service under his remit as a result of integrating the unarmed guard service into DIDO (both



IIP component Modification at the Effective Date as a function reporting to them, and then by the end of the Transformation Period as a part of the service delivery matrix), and then, following transition to an Industry Partner, the Total FM Service Line Lead (not a Named Contractor) needs to understand the modifications that have been made to the soft FM contracts under his/her stewardship to deliver the unarmed guarding service

o Increase in the DIDO staff engagement required at all levels as part of the Integration Plan by the Named Contractors fulfilling the Chief Operating Officer and Director of Service Delivery, with the need to engage with the 2,800 guarding staff inherited in DIDO at the Effective Date to update them on the position of the Contractor within DIDO, the top-level management structure and reporting lines and accountabilities plus to engage with relevant Trade Unions

o Extend the on-going engagement plan scope to cover guard service staff on all sites and make provision for communicating with them wherever they are based and whatever shifts they are working

o Mandatory training to be reviewed for the Director of Service Delivery and the Chief Operating Officer, based on inheriting the guarding service into Operations

o Named Contractors and other management to understand any additional policies or procedures relating to provision of the guarding service by DIDO

o Details of how the service will be monitored by the Defence Infrastructure Governing Authority (DIGA) will need to be formulated including the development of appropriate key performance indicators and reporting lines

o Hold a wider evaluation point review at the end of the Integration Period to ensure that the top-level organisational design, including the unarmed guarding function, is operating efficiently and effectively

SBP governance Modifications to the terms of reference of the DIDO Operations Board and DIDO Executive Committee whose remit will need to be extended to cover the provision of unarmed guarding

Interactions and dependencies

Modifications to the interactions in the service delivery matrix between the Total FM service line and the Regional Service Delivery Leads are anticipated due to the increase of scope in covering unarmed guarding

Modifications to the interactions between DIDO and DIGA are anticipated due to the need to develop and maintain an integrated



IIP component Modification security management policy (covering not just unarmed guarding but wider Authority guarding requirements)

2.3 The Contractor anticipates that the following resources shall implement the day to day operational requirements:

(a) Named Contractor - Chief Operating Officer: shall be accountable for the integration of the unarmed guarding service into the Operations directorate and for ensuring alignment with wider DIDO activities;

(b) Named Contractor – Head of Service Delivery: shall be responsible for the integration of the unarmed guarding service into the Operations directorate, into the Regional Service Delivery Matrix and will work with the Head of Commercial Named Contractor in the procurement of an Industry Partner;

(c) Named Contractor – Director of Asset Strategy & Portfolio: shall be responsible for ensuring unarmed guarding services are aligned to and support land and building disposal activities;

(d) Head of MoD Guard Services – the Contractor shall procure that the Head of MoD Guard Services provides leadership and support to the existing MGS team in the integration into DIDO and transferral of service provision to Industry Partners;

(e) Named Contractor - Head of Workforce & Talent Management: shall lead all workforce planning and staff engagement activities with regard to integration of the MGS into DIDO and transferral to Industry Partners;

(f) Named Contractor - Head of Strategic Stakeholder Engagement & Communications: shall provide support to other Named Contractors in the development of effective internal and external communications and stakeholder engagement in the design and integration process;

(g) Named Contractor – Head of Commercial: shall lead the procurement activities to modify contracts to integrate unarmed guarding services;

(h) Named Contractor – Head of Strategic Initiatives: shall lead activities to identify continuous improvement and innovation opportunities in the unarmed guarding service; and

(i) Named Contractor – Associate Finance Director: shall lead activities to revise the financial baseline to include the revised service.

2.4 The Contractor anticipates the following timeline to implement the requirements, should the Option be exercised:

Date Milestone



Date Milestone

Option exercise + 3 months

Retain the guarding service within DIDO as a directly employed service

Establish the unarmed guarding service office within Operations Development & Coherence

Integrate the existing MGS management team into DIDO’s service delivery structure retaining the existing Head of MOD Guard Services to fulfil the unarmed guard service line lead role

End of the Transformation Period or Option exercise + 3 months (whichever is sooner)

Integrate the unarmed guard service into the Regional Service Delivery Matrix as a service line alongside other service lines of Total FM, Accommodation, Training and Energy, Utilities & Sustainability

Effective Date + 24 months

Analyse guarding requirements, manning levels, technology solutions and the application of JSP440 across the Defence Estate through a security review and design with Security Services Group/seek approval from DIGA for guarding requirements for each site

Integrate these requirements with the Defence Estate disposals requirements as defined in Schedule 3 Part 5 Strategic Asset Management and Disposals

HESTIA contract procurement

Include modifications to allow unarmed guarding services to be integrated into the Soft FM contracts in the future

Effective Date + 48 months

Have completed the programme of physical updates to security across the Defence Estate as approved in the security review in 2.1.3

Integrate the unarmed guard service into the Total FM service line Make the Director of Service Delivery accountable for the provision

of unarmed guarding services and the assurance to the Chief Operating Officer that the unarmed guarding service is efficient, adequate and meeting the policy requirements established by the DIGA throughout the transition and then ultimately, in an enduring manner through the continuation of service delivery

Deliver unarmed guarding services through Industry Partners procured through HESTIA contract modifications

Transfer MGS staff to Industry Partners Liaise with local Heads of Establishment through local service

delivery teams to ensure that the service being provided by Industry Partners is meeting their requirements

3. OPTION 2 – EXPLOSIVE ORDNANCE CLEARANCE (EOC) GROUP


(a) within three months of the Option being exercised:



(i) establish the EOC Assurance Office within Operations Development & Coherence with responsibility for policy, plans and programmes; and

(ii) assess the EOC requirements across the Defence Estate;

(b) within four months of the Option being exercised:

(i) develop the strategy and procurement documentation in order to procure the services of an Industry Partner to provide EOC services;

(c) within eight months of the Option being exercised:

(i) have completed the procurement exercise to identify a framework of pre-approved Industry Partners to provide EOC geophysical survey and/or excavation services as required, in accordance with taskings developed by the EOC Assurance Office; and

(d) throughout the Contract Period:

(i) use the IMS system to hold and manage all ordnance data across the Defence Estate.


IIP component Description


Modifications to HESTIA contracts to include EOC services (model TBA with relevant SFM supplier)

Training sub-strategy Modifications to HESTIA contracts to include EOC services (model TBA with relevant Soft FM supplier)

Strategic asset management/disposals (inc. short term transformation)

Consideration to the cost and scheduling for EOC activities will be required in the plan for strategic asset management and disposals in order to ensure the process is expedited


Modification to Workforce Plan, both updating the plan to include EOC and ensuring that the EOC lead is involved in the workforce planning process through the Director of Service Delivery

Modification to skills strategy and plan - whilst EOC have some Authority-provided 'special to role' training courses, we will ensure that they are able to access the additional development opportunities offered by the DIDO Academy and review the offerings of the Academy to ensure they meet their needs

Modification to talent management and succession planning - identification of C1 grades' (and above) potential and/or absorption of any existing EOC succession planning approach



IIP component Description Modification to engagement and communications - inclusion of

EOC staff in all engagement and staff communication activities and interventions, tailored where necessary to meet any lack of easy access to IT

Modification to performance management - inclusion in the planned intervention to help line managers to use performance management processes, tools and techniques to build high performance and a clear line of sight to mission readiness

Managing the day to day recruitment, retirement or redundancy of transferred personnel; and actions required in respect of the eventual TUPE process, including consultation, to support the transfer to an Industry Partner

SBP resource and management

Modifications to team structure are as defined in 3.1 Modifications to Integration and transformation:

o Current EOC to be integrated into the new proposed Service Delivery function within Operations directorate as part of the DIDO top-level organisational structure of Named Contractors and Authority Personnel

o Director of Service Delivery to understand the increase in scope of service under his remit as a result of integrating the EOC service into DIDO (both at the Effective Date as a function reporting to them, and then by the end of the Transformation Period as a part of the service delivery matrix), and then, following transition to an Industry Partner, the Total FM Service Line Lead (not a Named Contractor) needs to understand the modifications that have been made to the Soft FM contracts under his/her stewardship to deliver the unarmed guarding service

o DIDO staff engagement required at all levels as part of the Integration Plan by the Named Contractors fulfilling the Chief Operating Officer and Director of Service Delivery, with the need to engage with the newly integrated staff inherited in DIDO at the Effective Date to update them on the position of the Contractor within DIDO, the top-level management structure and reporting lines and accountabilities plus to engage with relevant Trade Unions

o Extend the on-going engagement plan scope to cover EOC staff on all sites and make provision for communicating with them wherever they are based and whatever shifts they are working

o Mandatory training to be reviewed for the Director of Service Delivery and the Chief Operating Officer, based on inheriting the EOC service into Operations



IIP component Description o Named Contractors to understand any additional

policies or procedures relating to provision of the EOC service by DIDO

o Details of how the service will be monitored by the Defence Infrastructure Governing Authority (DIGA) will need to be formulated including the development of appropriate key performance indicators and reporting lines

o Hold a wider evaluation point review at some point after the EOC service is integrated into DIDO to ensure that the top-level organisational design, including the EOC service, is operating efficiently and effectively

SBP governance Modifications to the terms of reference of the DIDO Operations Board and DIDO Executive Committee whose remit will need to be extended to cover the provision of EOC services

Interactions and dependencies

Modifications to the interactions in the service delivery matrix between the Total FM service line and the Regional Service Delivery Leads are anticipated due to the increase of scope in covering EOC

Modifications to the interactions between DIDO and DIGA are anticipated due to the need to develop and maintain an integrated EOC policy


(a) Named Contractor - Chief Operating Officer: shall be accountable for the integration of the EOC service into the Operations directorate and for ensuring alignment with wider DIDO activities;

(b) Named Contractor – Head of Service Delivery: shall be responsible for the integration of the EOC service into the Operations directorate, into the Regional Service Delivery Matrix and will work with the Head of Commercial Named Contractor in the procurement of an Industry Partner;

(c) Named Contractor – Director of Asset Strategy & Portfolio: shall be responsible for ensuring EOC services are aligned to and support land and building disposal activities;

(d) Head of Operations Development & Coherence – the Contractor shall procure that the Head of Operations Development & Coherence provides leadership and support to the existing EOC team in DIDO, on the implementation of the EOC Assurance Offices and transferral of service provision to Industry Partners;



(e) Named Contractor - Head of Workforce & Talent Management: shall lead all workforce planning and staff engagement activities with regard to integration of EOC services into DIDO and transferral to Industry Partners;

(f) Named Contractor - Head of Strategic Stakeholder Engagement & Communications: shall provide support to other Named Contractors in the development of effective internal and external communications and stakeholder engagement in the design and integration process;

(g) Named Contractor – Head of Commercial: shall lead the procurement activities to modify contracts to integrate EOC services;

(h) Named Contractor – Head of Strategic Initiatives: shall lead activities to identify continuous improvement and innovation opportunities in the EOC service; and

(i) Named Contractor – Associate Finance Director: shall lead activities to revise the financial baseline to include the revised service.


Date Milestone


Establish the EOC Assurance Office within Operations Development & Coherence with responsibility for policy, plans and programmes; and

Assess the EOC requirements across the Defence Estate


Develop the strategy and procurement documentation in order to procure the services of an Industry Partner to provide EOC services


Have completed the procurement exercise to identify a framework of pre-approved Industry Partners to provide EOC geophysical survey and/or excavation services as required, in accordance with taskings developed by the EOC Assurance Office

4. OPTION 3 – PROVISION OF CERTAIN SOFT FM SERVICES ON THE AUTHORITY SITES THAT ARE NOT CURRENTLY DELIVERED BY DIO THAT MAY BE TRANSFERRED INTO DIO FROM OTHER TLBS BEFORE OR DURING THE COURSE OF THE CONTRACT


(a) include modifications to allow additional Soft FM services to be integrated into HESTIA contracts;

(b) where HESTIA contracts have been procured for the region in which the Soft FM service is to be provided, and within six months of the Option being exercised, deliver service through modifications to these HESTIA contracts; and



(c) where HESTIA contracts have not been procured for the region in which the Soft FM service is to be provided, and within six months of the Option being exercised, deliver service through bespoke contracts with the provision to be able to exit from these and integrate into HESTIA contracts once procured.




Modifications to HESTIA Soft FM contracts will be required to account for the expansion of the new service in the existing delivery locations.

Training sub-strategy Where a new site is a training establishment, a modification to the NTEP contract to include Soft FM provision at this site will be required.

Overseas sub-strategy If the new sites are located outside of the UK, changes to overseas service delivery contracts will need to be implemented to account for the increase in scope

Existing Soft FM contracts will need to be backed out of at appropriate points in time.


Existing workforce planning, development and staff engagement activities will need to be extended to the newly integrated service.


(a) Named Contractor - Chief Operating Officer: shall be accountable for the integration of the additional Soft FM services into the Operations directorate and for ensuring alignment with wider DIDO activities;

(b) Named Contractor – Director of Service Delivery: shall be responsible for the integration of the additional Soft FM services into the Operations directorate, into the Regional Service Delivery Matrix and will work with the Head of Commercial Named Contractor in the procurement of an Industry Partner;

(c) Named Contractor - Head of Strategic Stakeholder Engagement & Communications: shall provide support to other Named Contractors in the development of effective internal and external communications and stakeholder engagement in the design and integration process;

(d) Named Contractor – Head of Commercial: shall lead the procurement activities to modify contracts to integrate the additional Soft FM services; and



(e) Named Contractor – Associate Finance Director: shall lead activities to revise the financial baseline to include the revised service.


Date Milestone

HESTIA contract procurement

Include modifications to allow additional Soft FM services to be integrated into HESTIA contracts


Where HESTIA contracts have been procured for the region in which the Soft FM service is to be provided, and within six months of the Option being exercised, deliver service through modifications to these HESTIA contracts

Where HESTIA contracts have not been procured for the region in which the Soft FM service is to be provided, and within six months of the Option being exercised, deliver service through bespoke contracts with the provision to be able to exit from these and integrate into HESTIA contracts once procured

5. OPTION 4 – PROVISION OF SERVICES TO ANY AUTHORITY SITE NOT CURRENTLY MANAGED BY DIO THAT MAY BE TRANSFERRED INTO DIO FROM OTHER TLBS BEFORE OR DURING THE COURSE OF THE CONTRACT


(a) include modifications to allow additional sites to be integrated into NGEC/HESTIA contracts;

(b) where NGEC/HESTIA contracts have been procured for the region in which the site is located, and within six months of the Option being exercised, deliver service through modifications to these HESTIA contracts; and

(c) where NGEC/HESTIA contracts have not been procured for the region in which the site is located, and within six months of the Option being exercised, deliver service through bespoke contracts with the provision to be able to exit from these and integrate into NGEC/HESTIA contracts once procured.




Modifications in NGEC/HESTIA contracts will be required to account for the expansion of service in the new delivery locations



Training sub-strategy Where a new site is a training establishment, a modification to the NTEP contract to include Hard/Soft FM provision at this site will be required

Overseas sub-strategy If the new sites are located outside of the UK, changes to overseas service delivery contracts will need to be implemented to account for the increase in scope

Existing Hard/Soft FM contracts will need to be backed out of at appropriate points in time


Existing workforce planning, development and staff engagement activities will need to be extended to the newly integrated service


(a) Named Contractor - Chief Operating Officer: shall be accountable for the integration of the additional sites into the Operations directorate and for ensuring alignment with wider DIDO activities;

(b) Named Contractor – Director of Service Delivery: shall be responsible for the integration of the additional sites into the Operations directorate, into the Regional Service Delivery Matrix and will work with the Head of Commercial Named Contractor in the procurement of an Industry Partner;

(c) Named Contractor - Head of Strategic Stakeholder Engagement & Communications: shall provide support to other Named Contractors in the development of effective internal and external communications and stakeholder engagement in the design and integration process;

(d) Named Contractor – Head of Commercial: shall lead the procurement activities to modify contracts to integrate the additional sites; and

(e) Named Contractor – Associate Finance Director: shall lead activities to revise the financial baseline to include the revised service.


