1. Purpose
The purpose of this procedure is to ensure that prior to submitting a Tender the proposed terms and conditions are appropriately reviewed in order to:
– gain an overall appreciation of the risk profile of the proposed contract
– identify any specific provisions which may be unacceptable to company and that will require amendment, clarification or negotiation
– draw these issues to the attention of the Tender Team/Senior Management in order that they may qualify, make suitable provision for and/or negotiate these provisions as part of the tender process or post tender discussions.
To ensure that prior to entering into other forms of Pre and/or Post Main Contract documentation that may legally bind the company, such documentation is subject to ‘independent’ internal review at the corporate level.
2. Scope
This procedure applies to all contracts being considered by any business unit of the company.
3. References
Contract Review Report
4. Definitions and Abbreviations
Contract Reviewer (CR): A suitably experienced person who is responsible for reviewing tender documentation in order to identify and document specific risks or opportunities (typically the Divisional Commercial Manager and Corporate Commercial Director.
Bid Manager (BM): the person with the ultimate responsibility for ensuring that the formal response to the tender is prepared in accordance with the requirements of the tender documentation and the requirements of company procedures.
Bid Team: the personnel assigned to prepare the formal tender under the direction of the BM.
MOU: Memorandum of Understanding
Other Agreements: proposed documents (other than Tender/Contract Conditions) that may legally bind the Company and which must be subject to review by the Corporate Commercial Dept as provided for herein.
PSA: Pre-contract Services Agreement
Responsible Manager (RM): A manager or Director that is responsible to ensure that a contract review is carried out
Tender: The formal written response to an invitation to submit a tender from a potential client.
Tender Documentation: the documents supplied by the prospective Client that may comprise the Scope of Work, Quality requirements, Commercial Terms and Conditions, Finance Terms etc. upon which the formal response is based.
CCD: Corporate Commercial Department/Director
5. Responsibilities
The following personnel have responsibilities mentioned in this procedure:
– Responsible Manager
– Contract Reviewer
6. Contract Review Procedure
6.1 Review of TENDER CONTRACT documentation
a) Contract documentation in respect of all tenders MUST be subject to review by a suitably experienced Contract Reviewer (CR) (typically the Divisional Commercial Manager and Corporate Commercial Director
b) When the prospective Contract Conditions pertaining to a tender are received, the Bid Manager shall ensure that a copy is forwarded to the contract reviewer. This should be accompanied by basic details of the project as well as the anticipated timetable for Start Up, Strategy, Risk Assessment and Tender Review meetings in addition to the tender closing date.
c) Consideration should also be given as to whether a legal review and /or legal advice should be sought in relation to the Contract Conditions or any specific aspect thereof.
d) The CR shall conduct a thorough review in order to:
i. gain an overall appreciation of the risk profile of the proposed contract
ii. identify any specific provisions that may be unacceptable to company and thereby require amendment, clarification or negotiation
iii. draft proposed amendments/qualifications as deemed necessary
e) The Contract Review of Tender Documentation shall constitute part of the overall document review required. Details of the review shall be recorded in summary format and categorized using Contract Review Report to identify those terms and conditions that are to be :
i. Accepted
ii. Priced in
iii. Qualified as part of the Bid, or
iv. Rejected as unacceptable.
f) On completion, the CR shall forward a copy of the review to the BM, CCD and the relevant GM prior to any meeting that is scheduled to consider such contractual/commercial issues. The BM shall distribute additional copies as appropriate.
g) The CR shall liaise with the RM and attend tender meetings as necessary in order that:-
i. issues arising from the review should be brought to the attention of the Bid Team/Senior Management
ii. any qualification, clarification and/or negotiation of the relevant provisions should be included in the tender process and in the post tender discussions as necessary
iii. the tender negotiation should benefit from the ongoing assistance and advice of the CR.
6.2 Review of Other Contract Documentation
a) All prospective contractual agreements that have the potential to legally bind the Company (essentially above the level of a standard subcontract) are to be subject to ‘independent’ internal review at the corporate level.
b) This is key risk management requirement applies, but is not limited to, the following types of documentation:
6.2.1 Pre Main Contract
i. Memoranda of Agreement (MOA) or similar
ii. Memoranda/Letters of Understanding (MOU) or similar
iii. Prospective Joint Venture/Alliance Agreements
iv. Pre Contract Services Agreements v. Consultant Services Agreements
6.2.2 Post Main Contract
i. Memoranda of Agreement (MOA) or similar
ii. Memoranda of Understanding (MOU) or similar
iii. Supplementary Agreements or similar
iv. Agreements for Alternative Financing Proposals
v. Main Contract Final Account/Settlement Agreements
vi. Agreements that purport to vary the Main Contract
a) The Initiating Manager shall alert the Corporate Commercial Dept (CCD) at the outset of negotiations in relation to any such documentation.
b) Copies of this documentation shall then be forwarded to the CCD for review, comment and advice in sufficient time to allow for this input to be reasonably provided.
c) CCD will also consider whether an external legal review and /or legal advice should be sought in relation to the proposed documentation or any specific aspect thereof.
d) CCD will provide written summaries of key commercial/contractual issues, suitability categorized in respect of importance/criticality, to the Initiating Manager, the relevant GM and other Senior Management as appropriate.
e) The CCD shall assist in any subsequent meetings, redrafting, discussions or negotiations in order to settle the documentation to protect or enhance the Company’s position.
7. Records
Contract Review Report