Channel trepidation over contract ruling

Public-sector VARs are bracing themselves for a showdown with the Office of Government Commerce (OGC) over the final version of controversial contract guidance that is due for release next month.

Government IT suppliers are fearful that the new guidance, which the OGC signed off last week, will burden them with a disproportionate share of the responsibility for failure in future government IT contracts.

Nick Kalisperas, government IT head at trade body Intellect, said: "We would like contracts that are equitable between buyers and suppliers [and] facilitate a spirit of partnering, rather than confrontation."

Rosemary Mulley, IT disputes lawyer at Nabarro Nathanson, said the last published draft of the Ts&Cs treated suppliers unreasonably. "It's not usual practice in the industry," she said.

Unless the OGC concedes to concerns it has received in consultation, contracts will saddle suppliers with conditions such as clause SS5, Remedies in the Event of Inadequate Performance.

This includes provisions that give customers the right to deduct damages from payments due to suppliers, get a third party to finish the project and charge the costs to the original supplier.

Clause SS5 replaces common-law provisions with others that are not realistic, said Mulley. It looks like a "transference of risk onto the supplier", which could cause disputes, she added.

"If things are going badly it is usually because something's not being done right on both sides," Mulley said. "The main reason we get disputes over IT projects is not the absence of these sorts of provisions in the Ts&Cs."

The reason for nine out of 10 IT disputes, Mulley said, is contracts that fail to specify adequately what the customer wants.

Kalisperas said industry concern with the new contracts does not hang on the working of any single clause, but on how the entire document is interpreted.

A representative of the OGC said all public-sector buyers will be expected to follow the final contract guidance in November. "We've been taking advice from departments and the industry on board," he said.

Paula Sussex, head of government business at VAR Atos Origin, which took part in the original consultation with Intellect and the government, told CRN she "supported" Intellect's position.

crn@vnu.co.uk