UK Partnerships Hub – Hand Back Panel
Negativity in Handbacks doesn’t have to be a self-fulfilling prophecy
Last week, we discussed our contribution to the recent UK Partnerships Hub, an event engaging influential private and public sector PPP infrastructure stakeholders in debate on key industry issues.
While infrastructure projects necessarily focus on a plethora of complexities, details and practicalities, one common and fundamental theme of the dialogue was the ongoing commercial partnerships they are built on and the human relationships they depend on.
The Net Zero transition panel, which included Invesis Project Director, Edward Thompson, and its conclusions (you can about read it here) focused on attitudes, trust and cooperation as much as any technical requirements. The same can be said of the panel considering the handling of hundreds of upcoming project hand backs.
That panel was invited to discuss five of DLA Piper’s 10 recommendations for successful delivery, including aspects of future procurement policy and the lender role, establishing a Dispute Resolution Council and a Sustainability Working Group. But, according to Iain Harris, Head of UK Concessions (UK) at Invesis, “the “People Charter” had the most significant impact of all and sparked a healthy discussion.”
Change brings opportunity
There are numerous projects coming to the end of their contracts and over a period of several years, there will be heavy concentration on the minutiae of what each partner signed up to under the relevant terms and conditions agreed at contract close. At the same time, those terms and conditions could not take account of everything that has changed since they were drafted. In the last 30 years, technology has changed, the needs of individuals have changed, Brexit happened, Covid-19 happened and sustainability has raced up the agenda.
There is actually an opportunity here for private parties to show commitment to communication and collaboration with their public sector partners, right to the end of these contracts, with a view to making adjustments so that the most useful and suitable asset is handed back when the time comes.
The risk of the new
Yet, there is also a broad concern that the sheer volume and complexity of the hand back landscape and the new process it represents, generates the potential for substantial disagreements and litigation. But that negative outlook risks creating a self-fulfilling prophecy. While it is naïve to suggest that there will not be difficulties and disagreements, it is clear that it does not have to be the lasting legacy.
The panellists noted though, that a current lack of resource, with the teams set up at the outset no longer in place, and a damaging loss of expertise, does not make the job of leaving a positive impression any easier.
With one or two hand backs already setting an acrimonious tone in what may already be viewed as a non-growth industry (despite the critical role private investment will need to play in driving the energy transition across the net zero line, for example) fresh talent is not currently speeding into the industry.
Conversely, leaving well-realised projects with well-informed public parties can not only deliver useful utilities, but a pathway to potential future commercial relationships and an attractive environment for a new workforce.
Uncertainty does not have to bring chaos
There was absolute acceptance by the panel that public authorities are entirely entitled to check that the contract obligations, of which there may be hundreds in each project, have been met. But the panel emphasised the need for sensible collaboration and discussion here, understanding that responsibilities, methodologies and targets may have evolved and for working within the bigger picture of a smooth handover.
In short, what is required is commercial common-sense with ethical and accountable dealings undertaken in good faith. Given that the hand back provisions for these decades-long, multi-party, huge-value, and operationally-elaborate contracts generally run to just a few paragraphs, or a few pages at best, there is certainly scope for rational and balanced solutions when conflicts arise.
Where that is not the case, there is even a case to make public the results of adjudicated disputes, particularly when particular issues start to arise regularly, as a method to allow parties in other contracts to take insights on how to manage their similar situation without negative fall-out.
Working together sensibly and professionally – for now and the future
Invesis has already been at the forefront of hand back success with the A59 motorway, the first motorway in the Netherlands to be established as a Public-Private Partnership between the government and a private company. The A59 was successfully handed back in December 2020 after an 18-year concession. Discussions on handing back the concession to the client started nearly 5 years ahead of the concession end date and appropriate planned maintenance was carried out in 2020 to ensure the quality of the road when handed back was of a high standard.
Thanks to the flexibility of the Invesis team, the East Ayrshire Community Hospital was acquired by NHS Ayrshire and Arran in 2021, four years before the originally contracted date in 2025. The Trust wished to voluntarily terminate the agreement, to re-purpose the hospital to serve the future care needs for the people of East Ayrshire. Exiting the contract early was not possible, however, Invesis did find an innovative solution to allow the Trust to take control. The council praised the role played by Invesis both in the hand back process and in the 21-year partnership.
We believe that the best results will be achieved when all stakeholders in the hand back process focus on facilitating the ongoing usage of quality infrastructure for future generations.