HOT TOPICS IN PFI/PPP PROJECTS - PART 1: CHANGE OF LAW IN THE CONTEXT OF CHANGES TO FIRE SAFETY LEGISLATION - Addleshaw Goddard LLP
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HOT TOPICS IN PFI/PPP PROJECTS PART 1: CHANGE OF LAW IN THE CONTEXT OF CHANGES TO FIRE SAFETY LEGISLATION 12 November 2020
INTRODUCTION
Erin Shoesmith Stephanie Townley
Partner Legal Director
Global Investigations Infrastructure, Projects & Energy
Sarah Wilson Sally Friswell
Managing Associate Associate
Construction, Engineering & Environment Arup’s Fire Team lead, Midlands
AGENDA ● Change of Law provisions in standard form PFI/PPP contracts ● Changes to fire safety legislation and practical implications of the same ● Application of those changes in your PFI/PPP projects ● Other examples of a Change of Law ● Questions
WHY DOES CHANGE OF LAW MATTER IN PFI/PPP? 1. Compliance with the Contract in long term contracts 2. Health and Safety of users and residents of the facility 3. Certainty 4. Avoid Disputes
WHAT IS A CHANGE OF LAW?
“Change in Law” means the coming into effect after the date of this Contract of:
(a) Legislation, other than any Legislation which on the date of this Contract has been
published:
(i) in a draft Bill as part of a Government Departmental Consultation Paper;
(ii) in a Bill;
(iii) in a draft statutory instrument; or
(iv) as a proposal in the Official Journal of the European Communities,
(b) any Guidance, or
(c) any applicable judgment of a relevant court of law which changes a binding precedent.
“Legislation” means any Act of Parliament or subordinate legislation within the meaning of
Section 21(1) of the Interpretation Act 1978, any exercise of the Royal Prerogative, and any
enforceable community right within the meaning of Section 2 of the European Communities Act
1972, in each case in the United Kingdom.
Definition: STANDARDISATION OF PFI CONTRACTS – VERSION 4 - March 2007
IMPACT AND COST CONSEQUENCES
● Impact of a Change in Law:
Alterations to the structure of a building
Change to how Services are provided
● Category of Change of Law:
Discriminatory
Specific
General
● Cost liability:
Sole Authority Risk – Discriminatory and Specific
Sole Contractor Risk – Rare – some MOD Projects
Shared Risk – GeneralCOST SHARING – GENERAL POSITION ● Capital Expenditure – shared on a progressive scale ● Capital Costs – Contactor’s Risk (although this does vary and Authorities were advised to consider cost benefit of Authority taking the risk) ● Operational Costs – Generally Contractor’s Risk with changes to Services being applied through the Change Protocol
THE CHANGE OF LAW PROCESS – STEP 1 – NOTIFY AND AGREE
● Consider the Change in Law and impact on the Services
● Notify the other Party of the change and:
(i) any necessary change in Service;
(ii) whether any changes are required to the terms of this Contract
(iii) whether relief from compliance with obligations is required
(iv) any loss of revenue that will result
(v) any Estimated Change in Project Costs
(vi) any Capital Expenditure that is required or no longer required
● Discuss and agree these items and mitigation of costs
● If agreement cannot be reached then the issues should be
determined via the Dispute Resolution ProcedureTHE CHANGE OF LAW PROCESS – STEP 2 – FUND AND DOCUMENT Once Agreed or Determined: ● Apply the relevant cost sharing provisions to each element of cost associated with the changes; ● Project Co to obtain Funding for additional capital expenditure ● Apply changes to the Unitary Charge if required ● Document all changes to Project Document accurately ● Implement the Changes
'BUILDING A SAFER FUTURE' THE BIGGEST CHANGE IN BUILDING AND FIRE SAFETY FOR A GENERATION Erin Shoesmith Partner, Global Investigations 12 November 2020
TALKING POINTS ● Background behind the changes ● The Fire Safety Bill ● The Building Safety Bill ● Alignment
BACKGROUND
14 June • The Grenfell Tower fire.
2017
16 May • Publication of the Hackitt report which set out over 50 recommendations.
2018
6 June • The Government published the 'Building a Safer Future' consultation.
2019
30 Oct • The Grenfell Tower Inquiry published its Phase 1 report.
2019
19 • The Government published the drafted Fire Safety Bill.
March
2020
April • The Government published its response setting out plans. New measures are designed to incentivise compliance
2020 and to better enable the use of enforcement powers and sanctions.
20 July • The Government published the draft Building Safety Bill.
2020
July –
• Alongside the Building Safety Bill, the Government conducted a consultation to seek views on proposals to
Oct strengthen the Regulatory Reform (Fire Safety) Order 2005
2020
The biggest change in building safety for a generation to ensure residents are safe
in their homes.
