BSF, Builders and ICT - A Step Too Far?

BSF, Builders and ICT - A Step Too Far?

With the first English "BSF" pathfinder scheme in Bristol now signed, Adrian Eakin discusses some of the challenges for the ICT industry presented by the BSF approach to ICT.

BSF, Builders and ICT - a step too far?

Building Schools for the Future (BSF) is a new approach to capital investment in school buildings and ICT. Worth £2.2bn in its first year alone, it aims to ensure that secondary pupils in England learn in 21st-century facilities.

Under BSF, the relevant sponsoring Authority will appoint one successful private sector bidder to become its strategic partner over an agreed period (10-15 years) during which time the strategic partner will work with the Authority to bring new projects (construction of schools) forward for approval, then (it hopes) undertake those projects using pre-agreed standard contracts, such as PFI or D&B. The partner is not guaranteed 10-15 years' worth of projects, but it gets the "first bite at the cherry" and is required to demonstrate value for money through a combination of benchmarking and market-testing. If successful, this avoids the need for the Authority to run a new procurement for each new project, saving time and money. In a number of BSF schemes, the strategic partner is expected to arrange the delivery of a managed ICT service to schools. Apart from making school facilities fit for the 21st Century, a huge emphasis is being put on ICT to provide the pivotal and transformational engine for higher educational attainment. ICT becomes integral to the school and the "traditional" relationship between prime contractors and their sub-contractors totally inappropriate for delivering the ambitious aims of the programme.

ICT

As with most new procurement programmes, new standard form contracts have been devised. The BSF documents underwent considerable market consultation and will no doubt evolve as all projects progress. The initial draft ICT contract against which ICT contractors were required to bid included some issues not normally seen in such contracts. Whilst one of the most challenging issues relates to interface risk (discussed below), the following issues also led to some debate: ownership in the kit passing to the Authority before full payment is made; a PFI approach to force majeure but without the Authority having to pay PFI type compensation on termination; no compensation where the Authority voluntarily terminates the contract; few caps on liability; the passing of vandalism risk along the lines of a PFI contract where, broadly, the damage is assumed to be the contractor's fault except where it can show the theft/damage occurred within school hours (a difficult issue given the Authority's ownership of the ICT kit); and a complex payment mechanism calibrated to a degree that even minor degradations in performance and availability attract penalties disproportionate to the actual loss of service suffered (which arguably risks poor value for money and might deter potential ICT providers from getting involved). The final contractual treatment of many of these complex issues is hopefully to be amended in the BSF standard form to represent a more balanced approach following finalisation of the Bristol contracts.

Interface

Agreeing the contract for the management of ICT with the Authority and the strategic partner is one thing, but there are other issues. ICT contractors will in some cases be delivering kit to a school being built and then run by a PFI contractor. Access in the construction phase, working around snagging works when approaching a target date for delivery, how building materials and design could affect wireless technology, and who pays (and how much) if the builder is late handing over the school resulting in the ICT contractor's contract being shortened, are just some of the issues that need to be carefully regulated in an interface contract with the PFI contractor and its building contractor (who in turn also expect certain undertakings from the ICT contractor). There are also issues between the ICT contractor and the FM contractor such as temperature in the rooms, security of the school, maintenance of data points and availability of electricity. There is no standard document outlining these issues, it is up to private sector to think the issues through and present a workable solution to the Authority to give it comfort that detailed plans are in place to deal with all types of scenarios. Don't try this at home!

The Future

No one should be put off getting involved in BSF due to any perceived complexity. The partnering agreement, PFI and D&B contracts represent a reasonable position for contractors and are fairly well standardised. The ICT contract, whilst new, should soon become a standard document and draws on concepts familiar to those used with PPP contracts. ICT contractors should get themselves familiar with the new standard contract and talk to their bidding consortium about the type of interface issues outlined above. Whilst some of those issues may at first seem challenging, the sheer scale and volume of BSF projects should help alleviate the problem.

Adrian is a Partner in the firm's Corporate Department specialising in infrastructure and project finance. He recently advised Northgate/Sx3 on its successful bid for the Bristol BSF Pathfinder Project and is currently advising the SIB and Belfast Education Library Board on the Belfast Schools Strategic Partnering Scheme.

Adrian can be contacted at adrian.eakin@lestrangeandbrett.com

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