Date Milestone

NGEC/HESTIA contract procurement

Include modifications to allow additional sites be integrated into NGEC/HESTIA contracts



Date Milestone


Where NGEC/HESTIA contracts have been procured for the region in which the site is located, and within six months of the Option being exercised, deliver service through modifications to these NGEC/HESTIA contracts

Where NGEC/HESTIA contracts have not been procured for the region in which the site is located, and within six months of the Option being exercised, deliver service through bespoke contracts with the provision to be able to exit from these and integrate into NGEC/HESTIA contracts once procured

6. OPTION 5 – EXTENSION OF THE CONTRACT BY ONE YEAR AT THE SOLE DISCRETION OF THE AUTHORITY

6.1 The Authority shall have the option to extend the terms of the Contract by up to one year as defined in clause 2.4 of the Contract.

6.2 The Contractor shall, and shall procure that DIDO will, prior to the original Expiry Date and considering the additional year:

(a) confirm the availability of any Named Contractors;

(b) make any necessary updates to the Exit Plan; and

(c) develop an updated IIP.

7. DIDO RESOURCE IMPACT ANALYSIS

7.1 The Contractor anticipates that existing DIDO resources within existing roles will be used to implement changes to meet Option requirements, if executed, through:

(a) utilising efficiency gains as a result of implementing the Regional Service Delivery Matrix; and

(b) load balancing work across other parts of the service delivery team.

7.2 The parties involved in the delivery of the Options, if executed, are summarised in the table below where:

(a) R stands for responsible - means those who do the work to achieve the task. There is at least one role with a participation type of responsible, although others can be delegated to assist in the work required;

(b) A stands for accountable - means the one ultimately answerable for the correct and thorough completion of the deliverable or task, and the one who delegates the work to those responsible;

(c) C stands for consulted - means those whose opinions are sought, typically subject matter experts; and with whom there is two-way communication; and



(d) I stands for informed - means those who are kept up-to-date on progress, often only on completion of the task or deliverable; and with whom there is just one-way communication.

Contractor

Nam

ed

Con

trac

tor

STT

P st

aff

IIP

Cor

pora

te

Rea

ch B

ack

staf

f

DID

O

DIG

A

Aut

hori

ty

Option 1 - Unarmed Guarding A R

Ops Service Delivery (R)

Head Office Commercial/ Finance (C)

SAPT (C)

Finance (C)

Commercial (C)

Option 2 - Explosive Ordnance Clearance Group

A R



SAPT (C)

Finance (C)

Commercial (C)

Option 3 - Provision of certain Soft FM services on the Authority sites that are not currently delivered by DIO that may be transferred into DIO from other TLBs before or during the course of the Contract

A R

Ops Service Delivery (R) Head

Office Commercial/ Finance (C)

Finance (C)

Commercial (C)



Contractor

Nam

ed

Con

trac

tor

STT

P st

aff

IIP

Cor

pora

te

Rea

ch B

ack

staf

f

DID

O

DIG

A

Aut

hori

ty

Option 4 - Provision of services to any Authority site not currently managed by DIO that may be transferred into DIO from other TLBs before or during the course of the Contract

A R



Finance (C)

Commercial (C)

Option 5 - Extension of the Contract by one year at the sole discretion of the Authority

A R

All

All

7.3 The Contractor anticipates, over the Contract Period, that DIDO staff skills and capabilities will be improved in the following areas:

(a) Defence End User requirements definition, prioritisation and challenge to meet operational requirements and translate these requirements into cost effective solution designs;

(b) budget and requirements baselining and monitoring; and

(c) Industry Partner procurement and contract management (including performance oversight and assurance) and good practice sharing across regions.

8. OPTIONS ASSUMPTIONS

8.1 The Contractor shall procure that DIDO manage the following assumptions for Options implementation, where executed by the Authority:

Option Assumption Consequence

Unarmed guarding

Provision of unarmed guarding services is limited to sites requiring GL3 and GL4 guarding levels only

Potential requirement to rework service design

Potential negative impact to savings projections




Unarmed guarding

Provision of unarmed guarding services is limited to service provided by MoD Guard Service (MGS) staff only



Unarmed guarding

Provision of unarmed guarding services is limited to sites within the United Kingdom only



Unarmed guarding

MGS is transferred to the DIO as a going concern on 1 April 2013 (by simply 'bolting on' the service to the DIO Enhanced Operating Model (EOM)), with an expectation of outsourcing (with Transfer of Undertakings (Protection of Employment) Regulations (TUPE) as a major consideration) by the end of 2017



Unarmed guarding

MGS will reduce the management component of MGS at a regional, area and group level from 5, 22 and 107 to 3, 12 and 71 respectively



Unarmed guarding

MGS is reducing from a current (June 2013) complement of approximately 3,000 to approximately 2,100 operating across approximately 150 sites by April 2014 through replacement of MGS staff with MPGS staff



Unarmed guarding

MGS is supported by guarding contracts that are currently let by DIO to guard sites scheduled for disposal and at least one wider service contract (Brize Norton) as well as at the PFI site at Colchester



Unarmed guarding

Current budgets for the provision of unarmed guarding services will be transitioned to DIO with the service


Potential negative impact to savings




projections

Unarmed guarding

HESTIA contracts can include modifications to allow guarding services to be integrated into them



EOC High Level Policy shall remain with Defence Explosive Ordnance Disposal and Search



EOC Intelligent customer role (assurance, archive management, scoping /reconnaissance, desk top study, initial assessment, task design, authorisation and prioritisation, task review and interpretation) shall be part of DIDO



EOC Ordnance search, excavation and identification (including geophysical survey) shall be part of DIDO



EOC Disposal and certification free from explosives shall be agree at the time of execution of the Option



8.2 The Contractor’s assumptions with respect to the entire IIP are contained at Annex F to Schedule 3.



9. OPTIONS RISKS

9.1 The Contractor’s Named Contractor – Head of Business Assurance and Risk, shall procure that the DIDO Business Assurance and Risk Team manage the risks and mitigation efforts of the consolidated DIDO risk register and shall manage them in accordance with the process set out in Annex D to Schedule 3.

The Contractor shall, at the point at which an Option(s) is/are executed, update the baseline risk register with risks associated with the exercised Option(s).



SCHEDULE 12

CHANGES

1. ASSESSMENT OF FUTURE CHANGE

1.1 If the Authority is considering proposing any Change to this Contract, it will notify the Contractor of its proposals (a Notice of Possible Future Change) as soon as reasonably practicable. The Authority will involve the Contractor as early as is practicable in the development of the specification of the Change to solicit input from the Contractor for the detailed specification and to provide sufficient detail to enable the Contractor to respond to the notice further to paragraph 1.3.

1.2 Subject to paragraph 2.4, the Contractor may also make a proposal to the Authority for any Change which would improve the effectiveness, availability, efficiency, economy and/or quality of the services supplied by the Contractor under this Contract.

1.3 The Contractor shall consider the Notice of Possible Future Change served by the Authority pursuant to paragraph 1.1, or develop the proposal envisaged at paragraph 1.2, and provide a non-binding rough order of magnitude estimate of the potential impact of the Change on, where relevant in each case:

(a) the cost of the proposed Change to the Authority; and

(b) the risk profile of the proposed Change,

within 20 Business Days of the Authority issuing its Notice of Possible Future Change.

1.4 As soon as practicable after the Authority's Representative receives the estimate from the Contractor pursuant to paragraph 1.3, the Parties shall discuss such estimate for the purpose of assisting the preparation of a Notice of Change in accordance with paragraph 2.

1.5 If, following the Parties’ discussion pursuant to paragraph 1.4, either Party wishes to proceed with a Change it shall follow the process set out in this Schedule 12.

1.6 If during, or on completion of, the process set out in paragraphs 2 to 3 the Authority chooses not to proceed with a Change, no costs incurred by the Contractor for any work carried out in relation to the process set out in this paragraph 1 shall be reimbursed by the Authority.

2. PROPOSING A CHANGE

2.1 Both Parties have the right to propose Changes in accordance with this Schedule 12.

2.2 If either Party wishes to propose a Change, such Party (the Change Proposer) shall initiate the procedure set out in this Schedule 12 by sending a notice to the other Party (the Change Recipient) (a Notice of Change). The Change Proposer shall specify in the Notice of Change whether it considers that the Change is:

(a) an Administrative Change;

(b) a Minor Change; or



(c) a Major Change.

Change refusals

2.3 If the Authority is the Change Proposer, the Contractor may refuse to implement the Change if it:

(a) requires the services supplied by the Contractor under this Contract to be performed in a way that infringes any Legislation including, for the purposes of this paragraph 2.3 only, any applicable Legislation relating to export control or economic sanctions programmes or is inconsistent with good industry practice;

(b) would cause any existing Necessary Consent to be revoked or would require a new Necessary Consent to be obtained to implement the Change (which, after using reasonable efforts, the Contractor has been unable to obtain and reasonably believes it will be unable to obtain using reasonable efforts);

(c) would materially and adversely affect the Contractor’s ability to deliver the services supplied by the Contractor under this Contract (except those services which have been specified as requiring to be amended in the Authority’s Notice of Change) in a manner not compensated pursuant to this Schedule 12;

(d) would materially and adversely affect the health and safety of any person;

(e) would, if implemented, materially and adversely change the nature of this Contract (including its risk profile) in a manner not compensated pursuant to this Schedule 12; or

(f) is outside the Authority's legal power or capacity to require implementation of the Change.

2.4 If the Contractor is the Change Proposer, the Authority may, unless the Change is necessary to comply with a Change in Law, at its absolute discretion, refuse to allow the Change and the Contractor shall not implement such Change. The Authority shall not be obliged to give reasons for such refusal.

Notice of Change

2.5 Subject to paragraph 2.6, the Notice of Change shall include sufficient detail to:

(a) enable the Change Recipient to determine whether the Change is an Administrative Change, a Minor Change or a Major Change;

(b) in the case of an Administrative Change or Minor Change, enable the Contractor to prepare a proposal (an Administrative Change Proposal or a Minor Change Proposal, as appropriate, and each a Proposal); and

(c) in the case of a Major Change, enable the Contractor to provide the Initial Business Case in accordance with paragraph 2.13.

2.6 If the Authority is the Change Proposer of a Major Change, it shall also include in the Notice of Change (where reasonably practicable and where applicable):



(a) affordability thresholds for any proposed services comprising the Major Change;

(b) a specification of the proposed variation to the services in sufficient detail to allow the indicative pricing of the Major Change;

(c) the location for the services required, no longer required or to be modified;

(d) the timing of the services required, no longer required or to be modified;

(e) whether the Contractor is expected to provide services in respect of any additional sites or assets;

(f) an outline risk allocation matrix setting out the Authority’s preferred risk profile in respect of the Major Change; and

(g) the time period for submission of the Initial Business Case, which shall be reasonable, taking into account the complexity of the Major Change and, in any event, shall not be less than 30 Business Days.

2.7 If the Contractor does not intend to use its own resources to implement any Authority Change it shall comply with good industry practice with the objective of ensuring that it obtains best value for money (taking into account all relevant circumstances including, in particular, the requirements that the Contractor should not be worse off as a result of the implementation of the Authority Change) when procuring any work, services, supplies, materials or equipment required in relation to the Authority Change.

Administrative Changes

2.8 Within five Business Days of receiving a Notice of Change in respect of an Administrative Change (or such other time period as may be agreed between the Parties), the Contractor shall deliver to the Authority the Administrative Change Proposal.

2.9 The Administrative Change Proposal shall set out the steps which the Contractor proposes to take to implement the Administrative Change and the consequences of the Administrative Change, giving such level of detail as is reasonable and appropriate having regard to the nature of the Administrative Change.

2.10 The Contractor shall not request and shall not receive any increase to the Management Fee for an Administrative Change or any adjustment to the Payment Mechanism.

Minor Changes

2.11 Within 10 Business Days of receiving a Notice of Change in respect of an Minor Change (or such other time period as may be agreed between the Parties), the Contractor shall deliver to the Authority the Minor Change Proposal.

2.12 The Minor Change Proposal shall set out the steps which the Contractor proposes to take to implement the Minor Change and the consequences of the Minor Change, giving such level of detail as is reasonable and appropriate having regard to the nature of the Minor Change including, where relevant, the Contractor's opinion on any of the matters set out below:



(a) whether relief from compliance with the Contractor’s obligations under this Contract would be required during the implementation of the Change;

(b) any impact on the provision of the services supplied by the Contractor under this Contract;

(c) any amendment which would be required to this Contract (including Schedule 7) as a result of the Change;

(d) the costs of implementing the Change, including details of any impact on the Payment Mechanism and/or Base Case of the Change;

(e) the proposed timing of the Minor Change, so as to minimise any inconvenience to the Authority; and

(f) any other effects of the Minor Change, including interference in the relationship of the Authority with third parties or material effects on the risks or costs to which either Party is exposed.

Major Changes

Initial Business Case

2.13 Where the Notice of Change relates to a Major Change, within the time period agreed pursuant to paragraph 2.6, the Contractor shall deliver to the Authority the Initial Business Case. The Initial Business Case shall include the Contractor’s opinion on the matters set out in paragraph 2.12.

2.14 As soon as practicable after the Authority receives the Initial Business Case, the Parties shall discuss and agree the issues set out in the Initial Business Case. In such discussions the Authority may modify the Authority’s Notice of Change. The Contractor shall, as soon as practicable, and in any event not more than 10 Business Days (unless otherwise agreed by the Authority) after receipt of such modification, notify the Authority of any consequential changes to the Initial Business Case.

2.15 As soon as practicable after the discussion referred to in paragraph 2.14, the Authority shall:

(a) request that Contractor prepares a Detailed Business Case;

(b) where the Contractor is the Change Proposer, notify the Contractor that it will not allow the Change in accordance with paragraph 2.4; or

(c) where the Authority is the Change Proposer, notify the Contractor that it withdraws the relevant Notice of Change.

2.16 If the Authority does not request that the Contractor prepares a Detailed Business Case within three months of the discussion referred to in paragraph 2.14 (or such other time period as the Parties may agree), then the Notice of Change shall be deemed to have been withdrawn.



Detailed Business Case

2.17 Where the Authority requests that the Contractor prepare a Detailed Business Case pursuant to paragraph 2.15(a), the Contractor shall liaise with the Authority in developing the Detailed Business Case. The Authority shall provide to the Contractor such information as to its requirements as the Contractor may reasonably require. Any and all information and other input or feedback provided by the Authority to the Contractor shall, unless expressly stated otherwise by the Authority, be provided without warranty and shall be without prejudice to the Authority’s rights under this Schedule 12.

2.18 The Contractor shall submit the Detailed Business Case within a time period to be agreed between the Parties.

2.19 The Detailed Business Case shall include (where applicable), but not be limited to, the following information, which shall contain sufficient detail to enable the Authority to make an informed decision as to whether to approve the Change and shall take account of any affordability thresholds notified to the Contractor by the Authority:

(a) an outline programme for implementation of the Major Change, including anticipated dates of any applications for Necessary Consents (including planning applications) and time periods for the provision and training of staff;

(b) a broad indication of the impact of carrying out and implementing the Major Change on the provision of the services supplied by the Contractor under this Contract, and in particular whether relief from compliance with any obligations set out in this Contract is likely to be required during the implementation of the Major Change;

(c) the costs of implementing the Change, including details of any impact on the Payment Mechanism and/or Base Case of the Change;

(d) a budget (or budgets) together with a capped fee for third party costs (not including costs of the Contractor’s contracted supply chain) and details of the third party activity likely to be incurred by the Contractor, such as third party advice, the carrying out of surveys, obtaining Necessary Consents and independent certification that may be required to be completed prior to agreement of the Major Change, together with a proposed process for approval of such costs by the Authority before they are incurred;

(e) a summary of any amendments required to this Contract as a result of the Major Change; and

(f) a value for money assessment explaining why the Contractor's proposals represent value for money for the Authority.