Housing Secretary Rt Hon Robert Jenrick MPTHE FIRE SAFETY BILL
The fire safety consultation,
published alongside the draft
This includes
Building Safety Bill, is key part Responsible
person to assess,
cladding,
of Government’s package of manage and
balconies,
windows and
All multi occupied
residential
reduce fire risks by
individual doors buildings
reform to improve building and the structure and
opening onto
external walls
fire safety. common parts
The Home Office – October 2020
Encouraging those
Will not be
Responsible
The Government is in the process of persons to identify Consultation
dependent on the
height of the
materials and to
amending the Regulatory Reform (Fire update their FRAs
building
Safety) Order 2005 (RRO) by way of
Likely that Grenfell
draft Fire Safety Bill (FSB). phase 1 Expect that
recommendations Consultation is
will be likely to find that
● The FSB seeks to clarify the scope incorporated into
This may include
hotels
FSB should relate
legislation after the to a broader
of the RRO with a view to this conclusion of the category of
Consultation buildings
leading to better identification and
enforcement in high-rise buildings.
13BUILDING SAFETY BILL
Initially only applies to new higher risk buildings (i.e. multi occupied
residential buildings of 18m or more in height, or more than 6 storeys,
whichever is reached first)
It is likely to be extended to existing and all high risk buildings in due
course
Establish a new Building Safety Regulator within the Health & Safety
Executive
Will impose new obligations on dutyholders
Will also establish a new dutyholder regime
New roles - Accountable Person and Building Safety ManagerINTERACTION OF THE TWO BILLS
The FSB applies to all
non-domestic The BSB is limited in
buildings, new and its application to new
old, regardless of higher risk buildings
height
The responsible The accountable
person person
Fire & Rescue
The HSE
ServicesApplication of new Fire Safety Legislation to existing PFI/PPP Projects Sally Friswell Associate
Fire Safety Bill 2020
Additional responsibilities
• Regular inspections of lifts and the reporting of results to the local fire
and rescue services
• Ensuring evacuation plans are reviewed and regularly updated and
personal evacuation plans are in place for residents whose ability to
evacuate may be compromised
• Ensuring fire safety instructions are provided to residents in a form
that they can reasonably be expected to understand
• Ensuring individual flat entrance doors, where the external walls of
the building have unsafe cladding, comply with current standardsFaçade fire safety – Regulation 7 18
Facades – knowing yours 19
Building Safety Bill – New Roles
• Accountable Person
• Building Safety Manager
- Nominated individual
20Fire Safety Legislative Outlook 21
APPLYING THE CHANGE OF LAW MECHANISM TO THE FIRE SAFETY CHANGES ● Will your Project be impacted by the Fire Safety changes or is it likely to be in the future? ● If so, once implemented, these changes will be classed as a Change of Law. ● So…start early with Step 1 and be prepared! ● Remember to document the changes accurately. ● Consider how the changes will affect the rest of the Contract.
A LESS OBVIOUS “CHANGE OF LAW”
14.3 “Change in Law” means the coming into effect after the date of this Contract of:
(a) Legislation, other than any Legislation which on the date of this Contract has been
published:
(i) in a draft Bill as part of a Government Departmental Consultation Paper;
(ii) in a Bill;
(iii) in a draft statutory instrument; or
(iv) as a proposal in the Official Journal of the European Communities,
(b) any Guidance, or
(c) any applicable judgment of a relevant court of law which changes a binding precedent.
“Guidance” means:
any applicable guidance or directions with which the Contractor is bound to comply
● For example, Health Technical Memorandum Guidance (HTM).WHY BOTHER? ● Breach of Contract. ● Failure to comply can result in Deductions/ SFPs and/ or Termination. ● Avoid ambiguity and Dispute. ● Potential investigation by the regulator with the ultimate sanction of criminal prosecution.
CONTACTS
Erin Shoesmith Stephanie Townley
Partner Legal Director
Global Investigations Infrastructure, Projects & Energy
T: +44 (0)161 934 6554 T: +44 (0)161 934 6489
E: erin.shoesmith@addleshawgoddard.com E: stephanie.townley@addleshawgoddard.com
Sarah Wilson Sally Friswell
Managing Associate Associate
Construction, Engineering & Environment Arup’s Fire Team lead, Midlands
T: +44 (0)161 934 6341 T: +44 (0)121 213 3781
E: sarah.wilson@addleshawgoddard.com E: Sally.Friswell@arup.com
Join us for Part 2 in our series in December when we will be
partnering with Deloitte to explore the complex issues
around termination of PFI projectwww.addleshawgoddard.com
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