Contracts & Procurement: Key Information for Local Government Reform
ßÙßÇÂþ»’s Contracts During Local Government Reform (LGR)
ßÙßÇÂþ» (SCC) holds over 20,000 contracts, many of which underpin critical services. As SCC transitions into successor unitary councils, these contracts will need to be either transferred, novated, or hosted to ensure continuity of service and legal compliance post-Vesting Day (April 2027).
Main Options for Handling Contracts
There are three primary options:
- Transfer: Moving the contract to a single successor council.
- Hosting: One successor council delivers services on behalf of others via an Inter Authority Agreement (IAA).
- Novation: The contract is legally reassigned to one or more successor councils.
Criteria for Selecting Contract Handling Options
Decisions will be based on:
- Service alignment with successor councils
- Contract complexity and value
- Impact on vulnerable residents
- Market conditions
- Legal and commercial feasibility
- Data
- IT systems and architecture
Supplier Agreement Requirements
Not all changes require supplier consent. Under the 2008 Regulations, some transfers can occur automatically without supplier consent (Transfer and some hosting arrangements). However, novation will require supplier agreement and may involve renegotiation.
Importance of Section 16 Agreements
A Section 16 agreement under the 2008 Regulations allows for the automatic transfer of contracts, assets, and liabilities to successor councils. It is a key legal mechanism for ensuring continuity without needing to renegotiate every contract individually.
Risks Associated with Inaction Before Vesting Day
Deferring decisions may lead to:
- Non-compliant procurements
- Service disruption
- Out-of-contract supplier activity
- Increased legal and operational risks
Conditions for Extending Contracts Beyond Vesting Day
Extensions must be:
- Within approved governance arrangements
- Legally compliant (e.g., Section 24 consents may be required)
- Structured to allow successor councils flexibility (e.g., termination clauses)
- Contractually compliant
Section 24 and Its Significance
Section 24 of the Local Government and Public Involvement in Health Act 2007 gives the Secretary of State powers to control financial and contractual decisions made by councils undergoing reorganisation. For ßÙßÇÂþ», this means that once a Section 24 Direction is issued, the Council must obtain consent from the designated successor council(s) before entering into certain contracts or financial commitments.
Approach to Managing Large-Scale Contract Transfers
- Engage with the LGR Contracts & Procurement team
- Review contracts due to expire before April 2027
- Identify high-risk or high-impact contracts and prioritise them
- Prepare for early market engagement and supplier communication
- Ensure contract data is up-to-date in the central repository
- Record initial decision on vesting of contracts
Inheritance of D&B’s Contracts
Successor councils will inherit contracts through the Section 16 agreement by way of transfer.
Post-Vesting Day Contract Management
Successor councils will inherit contracts based on the agreed transition strategy. They may renegotiate, terminate, or continue contracts depending on their strategic priorities and service models.
Management of Supplier Communications
Generic supplier communications will be issued via the LGR Contracts & Procurement Workstream in conjunction with the Communications workstream. Where directorates have indicated a preference for direct supplier communication, these will be handled by the directorate using the generic communications message as a guide.
Location and Recording of Contractual Data
All contractual data will be held in the Contracts Management Hub; access can be granted through the LGR Contracts & Procurement Workstream Team (Lee Lawrence).
Support and Advice Contacts
Contact the LGR Contracts & Procurement Workstream Team for guidance on contract transition planning, legal implications, and procurement strategy.