Dated updated:

We are being contacted by schools and Academy Trust clients who are very concerned about how to respond to the contract renewal notices they are receiving from ESS, which propose a minimum contract term of 3 years going forward. Given what appears to be an automatic renewal in the event of no response, clients must urgently review their options. We have prepared this briefing to alert clients to this issue and to invite clients who might be affected to get in touch and to participate in a webinar we are arranging for 11am on Thursday 2 December, at which we will review whether the actions of ESS may be the subject of a legal challenge.
Whilst not all schools and Academy Trusts will necessarily be troubled by the new 3-year deal, it is likely to be of particular concern to those considering migration to another supplier. However, schools and Academy Trusts cannot simply renew with ESS without complying with the public procurement rules, which all schools and Academy Trusts therefore need to consider, along with securing best value for money.  
The short notice given to schools appears to be legally questionable. This is a fast moving area, and we understand that the DfE is currently investigating, and has therefore told schools and Academy Trusts to hold off from renewing. In the meantime, from a contract management point of view, schools and Academy Trusts previously planning, and now bringing forward plans, to migrate upon expiry of the current annual contract, are feeling enormous time pressure and facing urgent procurement exercises.
Renewing a contract with effect from its expiry is not the same as modifying it during its term, and a new procurement exercise would be required, dependant on its value. The question of whether the 3-year deal amounts to a “substantial modification”, to which regulation 72 of the PCR would apply to allow modifications in certain circumstances, will depend on whether the underlying ESS contract is a continuing contract or a contract subject to renewal. The question of whether the renewal notice being on terms of a 3-year deal can be challenged, is a question to which competition law principles could potentially be applied. The answers will depend on the wording of the underlying current contract between ESS and the school or Academy Trust and the context as a whole in each case. Those arrangements are not necessarily all identical across the country, and we are exploring these issues with clients who have come forward with their concerns. This is an area where we can support clients to ensure that their interests are protected.   

Whilst we continue to find out more about these issues with our clients, we have arranged a webinar for those schools affected, to be held at 11am on Thursday 2 December, so please click here to register to attend.
We would encourage clients to get in touch if they have concerns about their particular case.
Our lead contacts at Stone King on this issue are Graham Burns, Tony Pidgeon and Eleanor Reilly