It goes without saying that the NHS is at the forefront of addressing the Coronavirus outbreak. Of course, the NHS relies on thousands of different suppliers to provide it with equipment to function properly, and those businesses are likely to be affected by the current situation in many different ways. Because of this, I thought it sensible to provide some brief thoughts for businesses who are subject to the NHS framework.
Firstly, if you have not already, check your Business Continuity Plan (BCP). Not only is this a very sensible thing to do right now, it should also make reference to your insurance and any force majeure clause. If you are struggling to provide a product or service, you will need to demonstrate that not only is this event a force majeure, but that you have a BCP in place and have managed your risk appropriately.
The good news is that in the NHS Framework Agreement and the call-off terms and conditions, force majeure is given a wide definition. It covers :
“…Any event beyond the reasonable control of the party in question to include, without limitation:
(a) war including civil war (whether declared or undeclared), riot, civil commotion or armed conflict materially affecting either Party’s ability to perform its obligations under this Framework Agreement;
(b) acts of terrorism;
(c) flood, storm or other natural disasters;
(e) unavailability of public utilities and/or access to transport networks to the extent no diligent supplier could reasonably have planned for such unavailability as part of its business continuity planning;
a failure in the Supplier’s and/or Authority’s supply chain to the extent that such failure is due to any event suffered by a member of such supply chain, which would also qualify as a Force Majeure Event in accordance with this definition had it been suffered by one of the Parties…”
This tells us that it should be possible to persuade an NHS customer that the interruption in supply is genuinely beyond your reasonable control. The list of events highlighted above is by no means exhaustive. So, the fact that Coronavirus is not explicitly stated does not mean it cannot be a force majeure event.
If you do need to inform the NHS of an event which is preventing normal performance, it is crucial to address five distinct steps. They are:
1. Show that the event falls within the force majeure definition.
2. Show that the event has actually impacted you, preventing you from performing that specific obligation you are seeking to be relived of.
3. Show you’ve fulfilled your BCP obligations. These are set out in clause 6 of the Framework Agreement.
4. Demonstrate that you have not been wilful or negligent in any way that may have indirectly given rise to the force majeure event.
5. Show you have followed the procedural steps set out in clause 23 of the Framework Agreement.
The last point is specifically where your BCP comes into play, because, as a supplier, you are obliged to have a BCP that will provide continuity during a business continuity event. For the avoidance of doubt, a business continuity event includes any event or issue that could impact on the operations of the Supplier and its ability to fulfil its obligations under this Framework Agreement, including an influenza pandemic and any Force Majeure Event. Again, for the avoidance of doubt, we realise that the Coronavirus pandemic is not classified as an influenza pandemic.
We very much hope to see a policy statement from the NHS soon on how it will interpret these provisions so that suppliers do not have to adopt a case-by-case approach. But, in the absence of that, suppliers may want to apply the checklist above as their starting point prior to engaging with the NHS.
It’s safe to say that things are moving quickly right now, so being ready to react is crucial. But by following these steps an thinking about the questions they raise you will be well placed to have constructive discussions with your customers. I should also say that this guidance is not legal advice. It merely summarises the steps and issues that may need to be taken into account. Please always seek the advice of professionals on your own situation.