2.20 The Authority may conduct a full technical and cost audit of a Detailed Business Case (which if it is a Major Change proposed by the Authority shall be at the Authority's cost and if it is a Major Change proposed by the Contractor shall be at the Contractor’s cost) and the Contractor shall give the Authority access to all reasonable information requested by the Authority.

2.21 The Authority shall consider in good faith the Detailed Business Case. If the Authority finds the Detailed Business Case to be satisfactory, it shall notify the Contractor that the Detailed Business Case is agreed, in which case the agreement shall be documented in



accordance with paragraph 3.8. If the Authority finds any aspects of the Detailed Business Case to be unsatisfactory, it shall notify the Contractor of the same and request that the Contractor address such deficiencies and resubmit the Detailed Business Case as soon as reasonably practicable.

Advice and assistance

2.22 In all cases where a Change will, or is likely to, result in an increased cost to the Authority (of any type whatsoever), the Authority shall be entitled to request that the Contractor and/or DIDO (as appropriate) provide such advice and assistance as reasonably required by the Authority to allow the Authority to determine how (if at all) savings could be made elsewhere within DIDO to compensate for the increased cost.

3. APPROVING A CHANGE

Administrative Changes and Minor Changes

3.1 As soon as reasonably practicable after the Authority receives a Proposal, the Authority shall evaluate the Proposal in good faith, taking into account all relevant issues, and shall notify the Contractor either that:

(a) the Proposal is agreed, in which case the agreement shall be documented in accordance with paragraph 3.8; or

(b) the Proposal is not yet agreed, in which case the Parties shall discuss and endeavour to agree the issues set out in the Proposal and any such agreement shall be documented in accordance with paragraph 3.8.

3.2 If the Authority does not provide any notification pursuant to paragraph 3.1 within 20 Business Days of receiving the Proposal, then the Notice of Change shall be deemed to have been withdrawn.

3.3 If the Parties cannot agree the Proposal then the dispute shall be determined in accordance with Clause 43 of the Contract.

Major Changes

3.4 Within 40 Business Days of agreeing the Detailed Business Case pursuant to paragraph 2.21 (or such other time period as notified to the Contractor), the Authority shall either:

(a) confirm that the Contractor shall implement the Major Change by sending written notice to that effect to the Contractor (the Notice to Proceed);

(b) if the Authority is the Change Proposer, withdraw the Notice of Change by giving written notice to the Contractor; or

(c) if the Contractor is the Change Proposer and the Authority is entitled to refuse to implement such Change pursuant to paragraph 2.4, refuse the Change by giving written notice to the Contractor.

3.5 For all Major Changes not necessary to comply with a Change in Law, if the Authority does not provide a Notice to Proceed within 40 Business Days of agreeing the Detailed



Business Case pursuant to paragraph 3.4(a), then the Notice of Change shall be deemed to have been withdrawn.

3.6 If:

(a) the Authority is the Change Proposer of a Major Change; or

(b) the Contractor is the Change Proposer of a Major Change and the Notice of Change is withdrawn pursuant to paragraph 3.4(b),

then the Authority shall pay to the Contractor any actual direct costs reasonably incurred in preparing the Detailed Business Case, provided that:

(i) the Contractor has used all reasonable endeavours to submit a reasonably priced Detailed Business Case;

(ii) the Contractor has made available to the Authority a cost breakdown in the Detailed Business Case, including an estimate of the actual direct costs to be incurred by the Authority if the Notice of Change is withdrawn or deemed to be withdrawn; and

(iii) the Authority:

(A) approved the Initial Business Case and any actual direct costs incurred prior to any such costs being incurred;

(B) agreed that, given the nature of the proposed Change, it is reasonable to expect the Contractor to incur costs in preparing the Detailed Business Case on the basis of the extent of the proposed Change to the services supplied by the Contractor under this Contract and the work required in submitting a Detailed Business Case; and

(C) the Contractor has provided the Authority with such evidence as it may reasonably require in order to verify the actual direct costs incurred by the Contractor.

For the avoidance of doubt, the Contractor shall not be entitled to reimbursement for any costs incurred in preparing the Initial Business Case.

3.7 Any dispute arising in relation to paragraph 3.6 shall be determined in accordance with Clause 43 of the Contract.

Documenting agreement

3.8 Subject to paragraph 2.3, the Parties shall document their agreement and any effect on the Fee and/or the Base Case for all Changes other than Administrative Changes, and any other matters which are relevant, including the following:

(a) the agreed relief to be given to the Contractor; and

(b) any other agreed effects of the Change.



4. IMPLEMENTING A CHANGE

4.1 If a Proposal or Detailed Business Case has been agreed by the Authority pursuant to paragraphs 3.1(a) or 2.21 (as appropriate), then the Contractor shall implement the Change in accordance with the terms agreed between the Parties as documented pursuant to paragraph 3.8.

4.2 If a Change is implemented pursuant to paragraph 4.1, and the Change has a material adverse or beneficial impact upon:

(a) the obligations required to be undertaken by the Contractor under this Contract;

(b) the liabilities incurred or to be incurred by the Contractor under this Contract;

(c) the rights of the Contractor accrued or arising under this Contract; or

(d) the benefits (including any payment to the Contractor under this Contract) obtained or to be obtained by the Contractor under this Contract,

the Authority shall also instruct (acting reasonably and taking into account any submissions provided by the Contractor to the Authority in this regard) any variations or amendments to the Payment Mechanism and/or Base Case that are reasonably required to ensure that the Payment Mechanism and/or Base Case are reasonably commensurate with the impact upon, or the impact reasonably expected upon, the matters in this paragraph 4.2(a) to (d) as a result of the Change.

5. URGENT CHANGES

5.1 The Authority may (in its absolute discretion) for a Change other than an Administrative Change issue a Notice of Change authorising the implementation of such Change notwithstanding that the Proposal or Detailed Business Case has not been agreed in accordance with this Schedule 12.

5.2 If the Contractor receives a Notice of Change pursuant to paragraph 5.1, the Contractor shall provide to the Authority an estimate of costs to undertake the Urgent Change before proceeding.

5.3 The Parties shall use their reasonable endeavours to reach agreement on the estimate submitted by the Contractor pursuant to paragraph 5.2 as soon as possible following the issue of the Notice of Change authorising the implementation of an Urgent Change and the following conditions shall apply:

(a) immediately following confirmation by the Authority's Representative that the estimate provided pursuant to paragraph 5.2 is acceptable, the Contractor shall (unless it is entitled to refuse to implement such Change pursuant to paragraph 2.4) proceed to implement the Change promptly and shall inform the Authority on a regular basis as to the progress of implementation of the Change;

(b) while the Contractor is implementing the Change, the Contractor shall take all necessary steps to agree the estimate relating to the Change and paragraphs 2 to 4 of this Schedule 12 shall apply to the Change; and

(c) the Authority may at any time instruct the Contractor to discontinue the implementation of the Change.



5.4 Unless and until the estimate is agreed pursuant to paragraph 5.3(b) and/or the Authority instructs the Contractor to discontinue the Change pursuant to paragraph 5.3(c), the Authority shall reimburse the Contractor's costs incurred as a result of implementing the Change up to a maximum sum of the Contractor's estimate provided pursuant to paragraph 5.2.



SCHEDULE 13

INCORPORATION

1. INCORPORATION PROCESS PLAN

1.1 From the Effective Date, the Contractor shall procure that DIDO prepares a written plan for effecting the Incorporation Process (the Incorporation Process Plan). The Contractor shall procure that DIDO shall submit written versions of the Incorporation Process Plan to the Authority on the first Business Day of each full three month accounting period after the Effective Date, and shall take into account the Authority’s comments on such drafts when procuring that DIDO prepares its next versions of the Incorporation Process Plan.

1.2 The Incorporation Process Plan shall:

(a) set out the steps required to implement the Incorporation Process, including so as to ensure DIDO Ltd will be able to perform the DIDO Ltd Functions and DIDO Property can be transferred from the Authority to DIDO Ltd;

(b) identify issues to be addressed relating to such transfers and the Incorporation Process more generally;

(c) set out the Contractor’s reasonable estimate of the time required for the completion of each step (or work stream, or the resolution of each identified issue); and

(d) propose how to manage risks and costs arising in respect of the identified steps, issues and timing.

1.3 The Incorporation Process Plan shall, as a minimum, address the following matters:

(a) the timing and manner of the incorporation of DIDO Ltd (as to which see paragraph 2 of this Schedule 13);

(b) the functions that DIDO performs which are to be transferred to DIDO Ltd (the DIDO Ltd Functions);

(c) the functions that DIDO performs which should not be transferred to DIDO Ltd;

(d) generally the property, rights and liabilities DIDO Ltd will require from its incorporation to perform the DIDO Ltd Functions and to ensure the Contractor can fulfil its obligations under the Contract (the DIDO Property), and what powers, commercial and financial delegations and Authority Dependencies DIDO Ltd, the directors of DIDO Ltd and the employees of DIDO Ltd may otherwise require in order to fulfil the DIDO Ltd Functions;

(e) those employees who should transfer to DIDO Ltd, and whether the Transfer Regulations (or equivalent legislation) will apply in respect of the transfer of such employees;

(f) steps are required to ensure appropriate employees will transfer to DIDO Ltd in accordance with the Transfer Regulations (or equivalent legislation), including where



such employees are at the time of the relevant draft or final plan performing services in central Authority functions (such as in Defence Business Services), appropriate steps (where possible) to ensure such transfers can occur;

(g) steps which it is necessary or desirable to take in respect of military personnel and secondees, to ensure that DIDO can perform the DIDO Ltd Functions;

(h) any Transfer Regulations consultation process (or any equivalent consultation process), and any other trades union or other employee consultation process;

(i) how to ensure the effective transfer of appropriate employees (for the avoidance of doubt, including locally engaged civilians) to DIDO Ltd in jurisdictions where legislation equivalent to the Transfer Regulations does not apply;

(j) considerations as to the ongoing payment of the salaries of employees who are to be transferred to DIDO Ltd;

(k) satisfying obligations in respect of pensions, including (to the extent it will be applicable) those set out at Clause 17 of the provisions at Annex A of this Schedule 13;

(l) the appropriate Named Contractor to act as the sole director of DIDO Ltd;

(m) appropriate training for the proposed director of DIDO Ltd on his or her responsibilities as a director, under the Companies Act 2006 and other Legislation;

(n) duties of the DIDO Ltd director, and proposals on how to best to address any potential risks of breach of such duties;

(o) intellectual property of the Authority or third parties (in particular software licence providers) which DIDO Ltd will require the benefit of in order to fulfil the DIDO Ltd Functions;

(p) whether the benefits of any contracts between the Authority and third parties need to be transferred to, or provided on to, DIDO Ltd, in whole or in part (and if in part, how the relevant benefits of such contracts may best be assumed by DIDO Ltd);

(q) whether it is necessary or desirable to renegotiate contracts between the Authority and third parties to provide that DIDO Ltd will receive contractual benefits in respect of DIDO Ltd Functions equivalent to those received by the Authority before of the transfer to DIDO Ltd of the DIDO Ltd Functions, and in each case whether the Authority or Contractor should have primary responsibility and authority for such negotiations;

(r) other than with respect to employees and more generally contractual rights and obligations, what assets and obligations (if any) will transfer from the Authority to the Contractor;

(s) what Authority Dependencies are, and what other support is, required from the Authority, any changes required to the Authority Dependencies, and if necessary or desirable suggested improvements or alternative service providers in respect of such Authority Dependency or support;



(t) any changes required to the Government Furnished Services, and if necessary or desirable suggested improvements or alternative service providers in respect of such Government Furnished Services;

(u) in relation to Authority Policy Rules and Guidance:

(i) what Authority Policy Rules and Guidance DIDO Ltd will be required to comply with;

(ii) what Authority Policy Rules and Guidance DIDO Ltd will not be required to comply with, in which case the plan shall address:

(A) whether DIDO Ltd should be required to comply with the relevant policy, rule or guidance in full or in part on a voluntary basis;

(B) any desirable suggested improvements or alternative policies, rules or guidance; or

(C) whether DIDO Ltd should not comply with the relevant policy, rule or guidance after Incorporation, in which case the plan shall address the process for phasing out the existing policy, rule or guidance;

(v) insurance cover that DIDO Ltd and its director will require, or which it will be desirable for DIDO Ltd or its director to have, after incorporation;

(w) any changes necessary to the Exit Plan as a result of incorporation;

(x) process and authorisations required for the transfer of DIDO books and records from the Authority to DIDO Ltd to ensure continuity of management processes;

(y) anticipated nature of balance sheet, income statement and accounting policies of DIDO Ltd, identifying (for instance) items of anticipated regular income (if any) and regular outgoings, how employee costs (and any tax charges) are paid and accounted for, and whether or not it is desirable or necessary for DIDO Ltd to open its own bank account;

(z) anticipated tax liabilities and registrations (including any registrations relating to value added tax and “pay as you earn” obligations) of DIDO Ltd; and

(aa) the appropriate initial capitalisation of DIDO Ltd.

1.4 The Authority may, by serving written notice on the Contractor, require the Contractor to (and the Contractor shall then) procure that DIDO implements certain steps, items or work streams on the Incorporation Process Plan, or implements the Incorporation Process Plan as a whole. For the avoidance of doubt, the decision whether or not to serve such a notice (or such notices) on the Contractor shall be at the sole discretion of the Authority.

Regulatory exemption analysis

1.5 Without prejudice to the generality of paragraphs 1.1 to 1.4 of this Schedule 13, the Authority may direct the Contractor at any time following commencement of this Contract to, following which the Contractor shall, procure that DIDO:



(c) undertakes such analysis as is necessary to identify any Legislation and/or Regulatory Requirements (including without limitation any requirement for a Necessary Consent) which will apply to DIDO Ltd which do not apply or apply in a different way to DIDO;

(d) applies for and uses best endeavours to secure any Necessary Consents which are required by DIDO Ltd from the Transfer Date; and

(e) provides reports to the Authority addressing the outcomes of its analysis undertaken in accordance with paragraph (a) and progress towards obtaining the Necessary Consents in accordance with paragraph (b) above as regularly as the Authority requests.

1.6 The Authority shall procure that all information and cooperation necessary to procure any Necessary Consents shall be provided, including liaising with Relevant Authorities.

1.7 To the extent that DIDO is unable to obtain a Necessary Consent prior to the Transfer Date, the Authority may from the date of the Transfer Date provide for DIDO Ltd, to the extent permissible by law, to act as agent of the Authority in order to enable the continued reliance on any relevant exemption from a requirement to hold a Necessary Consent, to the extent necessary to facilitate continuation of DIDO’s operations.

1.8 In accordance with Schedule 6, the Parties shall cooperate to update any Authority Policy Rules and Guidance to the extent necessary to reflect any changes in Regulatory Requirements likely to arise from the Transfer Date, including without limitation practices relating to substantive operations and reporting.

2. INCORPORATION OF DIDO LTD

2.1 If the Authority authorises the Contractor to incorporate DIDO Ltd, the Contractor shall procure that DIDO ensures that DIDO Ltd is incorporated as soon as reasonably practicable and in accordance with the Companies Act 2006 and other Legislation, and that:

(a) DIDO Ltd shall be incorporated with the name that the Authority specifies to the Contractor in writing;

(b) DIDO Ltd shall be registered as a private company limited by shares;

(c) DIDO Ltd shall have the registered office that the Authority specifies to the Contractor in writing;

(d) DIDO Ltd shall be incorporated with the articles of association as the Authority may specify to the Contractor in writing or, failing that, the model articles for a private company limited by shares as set out at Schedule 1 of the Companies (Model Articles) Regulations 2008 (SI 2008/3229);

(e) a Named Contractor (as agreed between the Contractor and the Authority) shall act as the sole director of DIDO Ltd from its incorporation (the DIDO Ltd Director);

(f) the Authority shall be the sole subscriber to the memorandum of association;

(g) DIDO Ltd’s accounting reference date shall be 31 March, or such other date as may be specified by the Authority; and



(h) DIDO Ltd’s auditor shall be the Auditor General, within the meaning of section 1226 of the Companies Act 2006, unless otherwise specified by the Authority.

2.2 The Contractor shall procure that (to the extent permissible by law) the DIDO Ltd Director approves the execution of all documents, and all other acts and things as may be necessary, to give effect to the transfer of DIDO Property from the Authority to DIDO Ltd.

2.3 The Contractor shall procure that, from DIDO Ltd’s incorporation, DIDO Ltd shall meet all statutory requirements to make filings (including at Companies House), and keep registers and documents, including the register of directors and secretary, copies of all directors’ service contracts and memoranda of terms, register of members, register of charges, and records of resolutions and shareholder meetings.

3. COSTS

As between the parties, all Companies House charges and fees, and ancillary related costs, arising directly out of the incorporation of DIDO Ltd shall be borne by the Authority.

4. FURTHER ASSURANCES

The Authority and the Contractor shall perform (or procure the performance of) all further acts and things and execute and deliver (or procure the delivery of) such further documents, as may be required by Legislation or as may be necessary or required by the Authority to implement and give effect to paragraphs 1 and 2.



ANNEX A TO SCHEDULE 13

INCORPORATED CONTRACT



SCHEDULE 14

CONFLICTS MANAGEMENT POLICY

1. GENERAL OBLIGATION

1.1 Unless expressly stated to the contrary, any reference in this Schedule 14 to an obligation on the Contractor to perform a particular activity shall be construed as an obligation on the Contractor to perform for itself and to procure that each Related Party shall also perform.

1.2 The Contractor acknowledges that as a result of its participation in the Project:

(a) it will be in possession of information that could give rise to an unfair advantage in the pursuit of a matter other than the Project;

(b) it has the ability to directly influence the affairs and commercial activities of DIDO; and

(c) an actual or potential conflict of interest could arise on account of its interest in a matter other than the Project.

1.3 The Contractor shall comply with this Conflicts Management Policy.

2. IDENTIFICATION OF ACTUAL AND POTENTIAL CONFLICTS OF INTEREST

2.1 The Contractor shall, within 20 Business Days of the Commencement Date:

(a) carry out a review of its business to determine whether information passing between the Authority and the Contractor and/or any Related Party during the Contract Period is or may be material to any matter other than the Project in which the Contractor, or a Related Party has, or may be contemplating, a commercial interest; and

(b) provide to the Authority a report setting out the results of the review referred to in paragraph 2.1(a).

2.2 The Contractor shall monitor its business throughout the Contract Period and notify the Authority immediately upon becoming aware of any material changes to the results of the review referred to in paragraph 2.1(a).

2.3 Notwithstanding paragraph 2.2, the Contractor shall be required to provide an update on the matters set out in paragraph 2.1(a) in the Quarterly Performance Report.

3. FORMATION OF PROJECT TEAM

3.1 Within 10 Business Days of the Commencement Date, the Contractor shall provide the Authority with a list of all members of the Project Team categorised into the following sub teams as follows:

(a) Named Contractors who are within the executive management team;

(b) Named Contractors and Contractor Personnel who are not within the executive management team; and



(c) other Contractor Personnel with limited and controlled access to DIDO data and facilities.

Where a member’s details are unavailable within the time period stated above the Contractor shall promptly provide such member information to the Authority when it becomes available.

3.2 The Contractor shall procure that all members of the Project Team sign:

(a) the Conflict of Interest Declaration attached as Appendix 1 to this Conflicts Management Policy; and

(b) the Confidentiality Declaration attached as Appendix 2 to this Conflicts Management Policy, save where a member of the Project Team has already provided a declaration in the form attached at Schedule 16 pursuant to Clause 9.1(a).

3.3 Except as expressly permitted by the Authority in writing, such permission not to be unreasonably withheld or delayed, the following restrictions shall apply in relation to the individuals in the Project Team:

(a) no individual shall be allocated a role within the Project Team where performing that role would result in a breach by the individual of any duty owed to the Authority or any other UK government department or agency;

(b) Named Contractors within the Project Team shall not undertake any activity that might be considered to compromise their position as a Named Contractor undertaking the role of a public servant working in a Government Department;

(c) where the Contractor seeks to employ or appoint any individual on the Project Team or intends to involve as a member of the Project Team any advisor who has left the Authority within the last two years it will in each case:

(i) immediately notify the Authority, at the email address in paragraph 3.4 below, following the making of an offer of employment to any such individual or in the case of an advisor before such advisor becomes a member of the Project Team; and

(ii) ensure and the Contractor undertakes to ensure that any conditions imposed on the individual’s employment or any engagement entered into by him by the Authority’s business appointment process are complied with;

(d) no member of the Project Team shall be involved concurrently with the Project and:

(i) the tendering for or the performance of any other contract with the Authority or with any other Government Department or agency where such Project Team member is the Chief Executive of DIDO except when acting on behalf of DIDO or the Authority;

(ii) the tendering for or the performance of any other contract with the Authority or with another Government Department or agency for estate and property related infrastructure services where such Project Team member is a Named Contractor and is within the executive management team (other than the Chief Executive of DIDO); or



(iii) the tendering for or performance of any other land, estate, construction, facilities management or infrastructure related contract with the Authority;

(e) to the extent that a member of the Project Team retires, withdraws, is removed from or otherwise ceases to be involved with the Project, he shall not perform a role involving:

(i) the tendering for or the performance of any other contract with the Authority where such Project Team member was a Named Contractor and is within the executive management team (including the Chief Executive of DIDO);

(ii) the tendering for or performance of any other land, estate, construction, facilities management or infrastructure related contract with the Authority where such Project Team member does not fall within the scope of paragraphs 3.3(e)(i) of this Schedule 14;

for a period of:

(A) 12 months if the member of the Project Team is a Named Contractor within the executive management team (including the Chief Executive of DIDO);

(B) six months for other Named Contractors and Contractor Personnel who are members of the Project Team; or

(C) three months for identified Contractor Personnel with limited and controlled access to DIDO data and facilities

from their departure from the Project Team, unless the Authority agrees that there is no actual or potential conflict of interest in the individual taking such a role.

3.4 The Contractor shall send any requests for exceptions to paragraph 3.3 to the following address:

Defence Infrastructure Organisation

Email: [email protected]

Building 18

Piave Lines

Catterick Garrison

Richmond, DL9 3LR

Attention: Rachel Pearson

The Authority expects that such requests will only be made on an exceptional basis.

3.5 Subject to any requests for exceptions pursuant to paragraph 3.4 only being made on an exceptional basis, the Authority shall deal with such requests without undue delay and shall



provide an initial response to such request within two weeks of the Authority’s receipt of such request.

4. INFORMATION AND CONFLICT MANAGEMENT

4.1 The Contractor shall manage information relating to the Project in accordance with the Contract and Authority Policy Rules and Guidance. The obligations on the Contractor as part of this paragraph 4.1 shall include but not be limited to:

(a) maintaining a log of all current and past members of the Project Team;

(b) notifying all members of the Project Team of the restrictions at paragraph 3.3;

(c) complying with obligations in the Contract and Authority Policy Rules and Guidance regarding secure and separate storage and filing space for any electronic and hard copy documents and communications relating to the Contract;

(d) appointing and maintaining the appointment of an individual (or individuals) to be responsible for monitoring the arrangements under this Conflicts Management Policy during the Contract Period and ensuring compliance, and notifying the Authority promptly and in any event within five Business Days of the name of the individual (or individuals) appointed; and

(e) establishing, maintaining and implementing an effective disciplinary policy in respect of breach of this Conflicts Management Policy by any members of the Project Team (such policy to include notification to all members of the Project Team that any breach by them of this Conflicts Management Policy could lead to the imposition of disciplinary sanctions).

5. INTEGRITY OF DIDO PROCUREMENT PROCESSES

5.1 The Contractor acknowledges that DIDO is subject to obligations under Legislation relating to the procurement of public contracts and that such obligations may be affected by the Contractor’s conduct in managing DIDO to conduct such procurement processes.

5.2 Notwithstanding any Letter of Delegation, the Contractor shall not, without the prior written agreement of the Authority, allow DIDO to or procure that DIDO:

(a) awards any contract to the Contractor or a Key Sub-Contractor or an Affiliate of the Contractor or Key Sub-Contractor directly and without competition; or

(b) subject to paragraph 5.3, commences or continues with any DIDO contract award procedure where the Contractor is aware, should reasonably be aware, or becomes aware that a participant or intended participant in any procurement by DIDO of a public contract is or will be:

(i) the Contractor;

(ii) a Sub-Contractor; or

(iii) an Affiliate of the Contractor or a Sub-Contractor.



5.3 If the Contractor wishes to proceed with procurement in which any of the parties listed in paragraph 5.2(b) are, or are expected to, participate, the Contractor shall provide the Authority with a detailed plan setting out how the procurement process will be conducted so as to minimise the risk of an actual or perceived conflict of interest. The Authority reserves the right to withhold its agreement if it does not reasonably believe that a procurement process could be conducted by DIDO without a risk of a breach of Legislation.

6. CONFIDENTIALITY

6.1 The Contractor acknowledges that, in performing its obligations under this Contract, it is likely to come into possession of Confidential Information and that this may give rise to an actual or potential conflict of interests.

6.2 The Contractor shall not use or copy any Confidential Information unless necessary in order to perform its obligations under this Contract, and shall procure that all members of the Project Team shall use all Confidential Information strictly in accordance with the terms of this Contract.

6.3 In order to preserve the integrity of Confidential Information the Contractor shall implement the following measures in addition to the measures set out elsewhere in this Conflicts Management Policy:

(a) a log of all members of the Project Team;

(b) a schedule recording all internal movements of members of the Project Team indicating, if applicable, when their restriction ends;

(c) notification to all members of the Project Team of the restrictions;

(d) secure and separate storage and filing space for all hard copy documents and communications relating to the Contract;

(e) marking documents in relation to the Project as ‘confidential and subject to an information barrier’ before being handled by any of the Project Parties’ general administrative staff;

(f) identification of a member of Project Team with responsibility for monitoring the above arrangements and ensuring they are being followed by all members of the Project Team;

(g) notification to members of the Project Team that any breach by them of this Conflicts Management Policy could lead to the imposition of disciplinary sanctions.

7. COMPLIANCE

7.1 The Authority shall be entitled to audit the Contractor for compliance with this Schedule 14 and the Contractor shall provide such information, documents and co-operation as the Authority reasonably requests for the purposes of any such audit.

7.2 The Contractor shall not utilise (whether directly or indirectly) DIDO and/or any Authority Personnel to endorse or promote the Contractor’s business or other interests.

7.3 The Contractor shall:



(a) continually monitor compliance with this Schedule 14 by the Project Team (including with the obligations set out in the Conflicts of Interest Declaration and the Confidentiality Declaration) during the Contract Period;

(b) continually monitor whether this Schedule 14 remains effective and relevant for its purpose;

(c) provide an update on compliance and monitoring pursuant to paragraphs 7.3 (a) and (b) in the Quarterly Performance Report; and

(d) notify the Authority immediately upon becoming aware of any breaches of this Schedule 14.



APPENDIX 1

CONFLICT OF INTEREST DECLARATION

Employer:

Employee:

I, the above named employee, confirm that I have read the Contract between the Secretary of State for Defence, and [•] dated [•] (the Contract) as well as the Conflicts Management Policy set out in Schedule 14 to the Contract. Capitalised terms used in this document are as defined in the Contract or the Conflicts Management Policy (as applicable).

In consideration of being made a member of the Project Team, I agree to comply with the restrictions set out in paragraphs 3.3 and 4.1 of the Conflicts Management Policy.

I understand that any failure on my part to adhere to my obligations may (among other things) render me subject to disciplinary measures under the terms of my employment.

Signed:

Date:



APPENDIX 2

CONFIDENTIALITY DECLARATION

To: The Secretary of State for Defence

Date: [insert]

Dear Sirs

Name of employee:

Employer:

MOD Contract/Task No:

I, the above named employee, confirm that I am fully aware that, as part of my duties with my Employer in performing the above Contract, I shall receive confidential information of a sensitive nature (which may include particularly commercially sensitive information), whether documentary, electronic, aural or in any other form, belonging to or controlled by the Secretary of State for Defence or third parties. I may also become aware, as a result of my work in connection with the Contract, of other information concerning the business of the Secretary of State for Defence or third parties, which is by its nature confidential.

I am aware that I should not use or copy for purposes other than assisting my Employer in carrying out the Contract, or disclose to any person not authorised to receive the same, any information mentioned in paragraph 1 unless my Employer (whether through me or by alternative means) has obtained the consent of the Secretary of State for Defence. I understand that “disclose”, in this context, includes informing other employees of my Employer who are not entitled to receive the information.

Unless otherwise instructed by my Employer, if I have in the course of my employment received documents, software or other materials from the Secretary of State for Defence or other third party for the purposes of my duties under the above Contract then I shall promptly



return them to the Secretary of State for Defence or third party (as the case may be) at the completion of the Contract via a representative of my Employer who is an authorised point of contact under the Contract and (in the case of information referred to under paragraph 1 above) is also authorised under paragraph 2. Alternatively, at the option of the Secretary of State for Defence or the third party concerned, I shall arrange for their proper destruction and notify the above authorised point of contact under the Contract to supply a certificate of destruction to the Secretary of State for Defence. Where my Employer may legitimately retain materials to which this paragraph applies after the end of the Contract, I shall notify the authorised representative of my Employer to ensure that they are stored and access is controlled in accordance with my Employer’s rules concerning third party confidential information.

I understand that, under the above Contract, my Employer has agreed with the Secretary of State for Defence that certain intellectual property rights created in the course of the Contract, including by me, shall be either (1) the property of the Secretary of State for Defence or (2) licensed to the Secretary of State for Defence by my Employer. Where this is the case, I shall execute any documents and do any other acts that are necessary for the Secretary of State for Defence to obtain the benefit of that agreement regarding intellectual property rights, and, in particular, waive any moral or other rights in any works I create in the course of the Contract.

I understand that any failure on my part to adhere to my obligations in respect of confidentiality and intellectual property may render me subject to disciplinary measures under the terms of my employment.

Signed as a DEED by:

____________________________

[Individual contractor name]

Date:

In the presence of:

Witness signature : ____________________

Witness name:

Address:

Occupation:

Date:



SCHEDULE 15

KEY PERSONNEL

Named Contractors

Senior Management Team

Name Role

Richard McCarthy DIDO Chief Executive

Colin Wood Chief Operating Officer

Leo O'Shea D/ Service Delivery

Marcus Leek D/ Finance & Commercial

Matthew Punshon D/ Asset Strategy & Portfolio

Tony Gosling D/ Data Analytics & Insight

Richard Trevor D/ Transformation & Change

Ian Galloway H/ Commercial

Rosie Boorne PPP/PFI Finance & Commercial Advisor

Iain Sale Associate Finance Director

Damian Belgeonne Senior Advisor to D/ PPD (previously H/ Project & Programme Delivery)

Amanda Wharton Energy, Utilities & Sustainability Service Line Lead

Kevin Smith H/ Contingency Operations

Dan Roh H/ Strategic Initiatives

Simon deVere H/ Acquisitions, Disposals and Commercialisation

DCLG secondee H/ Accommodation Strategy

Ian Wallis H/ Data Analytics & Insight (previously Senior Data Analytics & Insight Manager)

Gary Bell Deputy Director of Transformation & Change

Angela Owen H/ Workforce and Talent Management

Peter Henderson H/ Programme Change



Iain Irving H/ Strategic Stakeholder Engagement & Communications

Gordon Kennedy H/ Business Assurance & Risk

To Be Confirmed Principal Staff Officer / Executive Advisor to the Chief Executive (previously Head of Strategic Requirements)

Owners Strategy Board

Name Role

Dawn Marriott-Sims Owners Strategy Board (not full-time)

David Swindle Owners Strategy Board (not full-time)

Programme Management Team

Name Role

JJ O'Brien FM Project Manager

Alan Parvez FM Procurement Manager

Gemma Russell Business Relationship Director (previously BS11000 Advisor)

Mike Johnson Soft FM Franchise Advisor

Richard Stephenson Capital Projects & Programmes Manager 1

Paul Townsend Capital Projects & Programmes Manager 2

Martin Whife Capital Projects & Programmes Manager 3

Paul Landsborough Programme Manager

Paul Clark Development Manager

Esther Howe Property Strategist 1

Jeremy Watt Property Strategist 2

Daniel Edwards People Change Co-ordinator 1

Jo Dunne People Change Co-ordinator 2



SCHEDULE 16

NAMED CONTRACTOR DECLARATION

To: The Secretary of State for Defence

Date: [insert]

Dear Sirs

Name of Named Contractor:

Employer:

MOD Contract/Task No:

I, the above named employee, confirm that I am fully aware that, as part of my duties with my Employer in performing the above Contract, I shall receive confidential information of a sensitive nature (which may include particularly commercially sensitive information), whether documentary, electronic, aural or in any other form, belonging to or controlled by the Secretary of State for Defence or third parties. I may also become aware, as a result of my work in connection with the Contract, of other information concerning the business of the Secretary of State for Defence or third parties, which is by its nature confidential.

I am aware that I should not use or copy for purposes other than assisting my Employer in carrying out the Contract, or disclose to any person not authorised to receive the same, any information mentioned in paragraph 1 unless my Employer (whether through me or by alternative means) has obtained the consent of the Secretary of State for Defence. I understand that “disclose”, in this context, includes informing other employees of my Employer who are not entitled to receive the information.

Unless otherwise instructed by my Employer, if I have in the course of my employment received documents, software or other materials from the Secretary of State for Defence or other third party for the purposes of my duties under the above Contract then I shall promptly return them to the Secretary of State for Defence or third party (as the case may be) at the completion of the Contract via a representative of my Employer who is an authorised point of contact under the Contract and (in the case of information referred to under paragraph 1 above) is also authorised under paragraph 2. Alternatively, at the option of the Secretary of State for Defence or the third party concerned, I shall arrange for their proper destruction and notify the above authorised point of contact under the Contract to supply a certificate of destruction to the Secretary of State for Defence. Where my Employer may legitimately retain materials to which this paragraph applies after the end of the Contract, I shall notify the authorised representative of my Employer to ensure that they are stored and access is controlled in accordance with my Employer’s rules concerning third party confidential information.



I understand that, under the above Contract, my Employer has agreed with the Secretary of State for Defence that certain intellectual property rights created in the course of the Contract, including by me, shall be either (1) the property of the Secretary of State for Defence or (2) licensed to the Secretary of State for Defence by my Employer. Where this is the case, I shall execute any documents and do any other acts that are necessary for the Secretary of State for Defence to obtain the benefit of that agreement regarding intellectual property rights, and, in particular, waive any moral or other rights in any works I create in the course of the Contract.

I understand that any failure on my part to adhere to my obligations in respect of confidentiality and intellectual property may render me subject to disciplinary measures under the terms of my employment.

Signed as a DEED by:

____________________________

[Individual contractor name]

Date:

In the presence of:

Witness signature : ____________________

Witness name:

Address:

Occupation:

Date:



SCHEDULE 17

KEY SUB-CONTRACTORS

Name Registered Number Registered Address URS (E&C) UK Limited 03909808 Washington House

Birchwood Park Avenue Birchwood Warrington Cheshire WA3 6GR

PA Consulting Services Limited 00414220 123 Buckingham Palace Road Victoria London SW1W 9SR



SCHEDULE 18

PROJECT DOCUMENTS

Description Parties Date

Key Sub-Contract Capita Business Services Ltd (1) and URS (E&C) UK Limited (2)

Key Sub-Contract Capita Business Services Ltd (1) and PA Consulting Services Limited (2)



SCHEDULE 19

CONTRACTOR WARRANTED DATA

Registered name of Contractor:

Capita Business Services Limited

Registered office of Contractor:

71 Victoria Street, Westminster, London SW1H 0XA

Company registration number of Contractor

02299747

Directors of Contractor: Michael Barnard

Maggi Bell

Kevin Dady

Victor Gysin

Gordon Hurst

Andrew Parker

Richard Shearer

Clare Waters

Craig Rodgerson

Peter Hands

Dawn Mariott-Sims

Stephen Sharp

James Parkhouse

Nick Greatorex

Shareholders of Contractor (with respective shareholdings):

Capita Holdings Limited (100%)

Registered name of Contractor's ultimate holding company:

Capita plc



Registered office of Contractor's ultimate holding company:

71 Victoria Street, Westminster, London SW1H 0XA

Company registration number of Contractor's ultimate holding company:

2081330

Directors of Contractor's ultimate holding company:

Maggi Bell

Victor Gysin

Andrew Parker

Gordon Hurst

Dawn Mariott-Simms



SCHEDULE 20

AUTHORITY DISCLOSED DATA



SCHEDULE 21

COMMERCIALLY SENSITIVE INFORMATION

In this Schedule the Parties have sought to identify the Contractor’s Confidential Information that is genuinely commercially sensitive and the disclosure of which would be contrary to the public interest.

Row Commercially Sensitive Information Duration of protection

Reasons

1 Limitation of Liability – Clause 45 of the Contract Contract Period plus 2 years

Note 1

2 Insurance – Clause 25 and Schedule 10 (Insurance) of the Contract

Contract Period plus 2 years

Note 1

3 Payment and KPIs – Clause 19 and Schedule 7 (Payment Mechanism) of the Contract


Note 1

4 Compensation on Termination – Clause 35 of the Contract Contract Period plus 2 years

Note 1

5 Financial model (together with any preparatory versions of it and any updates, revisions or subsequent versions of it (or any similar financial models) provided by the Contractor pursuant to this Contract and provided prior to the Commencement Date for discussion.

Without limit in time

Notes 1 and 2

6 Any information on Contractor’s costs including any disclosed pursuant to or in connection with the Contract.


Notes 1 and 2

7 Any information of a financial nature, or other information which might reasonably be considered to be of a confidential nature, relating to the Contractor’s business disclosed pursuant to this Contract (including audit information) and Clause 24 (Information Documents and Records).


Notes 1 and 2

8 Change Notices, invoices, minutes of meetings between the Parties, other documents and correspondence displaying any of the foregoing information in this Schedule


Notes 1 and 2

Note 1: The Contractor would be commercially disadvantaged by disclosure because the information listed is of potential value to its competitors both in relation to any future re-tendering of this Contract and in relation to other bids where obtaining a copy of the Contractor’s negotiated positions and other sensitive information would place the Contractor at a material disadvantage in competitive procurements.

Note 2: In addition to the concerns relating to other information, the Contractor would be materially commercially disadvantaged by disclosure at any time of cost and financial information related to its charges and the performance of this Contract because such



information is of value to its competitors both in relation to any future competitive tendering and general market positioning.

Note 3: Notwithstanding the above table and Notes 1 and 2, the Contractor agrees that all information relating to DIDO’s performance (including records and information that DIDO must create and/or maintain and minutes of meetings relating to DIDO performance) is not Commercially Sensitive Information. The Contractor also acknowledges that certain information relating to this Contract will need to made available to entities involved in any retendering of this Contract in accordance with Clause 36, and that nothing in rows 1 to 4 and 8 of the above table is intended to limit the provisions of the Contract in this regard.



SCHEDULE 22

CORPORATE REACH BACK: PRINCIPLES PAPER

1. INTRODUCTION

1.1 Award Criterion B.2.3 refers Bidders to:

(a) demonstrate an effective strategy to access specialist market knowledge, resources and wider skills beyond its Named Contractors on an ongoing basis to support the delivery of the Authority’s requirements and the Infrastructure Implementation Plan (IIP); and

(b) confirm that it will provide such corporate reach-back and additional specialist market knowledge in order to deliver the IIP at its own risk and at no cost to the Authority.

Further guidance on corporate reach-back is set out below.

2. OVERARCHING PRINCIPLES

2.1 The following section sets out the Authority’s overarching principles to be considered by Bidders when developing its reach-back proposals:

(a) The primary purpose of reach-back is to allow for access to corporate knowledge and additional corporate resources outside of the SBP management team (“Named Contractors”). This may be where the SBP considers that the IIP and/or additional financial savings can be better or more quickly delivered through the injection of additional resources.

(b) The costs of providing reach-back must be met entirely by the SBP.

(c) When considering the use of reach-back, the SBP needs to ensure that DIDO remains a sustainable organisation in the long term. The primary role of the SBP is therefore to embed the required skills into DIDO (for example through training and recruitment) rather than through implanting additional SBP resources in the organisation that will be removed when the SBP relationship ceases.

(d) The concept of reach-back is one of accessing SBP corporate capability so that DIDO can deliver its requirements on an ongoing basis.

(e) When considering its options to fill any skills gaps or posts, DIDO must demonstrate that it has considered the use of normal recruitment processes and not merely relied on the availability of SBP resource. Any arrangements for temporary filling of posts through reach-back that are put in place must consider and comply with legislation and Authority Policy Rules and Guidance (including in relation to TUPE, public procurement and the approvals process for use of consultants).

(f) The Authority wishes to encourage the use of reach-back to promote best practice through DIDO and considers this could be done through, but is not limited to: provision of corporate best practice, information, red team reviews, joint training, secondments or interchange of DIDO staff to the SBP partner organisations (and vice versa) and other



similar mechanisms. Any secondments must comply with Authority Policy Rules and Guidance.

(g) It is expected that proposals in relation to reach-back will be set out in the IIP and updated as part of the IIP on an annual basis

3. SPECIFIC OPERATIONAL REACH-BACK

3.1 The following section sets out where the Authority’s believes corporate reach-back could be used by an SBP.

Short term resource requirement

3.2 The provision of SBP staff to DIDO to temporarily plug any unfilled long term post. The SBP will be required to demonstrate that DIDO has first tried or is trying to fill the shortage through the normal channels, which are likely to include:

(a) Backfilling posts from DIDO

(b) Recruitment routes available to DIDO

(c) Agency staff and existing supply chain arrangements.

3.3 Any short term posts will be subject to the manpower substitution provisions which provide for a maximum duration of 11 months.

Access to SBP corporate processes/knowledge

3.4 The provision of information on how its corporate uses processes/ best market practice for the benefit of DIDO.

Additional projects volume

3.5 Additional reach-back resource may be required to manage projects volume, spikes in activity or specialist activity.

3.6 Projects resources required will be determined on an annual basis through the IIP process. The SBP will be expected to provide reach-back to support the programme of work where required. There may also be other spikes in activity, one off projects or specialists requirements that do not merit the recruitment of a long term post where the SBP will be able to offer support from its organisation on a temporary basis.

Supplemental training

3.7 The provision of reach-back to supplement existing Authority training to up-skill the DIDO workforce and gain and maintain market knowledge. For example, it is envisaged that the SBP may use its reach-back to provide onsite and offsite training to DIDO resources as well as the use of seminars and ad hoc training courses to enable DIDO staff to better perform its functions and deliver the IIP.

3.8 Whilst the Authority sees up-skilling and training DIDO staff as an important part of reach-back, formal training must adhere to any Authority Policy Rules and Guidance and use the training facilities / personnel presently provided to the wider Authority.



SBP staff injection for specific procurement / activity

3.9 The SBP may wish to use reach-back to inject temporary SBP staff into DIDO to help support procurements to accelerate the timetable and therefore savings available.

Access to specialist skill set

3.10 Reach-back may be used where DIDO requires access to a limited specialist skill set to complete a task which is not a full time position. The SBP is encouraged to provide support subject to demonstrating that they have tried to fill the requirement through normal channels as set out above or where it is not value for money or cost effective to do so i.e. for a short term/ one off task.

4. PROHIBITED USE OF REACH-BACK

4.1 The following section sets out what is not permissible under the concept of reach-back.

Using reach-back for the long term filling of DIDO posts and/ or requirement for specific technical specialist requirement on an on-going basis:

4.2 Such ongoing or long term needs are to be filled in the long term by a permanent employee where that post is considered necessary in the long term.

4.3 Where a lack of resources has been identified by DIDO and/ or DIDO does not have the relevant skills set, DIDO supported by the SBP, would review the options for addressing that shortage or skills gap. This may include the use of agency staff, existing frameworks or external recruitment where the post cannot be filled internally. As per the existing DIO process, a business case would need to be made to establish the need and review the options. It is considered that it would not be appropriate for the SBP to fill this gap through corporate reach-back on a long term basis.

Using reach-back to fill Urgent Operational Requirements:

4.4 DIDO should be a sustainable organisation with appropriate internal skills and supply chain to manage Urgent Operational Requirements (“UOR”). Therefore, DIDO should not be reliant on the SBP Corporate reach-back to fill Urgent Operational Requirements. However the Authority does recognises that there may be certain instances where reach-back may be required for UOR on a short term resource requirement basis (as per 3.1 above), and in such circumstances this may be permissible.

Filling a DIDO post with reach-back resources which is not vacant:

4.5 The SBP cannot substitute its own staff for DIDO staff through corporate reach-back. DIDO wants to ensure that it is appropriately up-skilled and staffed so that there is a sustainable organisation going forward, rather than an organisation filled with temporary posts.

Using reach-back to replace elements of the DIDO supply chain:

4.6 Corporate reach-back should not be used to plug any gaps in the delivery supply chain. The role of the SBP is strategic only and not delivery focused. The use of corporate reach-back should not result in any conflict of interest with any existing delivery frameworks and must be in compliance with the Contractor’s Conflicts Management Policy.



Using reach- back to increase the scope of the contract or role of the SBP:

4.7 The use of reach-back should not be used as a way to increase the scope of the contract or role of the SBP so that it falls outside the scope that was advertised in the original OJEU notice.



SCHEDULE 23

SPEND TO SAVE INITIATIVES AND PUMP PRIMING INITIATIVES: PRINCIPLES

PAPER

1. INTRODUCTION

1.1 The overarching principles are as follows:

(a) The Authority would like to pursue further Spend to Save and Pump Priming initiatives but may not have the funds available to pursue them itself.

(b) As such it would wish to have a facility whereby it can request that the SBP funds such initiatives on behalf of the Authority.

(c) Primarily the Authority envisages that it will be DIDO that pursues the initiative with the support of the SBP and any corporate reach back facility (see principles for reach-back at the end of this paper).

(d) The Authority would, however, be unable to invest alongside the SBP as it is not permitted to mix public and private funds. The Authority would, however, retain the right to fund the initiative in its entirety.

(e) The SBP would earn a return on its money investment and be reimbursed its money investment. This would tend to be a priority return (assuming no senior debt funding) and payable from the savings or disposal receipts generated.

(f) The SBP is to bid a cap and collar for this return, providing the parameters for the return that can be earned by the SBP. These are to be bid during the process together with any other conditions.

(g) Costs to be incurred by DIDO pursuing such initiatives must be transparent and pre-agreed with the Authority.

(h) At the start of each stage (see below), the SBP and DIDO will document how VFM will be measured and assessed at each subsequent stage.

2. SPEND TO SAVE INITIATIVES

2.1 Overarching intention is that this relates to upfront money investment to drive future revenue savings.

2.2 The PMPP provides for:

(a) Stage 1 – DIDO to put forward its initial proposals (options analysis, costings, projected savings and SBP proposed return on investment, accounting treatment) for Authority to consider.



(b) As part of its initial proposal, the SBP should set out its proposed role in the initiative and consider whether the initiative is in compliance with the procurement rules, together with any other options the Authority may have to procure the initiative.

(c) If acceptable, DIDO would develop the proposal further to a point where it is ready to be implemented including the detailed costing proposed etc. (stage 2).

(d) The return on the SBP’s money investment is contingent on the delivery of the savings and payable only once. However that capital invested and return may be recouped over a period of time where the savings are delivered over a period of time.

(e) The return is to be agreed on a case by case basis – subject to a cap and collar to be bid at ITN.

(f) If the principle of the initiative is accepted at stage 1 and DIDO develops the detailed costing (stage 2), and the Authority does not then approve the detailed proposal (and the SBP demonstrates that it would have delivered VFM), the Authority will reimburse the SBP’s reasonable costs.

(g) Reasonable costs include any third party costs and reach-back costs the SBP has incurred as a result of pursuing that initiative beyond stage 1. Such costs are to be agreed prior to the commencement of the work and capped at that level as being the maximum to be reimbursed should the Authority not pursue the initiative beyond stage 2 (subject to the VFM assessment above).

2.3 Spend to save scenarios are set out below for illustrative purposes only.


Stage 1 Stage 2 Assumptions Scenario 1 SBP recommends that the Authority invests in capital expenditure to fund future revenue savings e.g. replace some boilers across the accommodation estate to drive down future energy consumption

The capital investment is not affordable by the Authority

Authority accepts proposal. Proceeds to stage 2

Authority accept stage 2 proposals and DIDO progresses with initiative

� SBP uses both its own staff and DIDO staff to work up the detailed proposals. Please note that the overarching principle is for DIDO to pursue the initiative with the support of the SBP and any corporate reach back facility; if SBP uses its own staff then this must comply with the corporate reach-back principles and any return on its staff will be at risk for the SBP and recouped through the incentive fee.

� where the SBP has the in-house skills it should use its own staff via corporate reach-back rather than procure third parties.

� if any third party input is needed to develop the detailed proposals e.g. needs specialist heating engineers, then this is to be procured through the DIDO normal procurement routes.

� DIDO procures the boilers i.e. goes to the market to acquire and install boilers (as opposed to SBP)

� DIDO manages the procurement and oversees installation as it would do now on behalf of Authority.

� the Authority owns the boilers from day 1.

� the Authority request that the SBP to provide the capital to pay for the boilers once installed and fund future maintenance until such time as the SBP is reimbursed for its investment.

� If the SBP wants to provide DIDO with any support to do this (for example so it is done quicker) then any support is via corporate reach back and must adhere to those principles.

� the Authority repays the SBP its capital (and any maintenance funded by the SBP) and a return on its investment from the savings delivered.

A ll i l i d b i id h SBP lOFFICIAL SENSITIVE – COMMERCIAL

Page 1263



Authority rejects stage 2 proposals and proposal would have offered VFM

� The Authority must reimburse the SBP reasonable costs including SBP staff costs (corporate reach back) in working up the detailed proposal, advisers or third party costs if applicable, albeit the latter should be minimal as should mainly be DIDO costs as the assumption is that it is procured through it rather than the SBP.

� Costs are to be agreed prior to the commencement of the work and capped at that level as being the maximum to be reimbursed should the Authority not pursue the initiative beyond stage 2 (subject to the VFM assessment below)


Authority rejects stage 2 proposals and/or the detailed proposal would not

� No reimbursement of any costs by the Authority.

� VFM methodology would have been documented at the start of stage 2 as per the overarching principle.

Authority rejects proposals at stage 1

� No reimbursement of any costs by the Authority.

Scenario 2 SBP proposes to invest directly in an initiative eg installation of solar panels on the Authority’s assets.


Authority accept stage 2 proposals and the SBP progresses with initiative

� SBP uses both its own staff and DIDO staff to work up the detailed proposals. Please note that the overarching principle is for DIDO to pursue the initiative with the support of the SBP and any corporate reach back facility; if SBP uses its own staff then this must comply with the corporate reach-back principles and any return on its staff will be at risk for the SBP and recouped through the incentive fee.

� where the SBP has the in-house skills it should use its own staff via corporate reach-back rather than procure third parties.

� the SBP procures/ arranges for the installation of the panels under licence from the Authority and pays for any maintenance costs over the period of the investment.

� the SBP would own the panels.

� the Authority pays a return on the SBP’s investment (but not the investment itself) from the savings delivered.

� as well as the return being paid, the SBP also shares in the future




revenue savings delivered as a result of the upfront investment. This is the mechanism by which the SBP gets its return on the corporate reach-back used.

� at the end of the contract or on early termination, the SBP may be required to remove the panels or the Authority will reimburse certain of the SBP’s costs (which will be agreed in advance).



� the Authority must reimburse the SBP reasonable costs ie assumed to be staff costs (including corporate reach back) in working up the detailed proposal, advisers or third party costs if applicable (ie architects etc) albeit the latter should be minimal as should mainly be DIDO costs as the assumption is that it is procured through it rather than the SBP.

� costs are to be agreed prior to the commencement of the work and capped at that level as being the maximum to be reimbursed should the Authority not pursue the initiative beyond Stage 2 (subject to h VFM b l ) Authority accepts

proposal. Proceeds to stage 2

Authority rejects stage 2 proposals and/or the detailed proposal would not have offered VFM

� no reimbursement of any costs by the Authority.

� VFM methodology would have been documented at the start of Stage 2 as per the overarching principle.





3. PUMP PRIMING INITIATIVES

3.1 The overarching intention is that this relates to capital investment to kick start an initiative that will result in a capital receipt (rather than the primary purpose being to deliver on-going savings as per spend to save, although future savings may occur as a result of the pump priming). Examples might include:

(a) funding the provision of upfront infrastructure in-order to improve the value of land to be brought to the market. i.e. one off capital injection and associated works upfront to deliver a future capital receipt.

(b) investing in planning advice to change the use of land or improve the value of that land. i.e. one off capital injection for third party services to improve the value of an asset or to maximise future sale proceeds.

(c) acquisition of ransom strips.

3.2 It is considered this will not involve the SBP providing strategic management input upfront to maximise value – as this is part of the remit in any event, needs to be compliant with the principles of corporate reach-back and the SBP would get rewarded through the incentive fee mechanism for disposals and projects.

3.3 As for spend the save, the PMPP provides for:

(a) Stage 1 - DIDO to put forward its initial proposals (options analysis, costings, projected receipts and associated capital expenditure, planning implications and SBP proposed return on investment, accounting treatment) for Authority to consider. The stage 1 proposal is also to consider wider issues such as re-provisioning costs, stakeholder management etc.

(b) As part of its initial proposal, the SBP should set out its proposed role in the initiative and consider whether the initiative is in compliance with the procurement rules, together with any other options the Authority may have to procure the initiative.

(c) If acceptable to the Authority, DIDO is to develop the proposal further to a point where it is ready to go to market including detailed costing proposed etc. (stage 2). Projected receipts are to be supported by independent third party valuations.

(d) The return on investment is contingent on the delivery of the initiative and payable from subsequent net disposal receipts.

(e) If the net proceeds from disposal are insufficient to repay the capital and the return as a result of the disposal not generating the level of receipts envisaged by the SBP, the SBP’s capital and return will be limited to that increase in value. If no additional value is generated, no capital or return will be payable.

(f) The return is to be agreed on a case by case basis – subject to a cap and collar to be bid at ITN



(g) The SBP will additionally share in the net disposal incentive fee as per the PMPP. For the avoidance of doubt this will also be net of any investment made by the SBP so there is no double counting.

(h) If the principle of the initiative is accepted at stage 1 and DIDO develops to the detailed costing (stage 2), and the Authority does not then approve the detailed proposal (and the SBP demonstrates that it would have delivered VFM), the Authority will reimburse the SBP’s reasonable costs.

(i) Reasonable costs include any third party costs or reach-back costs the SBP has incurred as a result of pursuing that initiative beyond stage 1. Such costs are to be agreed prior to the commencement of the work and capped at that level as being the maximum to be reimbursed should the Authority not pursue the initiative beyond Stage 2 (subject to the VFM assessment above)

(j) Unlike the spend to save there is an additional provision which allows for the Authority to get independent input / advisers to look at the proposals to make sure proposals are competitive. DIDO is to meet the cost of such advice.

3.4 Pump priming scenarios set out below for illustrative purposes only.


Stage 1 Stage 2 AssumptionsScenario 1 SBP proposes investment

In upfront infrastructure costs in order to sell an asset.

For example Infrastructure works needed before the asset can be sold e.g. putting in a road to sell off serviced plots to third party developers.

The investment cannot be funded by the Authority


Authority accept stage 2 proposals and DIDO progresses with initiative

� SBP uses both its own staff and DIDO staff to work up the detailed proposals. Please note that the overarching principle is for DIDO to pursue the initiative with the support of the SBP and any corporate reach back facility; if SBP uses its own staff then this must comply with the corporate reach-back principles and any return on its staff will be at risk for the SBP and recouped through the subsequent disposal fees.

� where the SBP has the in-house skills to work up the proposal it should use its own staff via corporate reach-back rather than procure third parties.

� if any specialist third party input is needed to develop the detailed proposals or it doesn’t sit well with the SBP skills set, that this is input is procured through the DIDO normal procurement routes.

� the Authority procures the infrastructure

� DIDO manages the procurement and oversees the works as they would do now.

� the Authority owns the infrastructure (given it owns the land) from day 1.

� the Authority requests the SBP to provide funding for the infrastructure and for its maintenance until such time as the SBP is reimbursed for its investment .

� If SBP wants to provide DIDO with any support to do the procurement (for example so it is done quicker) then any support is via corporate reach back and must adhere to those principles (see end of paper for principles)

� the Authority repays SBP its capital and a return on its investment from the capital receipt (subject to the overarching principle that this is limited to the uplift in the receipt above the value that would otherwise have been realised if the receipt is insufficient to cover both capital and the return)

� as well as capital investment and return being paid, the SBP will also share in the future capital receipt delivered as a result of the upfront investment



under the PMPP. This is the mechanism by which the SBP gets its return on the corporate reach-back used. This is net of any investment of the SBP to ensure no double counting.

� alternatively, the SBP could invest directly in the road and procure it direct. In this instance, as per the spend to save, the SBP would be obliged to transfer the road at cost to the Authority or to a subsequent purchaser of the land subject to any reimbursement of that cost to the SBP from the sale proceeds.



� the Authority must reimburse the SBP reasonable costs ie assumed to be staff costs (including corporate reach back) in working up the detailed proposal, advisers or third party costs if applicable, albeit the latter should be minimal as should mainly be DIDO costs as assumption is that it is procured through it rather than the SBP.

� costs are to be agreed prior to the commencement of the work and capped at that level as being the maximum to be reimbursed should the Authority not pursue the initiative beyond Stage 2 (subject to the VFM assessment below)


Authority rejects stage 2 proposals and/ or the detailed proposal would not have offered VFM


� VFM methodology would have been documented at the start of Stage 2 as per the overarching principle.



Scenario 2 SBP proposes to invest in cap ex to fund a change of use on a property.


Authority accepts proposal.

Authority accept stage 2 proposals and DIDO progresses with

� SBP uses both its own staff and DIDO staff to work up the detailed proposals. Please note that the overarching principle is for DIDO to pursue the initiative with the support of the SBP and any corporate reach back facility; if SBP uses its own staff then this must comply with the corporate reach-back principles


Proceeds to stage 2

initiative and any return on its staff will be at risk for the SBP and recouped through the subsequent disposal fees.

� where the SBP has the in-house skills to work up the proposal it should use its own staff via corporate reach-back rather than procure third parties.

� if any third party input is needed to develop the detailed planning application this input can be procured direct by the SBP as part of its pump priming capital invested.

� the Authority repays the SBP its capital and a return on its investment out of the subsequent disposals receipts, (subject to the overarching principle that this is limited to actual net disposal receipts over the value that would otherwise have been realised if there are insufficient proceeds)

� as well as capital investment and return being paid, the SBP will also share in the future net capital receipt delivered as a result of the asset subsequently being sold through the disposals incentive regime. This is the mechanism by which the SBP gets its return on the corporate reach-back used, subject to there being no double counting as above.



� the Authority must reimburse the SBP reasonable costs ie assumed to be staff costs (including corporate reach back) in working up the detailed proposal, advisers or third party costs if applicable.

� costs are to be agreed prior to the commencement of the work and capped at that level as being the maximum to be reimbursed should the Authority not pursue the initiative beyond Stage 2 (subject to the VFM assessment below)



Authority rejects stage 2 proposals and/or the detailed proposal would not have offered

� no reimbursement of any costs by the Authority. � VFM methodology would have been documented at the start of Stage 2 as

per the overarching principle.






4. CAP ON FUNDING

4.1 For both spend to save and pump priming the maximum amount outstanding at any one time is to be £40m.



SCHEDULE 24

DIDO SERVICES

The table below broadly sets out the scope of services/activities DIDO provides to the Authority and other entities as at the Commencement Date. The scope of the DIDO Services may change from time to time, at the Authority’s discretion, in response to changed requirements of the Authority.

For the avoidance of doubt, any material changes to the scope of the DIDO Services shall be reflected in revisions to this Schedule 24. Such Changes, and any other Changes to this Contract which may flow from such amended scope, shall be dealt with in accordance with the Change process set out in Schedule 12.

Services/ Activity Description

Strategic management of capital projects

Managing construction projects (via third party sub-contractors and project managers) as detailed below: Provide interface with SAPT and customers in relation

to their capital projects requirements. Develop and update strategy for capital projects

delivery.

Support production of the projects sub-programme of the DIP.

Strategic and day to day contract / project management of existing contractors / suppliers.

Develop user requirements.

Develop user requirements into specifications for service delivery / implementation.

Provide detailed budget monitoring and reporting (e.g. five (5) year / triennial / annual) based on DIGA specific requirements.

Business case production and manage approval process, presently part outsourced to third party providers.

Review outputs from cost and schedule analysis at option appraisals and approval gates.

Assessment studies and feasibility studies (presently part outsourced to third party providers).

Cost planning for all capital projects and cost reviews as project programme progresses (presently part




outsourced to third party providers).

Risk management and critical appraisal of risk documentation (presently part outsourced to third party providers).

Oversee contract procurement and monitor framework contractors and procurement service providers presently part outsourced to third party providers).

Ensure standardisation and savings across portfolio solutions.

Compare and report performance to agreed benchmarks.

Contract procurement, performance oversight and assurance.

Key programme management, including mitigating escalated risks.

Provide senior stakeholder management and liaison with military end user customers.

Soft FM Managing the provision of soft FM across the estate.

Procuring and managing the soft FM suppliers.

Develop and update strategy for soft FM delivery.

Provide interface with SAPT and customers in relation to their soft FM requirements.

Develop detailed strategy for future soft FM to drive savings and efficiencies.

Identify, assess and draft detailed requirement for services.

Set up a performance framework for management of KPI reporting and collect KPI data for analysis (presently part outsourced to third party contractors).

Strategic and day to day contract / project management of existing contractors / providers.

Analyse, calculate and collect financial information (presently part outsourced to third party contractors).

Ensure compliance with statutory / mandatory obligations (presently part outsourced to third party contractors).

Provide senior stakeholder management and liaison with Defence end user.




Convert Government wide standards into relevant military standards.

Maintain and provide analysis of central database of documentation and performance reports (presently part outsourced to third party contractors).

Providing high level contract performance oversight and assurance reports.

Key programme management: Key investment / financial decisions; mitigate escalated risks; provide senior stakeholder management and liaison with military end user customers.

Manage any soft FM procurements

Land Management Services (“LMS”)

Develop and update strategy for LMS delivery and make recommendations / implement where approved.

Communicate with senior stakeholders and liaise with other Government bodies / statutory non-Government bodies and other Government departments.

Stakeholder management and provide interface with SAPT and customers to include translating high level user requirement and feedback performance of LMS services.

Letting and lettings management e.g. lease renewals, dilapidations, debt recovery etc (presently part outsourced to third party contractors).

New hirings i.e. where DIO is a tenant e.g. rights of way, offices, training on private land, and including cash office responsibilities.

Town and Country planning, valuations and ratings (presently part outsourced to third party contractors).

Disposals / acquisitions (presently part outsourced to third party contractors).

Claims (presently part outsourced to third party contractors).

Safeguarding (environmental issues such as wind energy, development plan consultation) supporting the production of byelaws (presently part outsourced to third party contractors).

Forestry and woodland management (presently part




outsourced to third party contractors).

Property ownership issues (e.g. boundary disputes, maintenance of legal deeds, land condition) - presently part outsourced to third party contractors.

Policy interpretation (general initiatives) – presently part outsourced to third party contractors.

Geospatial services (includes management of estate records) – presently part outsourced to third party contractors.

Performance management against benchmarks - presently part outsourced to third party contractors.

Policy help desk and advice and strategy for property related issues (presently part outsourced to third party).

Hard FM To include the management of the supply chain to execute the strategy (which in the future will be set out in the IIP) to better manage costs and services and delivering the activities set out below:

Managing the NGEC procurements.

Manage any further procurements.

Provide interface with SAPT and customers to include translating high level user requirement and feedback performance of hard FM.

Develop and update strategy for hard FM delivery.

Produce contract performance oversight and assurance reports.

Key programme management.

Mitigate escalated risks.

Provide senior stakeholder management and liaison with Defence end user.

Strategic and day to day contract / project management.

Contract development – change control, documenting and agreeing on any changes or amendments that may arise during its execution; value for money testing (presently part outsourced to third party contractors).




Risk management – managing contractual and supplier risk (presently part outsourced to third party contractors).

Market management – benchmarking, contingency planning, re-competition strategies and procurement (presently part outsourced to third party contractors).

Delivery of hard FM services (presently part outsourced to third party contractors).

Specification and business case for any new requirements over £2,500.

Comparing performance to agreed benchmarks.

Provide operational estate solutions to other Government departments / public bodies who are in occupancy of MOD assets and dealing with estate issues concerning their occupancy needs.

Accommodation To include the management of any supply chain to execute the strategy set out in the IIP to better manage costs, services, supply and demand including the delivery of the activities set out below:

Develop and update strategy for accommodation delivery and make recommendations / implement where approved.

Communicate with customers. Stakeholder management and provision of interface

with SAPT and customers to include translating high level user requirement and feedback performance of accommodation services.

Day to day contract management (presently part outsourced to third party).

Site management (presently part outsourced to third party).

Housing and accommodation provision (presently part outsourced to third party).

Defence Accommodation Stores (presently part outsourced to third party).

Liaise with Annington Homes for the subletting of MOD properties to the public on a rolling six (6)




monthly basis (presently part outsourced to third party).

Strategic asset management

The SBP will work with DIDO (and in particular its current SAPT function) to:

Identify and pursue further opportunities to reduce costs across the estate so that DIDO is able to better meet its CTs whilst still delivering the requirements of the Authority.

Pursue opportunities to release funding for reinvestment into the estate to meet the requirements of the Footprint Strategy.

Improve the service to users and better respond to its needs.

Ensure that strategic asset management opportunities are identified and pursued.

Manage DIDO to deliver the core activities set out below:

Assist DIGA to develop the DICP as and when required by the Authority.

Deliver, monitor and review compliance of DICP.

Support audit function.

Advise on best procurement and delivery strategy.

Drafting the DIP, liaising with third parties where appropriate.

Monitor the DIP, undertake prioritisation to determine the funded programme providing the prioritised position to the SAPT, allocate resources and monitor DIP against strategic objectives.

Challenge prioritisation process through a strategic understanding of assets and identify efficiency savings.




Advise on efficient and effective asset management practice across the DIO portfolio (including housing allocation).

Suggest and implement large scale rationalisation activities (from programme perspective).

Prepare and support submission of IAC business cases and provide commentary.

Advise on procurement strategy to help deliver outputs.

Develop, manage, and maintain the risk / opportunity plan and benefits realisation plan in support of the DIP.

Assist DIGA in maintaining the Footprint Strategy consulting with third parties where appropriate and provide subject matter expert advice.

Produce and maintain the asset management strategy and plan.

Undertake periodic reviews of the portfolio and update the information systems.

Receive and evaluate reactive optimisation opportunities.

Check compliance of portfolio against existing policies.

Provide operational estate solutions to other Government departments / public bodies who are in occupancy of MOD assets and dealing with estate issues concerning their occupancy needs.

PFI Develop and update future contracting strategy and review of contracts (including contributing to the Renegotiation Programme and the delivery of benefits from that programme).




Stakeholder management and provision of interface with SAPT and customers to include translating high level user requirement and feedback performance of PFI contracts.

Managing the current 19 estate PFI contracts in place.

Managing the Health and Safety and legal roles where necessary (presently part outsourced to third party).

Overseas estate Efficiently and effectively manages the Overseas estate, complying with the International Protocols set out in the Data Room

Infrastructure Professional Services (“IPS”)

(specialist technical expertise and advice)

Land & property: complex planning advice, heritage, access and safeguarding

Engineering & construction: airfield inspections, explosive storage inspections, weapons effects on structures, electrical, mechanical and fuel infrastructure.

Environmental: environmental liability management, explosive ordnance clearance, sustainable development support, rural estate management and ecology.

Provide technical authority sign off as per MOD policy documentation.

Provide intelligent client role to provide expert technical challenge to supplier proposals.

Utilities Manage the efficient provision of all utilities to the estate (apart from that procured through PFI arrangements), pursuing opportunities to consolidate contracts and reduce costs where appropriate. In particular:

To accurately track and forecast demand for energy and water on the Defence estate worldwide, and from this ensure sufficient supplies at best value for money to meet Defence needs, using wherever possible, common Government or MOD supply contracts.

To accurately track and forecast waste generated on the Defence estate worldwide, and the extent of waste recycling achieved.

Working closely with industry partners and the user community, deliver improvements in energy and water




efficiency in new and existing buildings so as to reduce MOD demand and consequent greenhouse gas emissions, and to deliver improvements in waste reduction measures and recycling facilities.

To optimise security of energy supply, especially to critical Defence facilities and installations. To ensure prompt and accurate payment of energy and water bills and related costs such as carbon permits.

Compliance with energy and water supply legislation, and to report on progress against Government and MOD targets and policy for energy, water, and waste.

Training estate Develop and update the strategy for training estate delivery and make recommendations /implement where approved.

Stakeholder management and provide interface with SAPT and customers to include translating high level user requirements and feedback performance of training estate services.

The provision / allocation of training facilities (where required including accommodation and catering) in accordance with the agreed customer training priorities.

Translation of high level user requirement.

Day to day contract / project management / estate support and compliance (presently part outsourced to third party).

Delivery of training facilities (presently part outsourced to third party).

Management of training areas (presently part outsourced to third party).

Additional DIO activities

including non MOD customer service arrangements

The provision of facilities for the benefit of the Met Office

Ad-hoc property advice for the benefit of all third party users of the Defence Estate

Day to day Draft production of answers to Parliamentary questions




operations

and Ministerial submissions to standard required by Ministers.

Provide support to the DIB in terms of secretariat.

Support policy production and implementation.

Policy setting based on Defence priorities.

Upward reporting of DIDO performance to DIGA.

Co-ordinate security clearance and support business continuity plans.

Accountable for technology data integrity and assurance.

Administration and support to DIDO board (if applicable) and committee(s) where required.

Technology support and administration.

Provide support for financial reporting and management information, including managing bill payment across DIDO.

Collate data for Freedom of Information requests.

Produce performance management reports.

Co-ordinate staff training and development.

Liaising on internal communications and external communications / press.

Financial management of DIDO ensuring regularity, propriety and value for money of all expenditure proposals and proposals to generate income and that DIDO remains within the Control Totals allocated by DIGA

Volunteer estate Stakeholder management and providing interface with SAPT, Reserve Forces and Cadet Associations (“RFCA”) and customers to include translating high level user requirement and feedback performance of volunteer estate.

Strategic and contract management (presently part outsourced to third party).

Managing the delivery of hard / soft FM (presently part outsourced to third party).





SCHEDULE 25

AUTHORITY DEPENDENCIES

In addition to limbs (a) to (f) of the definition of Authority Dependencies, the additional dependencies set out in this Schedule 25 shall also constitute Authority Dependencies. The Authority shall have no obligation to perform any dependency unless specifically set out in the Contract or in this Schedule 25.

The Authority Dependencies shall be provided to the Contractor free of charge (which may be accounted for either within the DIDO budgets (RDEL or CDEL as appropriate) or within other wider Authority budgets), unless otherwise agreed in writing between the Parties.

Nothing within this Schedule 25 is intended to replace the obligations of the Contractor to undertake the day to day management of DIDO or and to mitigate any dependency failure.

The Authority shall, in relation to this Contract, perform the Authority Dependencies identified below. Subject to Clause 30, where the Dependency Requirement listed in this Schedule 25 has not been met, the specified ‘Relief’ shall apply and the Mitigation Plan shall be implemented. Each Authority Dependency shall be made continually available to the Contractor (including Named Contractors and/or Contractor Personnel unless otherwise stated) from the Start Date to the End Date specified:

Ref Subject Dependency Requirement Rationale Start Date End Date

Relief Mitigation Plan to reduce probability and/or avoid impact of dependency failure.

MOB1

PMO The Authority shall provide programme management office with approximately 20 desk spaces in Sutton Coldfield including a civilian and

Co-located PMO including dovetailing in with the existing transformation

Commencement Date

Effective Date

If no PMO office spaces are available at all and the specific mitigation

An alternative location could be agreed including a non-DIO (Contractor) office or an alternative Authority





military transition liaison / manager during the Mobilisation Period so that the Named Contractors and existing DIO people can work together on meeting the mobilisation obligations

team is more optimal than a new stand-alone Contractor team

proposals are not acceptable to the Authority, then the Effective Date will be deemed to have been met in so far as payment of fees is concerned.

location.

MOB2

Access to DIO staff during mobilisation

The Authority shall provide access to DIO teams for Named Contractor leadership meetings/briefings to facilitate integration.

Strategic and Operational Requirement

Commencement Date

Effective Date

If no access has been permitted then the Effective Date will be deemed to have been met in so far as payment of fees is concerned.

The Contractor will submit a communication plan with dates that the Named Contractors will wish to hold leadership meetings/briefings.





IIP1 Access to HRMS

The Authority shall provide access for the Contractor’s relevant staff (Named Contractors and potentially Contractor Personnel) to HRMS systems and data.

Line management requirement and Transformation requirement.

Effective Date

Expiry Date

The Authority will not deem that the Contractor has failed to fulfil the STTP Milestones related to Workforce planning as set out in section 31.1 of Part 2 of Schedule 3, reference Milestone TR7

The Authority will provide the Named Contractors with their login details to their HRMS profiles by the end of the first month of the Mobilisation Period. These profiles should be configured to reflect the individual line management responsibilities of each Named Contractors. The Contractor will advise the Authority by the end of the second month of the Mobilisation Period of any outstanding issues with these profiles, and the Authority will complete all remedial





action to ensure the profiles are fit for purpose by the end of the Mobilisation Period.

IIP2 Authority supply arrangements

The Authority shall allow the Contractor to, either directly or via the Authority’s Representative, act as the Authority’s authorised person in its supply arrangements subject always to any Letter of Delegations and acting within Authority Policy, Rules & Guidance.


Effective Date

Expiry Date

Any failures by the Named Contractors against the KPIs due to the inability to act on behalf of the Authority for supply will be discounted when calculating the Service Deductions.

Appropriate Letter of Delegation to the CEO Named Contractor.

IIP3 Military

The Authority (via military personnel centres) shall

DIDO can rely on military

Effective Date

Expiry Date

Where there is a significant

Back filling gapped posts with civilians on





Service Personnel

provide the military personnel per the manning levels in the EOM (or as amended as with the Authority’s agreement as part of the short term Transformation Plan and as set out in Part 10 of Schedule 3 and the Letters of Delegation shall allow Named Contractors to manage the performance of the military personnel within DIDO subject always to compliance with Authority Policy Rules and Guidance.

personnel availability in broad terms without the staff being withdrawn and leaving DIDO to challenge of filling posts without a corresponding RDEL budget

shortfall relative to the planned military staffing levels the Contractor may apply for KPI relief or Base Case adjustment as appropriate, providing it can evidence an impact.

temporary placements and, only when all other avenues have been exhausted, use of the Contractor’s own personnel and/or resources

IIP4 Pay and Discipline

The Authority shall pay any military personnel within DIDO (including travel and expenses) and any employment costs.

Clarity that DIDO does not pay military staff

Effective Date

Expiry Date

Not applicable Not applicable





IIP5A Smart Procurement

In respect of pan government or pan-MOD contracts, the Authority shall permit DIDO (and the Contractor) access to the details of contracts and access to the appropriate commercial team for example the Crown Commercial Service (CCS) and/or the wider Authority in respect of procuring utilities and energy.


Effective Date

Expiry Date

Not applicable. The Authority (DIGA or MOD Commercial) shall at its own behest or at the request of the CEO of DIDO, notify the CCS of this change and ask them to cooperate with DIDO.

IIP5B Historical spend data

The Authority shall provide access rights to the Contractor to the historical expenditure data for example in order to verify utilities billing data.


Effective Date

Expiry Date

Not applicable The Authority will provide the Contractor confirmation that it will permit access to the historical utilities billing data by the end of the first month after the Effective Date.





IIP6 Freedom of Information and PQs

The Authority will ensure that all requests received by it and that DIDO is required to answer shall be handed on to DIDO promptly to enable responses to be prepared in good time to meet the KPIs and where information is held by itself that is required to give a complete answer to the question that it shall share such information

Compliance with legislation and avoids confused accountability

Commencement Date

Expiry Date

Relief to KPI 36 Use of permitted extension of time and if the Parties discover that a request has been flagged in the internal communication chain then the Contractor will direct DIDO Personnel to prioritise the response.

IIP7 Authority Hire/Leased Vehicles

The Authority will allow and facilitate Named Contractors and Contractor Personnel to use hire/leased vehicles under the MOD Phoenix (or its successor) contract for DIDO related activities subject always to Authority Policy

The management fee and incentive fees do not include payment of these costs

Commencement Date

Expiry Date

Where a Phoenix (or its successor) contract hire/leased vehicle is not available the Contractor shall

Use of Contractor leased vehicle or private vehicle.





Rules and Guidance. For the purposes of which, the Contractor Personnel and Named Contractors shall be deemed to be Authority employees and shall be treated as such with regard to:

a) costs incurred under the MOD Phoenix (or its successor) contract;

b) the requirement for insurance and liability for any uninsured losses;

c) reimbursement of incidental expenses incurred

in accordance with Authority Policy Rules and Guidance.

be entitled to recover its expenditure from DIDO (which will have avoided the Phoenix (or its successor) cost).





IIP8 DII UADs, printers and scanners

In respect of the Named Contractors and Contractor Personnel, the Authority (through its MOD wide contract) shall make available the use of DII (or its successor) or UADS, printers and scanners and shall be responsible for refreshing and maintaining such DII computers, including any consumables with such costs being met by DIDO.

Mandatory requirement

Commencement Date

Expiry Date

Any resultant impact will not be deemed a breach of the Contractor’s obligations.

Access to data within the DIDO IMS will be via a DIDO employee subject to compliance at all times with Authority Policy Rules and Guidance.

IIP9 Facilities Management

The Authority (DIDO RDEL budget) shall meet all costs associated with the Contractor occupying Authority locations for the purposes of this Contract only as set out in paragraph 1.7 of Part 8 of

Saves double handling of costs.

Commencement Date

Expiry Date

None. Included here for clarity that the Contractor is not providing their own office

n/a as part of the DIDO BCP managed by the Contractor.





Schedule 3 solution.

IIP10 Health and Safety Records

The Authority shall permit DIDO access to health and safety records including those held by the military where DIDO is dependent on access to ensure the safety of personnel, for example any COSHH records held by the Army for Contractor occupied premises.

Needed to ensure Contractor staff work within Authority safety processes

Commencement Date

Expiry Date

Relief from KPIs 28 and 29 where causality is reasonably evidenced.

Contractor to procure that DIDO identifies any access issues that it has been unable to resolve itself without the support of DIGA intervention.

IIP11 Hosting Support Desk

The wider Authority shall provide rights for the Contractor to access technical support helpdesks for hosting, DII and telecoms in respect of its Named Contractors and where appropriate Contractor

Atlas and DFTS need to know that Contractor staff are authorised users

Commencement Date

Expiry Date

It is envisaged that this may have a delay on Mobilisation and Transformation activities only.

Authority DR/BC plans apply





Personnel.

IIP12 Insurance and Claims

In respect of DIDO activities, the Authority (through its RDEL or CDEL budgets for DIDO) shall be responsible for all accident or professional indemnity claims and uninsured losses including property damage. For the avoidance of doubt, nothing in this Authority Dependency is intended to affect the Contractor’s obligation to maintain insurance in respect of its own activities in accordance with Clause 25.

The scope of the Contractor does not include management of claims or insurance provision for DIDO (per MOD Policy)

Commencement Date

Expiry Date

In respect of any uninsured loss of greater than £50m the Base Case will be upwardly adjusted.

n/a

IIP13 Interfaces

The Authority shall maintain provide the ICT hosting, file servers, network and interfaces

The IMS and Atlas Hosting and network are

Commencement Date

Expiry Date

The Authority shall not be entitled to

The Parties should periodically check with the part of the Authority





so as to allow DIDO and the Contractor to use the DIDO IMS and for example if any serving military staff who are part of DIDO need to access the Joint Personnel Administration system for their pay and allowances they will be able to do so.

all part of separate procurements not within the gift of the Contractor to manage.

terminate the Contract for Contractor Default where such a default has been caused by a failure to provide the Authority Dependencies. The Contractor may request relief from any impacted KPIs.

responsible for these contracts to make sure that DR and BC are robust and have been tested so as to mitigate any failure risk.

IIP14 Security Approvals Process

The wider Authority's DSAS accreditors will continue to provide statements of permitted derogation from security policy for premises (broadly in line with historic

Derogation from JSP440 is required from a wider MOD DSAS

Commencement Date

Expiry Date

The Base Case will be adjusted for material changes to the existing derogations

Where the security posture changes then the Contractor will procure that DIDO liaises with the military TLB representatives to





derogations from policy.) accreditor. subject to an Impact Assessment, or alternatively the Contractor may apply for relief from the second part of KPI 37.

mitigate the impact

IIP15 Telephony

The wider Authority shall make available the telephony functionality provided under the Defence Fixed Telecommunications Service supplied by British Telecom for DIDO (and the Contractor) to use in performance of the services.

Mandated policy Commencement Date

Expiry Date

KPIs related to customer satisfaction may be given relief if the Contractor can demonstrate that DIDO was not able to meet the KPIs owing to any ‘outage’

Short term (up to 3 days) incoming call diversion to mobile phones and Contractor Personnel will use email for outgoing communications. Longer disruption to be discussed at the time.





IIP16 Training Courses / Place allocation

The Authority shall facilitate and provide access to the booking system and make available appropriate training to Named Contractors and Contractor Personnel where such training is required by the Contract (for example during the Mobilisation Period) and thereafter shall continue to allow DIDO (and the Contractor) to access wider Authority training.

Mandatory requirement

Commencement Date

Expiry Date

During the Mobilisation Period the Authority shall waive any impacted requirement in respect of Clause 3.18 and after the Transformation Period shall give relief in respect of KPI 31 (Mandatory Training)

Course to be completed as soon as an alternative date becomes available after the Effective Date. If this is not possible then the Parties will discuss in good faith the appropriate remedial action.

IIP17 Travel The wider Authority shall provide access to the Defence Travel portal.

Saves double handling expenses and ensures that

Commencement Date

Expiry Date

Not applicable as cost impact only.

Contractor permitted to make its own travel arrangements and re-charges costs to the





Named Contractors are treated the same way as their Authority counterparts

Authority

DIDO Finance

Financial Control

The Named Contractors shall have access to appropriate financial reports showing details of DIDO’s; Control Totals, budgets, forecasts, committed expenditure, actual expenditure and income, such reports to be available on a monthly basis or more frequently if requested and shall be a true reflection of the transactions that have been input into the underlying

Need for Contractor to monitor Control Totals for cash RDEL and CDEL in accordance with Clause 14

Effective Date

Expiry Date

The Contractor shall be relieved from liability under the indemnity in Clause 14.17 to the extent that costs incurred by DIDO are not accurately reported by DIDO’s finance systems.

The Contractor will work with DIDO to implement financial reporting systems/procedures within DIDO in accordance with best commercial practice






systems.


SCHEDULE 26

TEMPLATE LETTER OF DELEGATION

Dear [Name]

LETTER OF DELEGATION

Introduction

1. As the Top Level Budget Holder for the Defence Infrastructure Organisation (DIO), I am responsible for the delivery of a range of outputs, directly related to the MOD’s infrastructure requirements. To discharge my responsibilities, the Permanent Under Secretary (the MOD’s Principal Accounting Officer) has delegated to me a range of financial and other authorities. A copy of PUS’s letter of delegation to me is enclosed.

2. The purpose of this letter is to delegate to you specific authorities to enable you to deliver the outputs for which you are accountable, consulting me as appropriate when significant challenges or opportunities arise. You will be accountable to me for the use and management of these delegations, as set out in the delegation matrix enclosed.

3. In your role as Chief Executive you are responsible for the delivery of the agreed outputs of DIDO.

4. Whilst you must exercise discretion, set appropriate limits and follow government and Departmental guidelines, I encourage you to sub-delegate your authorities to the maximum extent consistent with sound management, and within the limits I have set. Sub-delegation must be undertaken formally in writing to named individuals, who are to acknowledge receipt and confirm that they understand the terms and extent of their delegated authorities. You will ensure that a copy of all letters of delegation (down to B1 appointment) is provided to the Deputy CFO as they are agreed.

Conduct of Business

5. In delivering those outputs, you need to recognise the distinction between the authority to approve new expenditure, and the authority to execute approved expenditure within your issued Control Totals.

6. You are personally accountable to me for: a. Delivering your directed outputs and targets as effectively, efficiently and

economically as possible, while remaining within your issued Control Totals. You are responsible for ensuring that any direction you give is within your delegated authority, and has the appropriate approval in place;



b. Executing the responsibilities and delegations set out at in the attached delegation matrix;

c. Ensuring that publicly funded assets and other resources are used only in the public service and that a clear distinction is maintained between public and non-public funds; if in doubt you must consult the Senior Finance Officer (SFO) of DIDO; and

d. Ensuring rigorous adherence to MOD’s zero tolerance policy on fraud, theft, corruption and irregularity.

7. You are responsible for supporting me in ensuring that the systems of internal

control and business risk management across DIDO are operating efficiently and effectively. Systems of control should ensure: a. The reliability and integrity of financial and operating information and the

means for capturing and reporting such information;

b. Compliance with policies, plans, procedures and regulations;

c. The safeguarding of assets from loss or theft and ensuring that all losses are reported and investigated to prevent any recurrence;

d. The economic and efficient use of resources and the achievement of value for money; and

e. Effective corporate governance, risk management and assurance.

Financial Approvals & Financial Delegations

8. When exercising your approval authority, you must comply with the DIDO and IAC Control Framework, including development and scrutiny of robust business cases.

9. You are to ensure that expenditure is committed or incurred only in accordance with the delegated financial authorities set out in this letter and the associated guidance material, and through the advice of the SFO. You are fully accountable for decisions taken within the scope of these delegations.

10. You have authority to execute the delivery of approved contracts, pay bills, recover costs, make low value purchases through the use of the Government Procurement Card (GPC) mechanism, and approve expenditure against your outputs up to your agreed Control Total, and in line with agreed outputs and targets. I recognise that you will be required to commit expenditure beyond the financial year prior to formal agreement of your subsequent annual budget and you have the authority to do so. You should base your decision on your current issued Control Totals and recognising any future spending restrictions. If you



have any concerns in this area you will discuss the situation with me prior to making the commitment.

11. You are to provide a monthly statement of expenditure and a forecast of outturn for the full year covering all aspects of expenditure within DIDO to the SFO in accordance with In Year Management Instructions issued by Defence Resources and the SFO.

Financial scrutiny

12. When exercising your delegated authority, you must ensure that: a. All expenditure is consistent with the HM Treasury document ‘Managing

Public Money’, including the requirement to conform to International Accounting Standards, and relevant MOD guidance1;

b. The costs incurred can be met within existing budgetary limits issued to you as a result of the Annual Budget Cycle, and, in particular, that Control Totals (as adjusted during the in-year management process) are not breached;

c. You have approval2 from the appropriate approving authorities, including Ministers where necessary;

d. You have complied with the current Cabinet Office / Efficiency Reform Group (ERG) controls3; noting that these controls are subject to regular change; and

e. Any issues relating to the use of public funds which risk conflicting with legislative requirements, HMT’s Managing Public Money or other HMT guidance, or are novel or contentious or raise issues of financial principle which are outside your delegated powers, must be raised with the SFO.4 You do not have the authority to make any commitment until that advice has been received and the commitment has been authorised.

f. All expenditure proposals and proposals to generate income must be subject to financial scrutiny against the criteria of regularity and propriety, value for money, and affordability and be carried out in accordance with the letter of delegation provided by DG Fin to the SFO of DIDO.

1 In particular JSP 462 – Financial Management Policy Manual, JSP 472 – Resource Accounting Policy

Manual and JSP 368 – Guide to Repayment, JSP 507 – Investment Appraisal Guidance 2 Approval categories and levels of expenditure are set out in the SMART Approvals guidance issued on behalf

of the IAC and within the DIDO Control Framework. 3 Cabinet Office – Guidance on Actions & Processes – Version 3.1 dated June 2012 – Source

http://www.cabinet-office.gsi.gov.uk/guides.htm. 4 See JSP 462 – Financial Management Policy Manual (Chapter 3) for guidance.



The SFO is responsible for ensuring compliance with the guidance. Proceeding with expenditure proposals which fail to satisfy the criteria of regularity and propriety, value for money and affordability, or proceeding with novel or contentious proposals without seeking the necessary HM Treasury clearance, may be considered an abuse of financial authority and may result in formal disciplinary action. If in doubt, you must seek advice from the SFO.

Delegated Staffing Authority and Complementing Powers

13. Your civilian workforce is an essential element of the resource available to you in support of the delivery of your outputs and key targets. You will be supported by the DIDO Civilian Workforce Advisor.

14. You will wish to note in particular that: a. You have been delegated the authority to recruit into all civilian posts

within the agreed organisational design for DIDO. However, you have no authority to commit to external recruitment without the approval of the SFO, in line with Departmental policy.

b. You have the authority to create and abolish posts, re-grade existing posts and/or change the grade mix (up to and including Pay Band B) – subject to remaining within your resource control total and acting in accordance with the limits of your delegated complementing powers as set out in JSP 462. In exercising your authority you must observe the principles and standards as laid down in the Civil Service Management Code.

c. You have the authority to manage your civilian workforce in accordance with all the relevant Civil Service and Departmental regulations, UK employment legislation and, in the case of Locally Engaged Civilians (LECs) and UK Based Civilians serving overseas, local employment law and other legal provisions or binding arrangements.

Delegated Commercial Authority

15. You have the authority to execute contractual commitments from the resources available within your issued Control Totals. However the authority to enter into any arrangement, in whatever form, which places a commitment upon the MOD such as placing, amending contracts, or dealing with claims arising, can only be exercised by staff holding written authority from the MOD Commercial Director through DIDO Hd Commercial. This letter does not convey any commercial authority. Any sub-delegations you make should ensure you maintain complete clarity and separation between financial authority and Commercial authority.

16. Contracts or arrangements that have been negotiated on a pan-Government basis to secure best value for money for the public purse must be used by all procurement staff as the default option. In exceptional circumstances, where



an alternative source has been identified and considered to provide better overall value for money for the Department, an exemption may be sought. You should seek the advice of DIDO commercial staff as soon as you have identified a requirement in order that they can advise on the most appropriate Contracting route.

Business Continuity 17. You should ensure that appropriate Business Continuity plans and processes

are in place to manage the risks associated with the continuation of business5 in your area of responsibility. The SFO is the senior responsible person for Business Continuity in DIDO.

Parliamentary & Public Business, Advice to Ministers and Presentation

18. In exercising your duties, you should be mindful of potential parliamentary, political, policy and presentational issues and the interests of other government departments and should ensure that Departmental instructions, guidance and standards in this area are adhered to. Where necessary the SFO should be consulted for clarification and assistance.

Freedom of Information and Data Protection

19. In the event of a request under the Freedom of Information Act 2000, you should provide the information requested accurately and within the time constraints allowed as guided by the SFO.

20. You should ensure that the processing of information relating to individuals (both Service and civilian), including the obtaining, recording, holding or use or disclosure of such information within DIDO, complies with relevant guidance.6 The Chief Information and Process Officer (CIPO) has been appointed as Data Protection Officer, Chief Information Officer and Senior Information Risk Owner (SIRO), and is the principal TLB source of authoritative advice on this issue.

Health and Safety

21. Responsibility for the provision of a safe working environment rests with us all. Wherever DIDO staff or their contractors are employed they are required to follow the site H&S rules and requirements at all times, and where DIDO is the Hd of Establishment appropriate arrangements should be set in place and rigorously applied. This in no way removes the duty of care from the chain of at command all levels and their obligations in respect of the Health and Safety at Work etc Act 1974 and associated legislation. The SHEP requirements for

5JSP 503: Business Continuity Management. 3rd Edition 6 Data Protection Act 1998 and JSP 400 Disclosure of Information


http://defenceintranet.diiweb.r.mil.uk/DefenceIntranet/Library/CivilianAndJointService/BrowseDocumentCategories/ManComm/CorporateGovernance/BusinessContinuityPlanning/Jsp503BusinessContinuityManagement3rdEdition.htm

http://defenceintranet.diiweb.r.mil.uk/DefenceIntranet/Teams/BrowseTeamCategories/Orgbased/DirectorateOfInformationExploitationAccessadInfoexp-access.htm

http://defenceintranet.diiweb.r.mil.uk/DefenceIntranet/Library/BrowseDocumentCategories/Legal/UkLegislation/DataProtectionLegislation/JSP400DisclosureofInformation.htm


DIDO posts are set out in the CE’s SHEP Organisation & Arrangement Statement.7

22. In the case of multi-occupier sites, the lead unit, normally the headquarters or the largest unit, is to set up arrangements to ensure that there is co-operation between the lead and all lodger units, including contractors. The safety and environmental protection command and control arrangements will normally follow those of the lead headquarters or unit. Arrangements are to be covered by formal letters of agreement for each such site.

23. I have copied this letter to the Senior Finance Officer and will publish it, and any subsequent amendments, on the DIDO Intranet. All subsequent letters of delegation to SCS and military equivalents that you issue will also be published.

24. Finally, you should write to me to confirm that you understand the terms and extent of your delegated authorities and the accountability that they entail.

Yours sincerely,

TLB Holder

7 Safety Health & Environmental Protection (SHEP)




RECEIPT OF LETTER OF DELEGATION

1. I, [Name] acknowledge receipt of my personal letter of delegation dated [xx 2014] from [TLB Holder]. This delegation is to the value specified and is valid only whilst I hold my present post.

2. I confirm that I have read and understood my letter of delegation.

SIGNED …………………………………………………………………………..

NAME …………………………………………………………………………..

DATE …………………………………………………………………………..

When completed please return to:

[xxx]