Leisure services outsourcing – time for a refresh

Authorities involved with the outsourcing of leisure services provision will be aware that the standard template contract used, which was drafted by Sport England, is now quite old and possibly not fully fit for purpose.

Sport England have taken these issues on board and have commenced a process to revise and issue a new form of standard contract. Consultant, Stephen Pearson recently attended a contract consultation event with representatives from other law firms active in the field, acting for both leisure services providers and for Local Authorities. 

It looks like the revised form of contract may still be a year or so away, but the consultation event was useful, and there are a number of key issues which we do expect to be taken on board within the new contract. In particular, these include:

• The contract was widely perceived to be out-of-date when the Covid Pandemic occurred. Accordingly, we expect there will be comprehensive wording concerning: 
  • the definition of “Pandemic or Epidemic”
  • how it should be treated
  • what relief and obligations will be given; and
  • what entitlement there might be to compensation and how long this might continue for
• A lot of local authorities are now going down the route of entering into an “agency” relationship with their leisure services provider which, amongst other things, provides substantial advantages in terms of VAT treatment. It is expected that the new contract will adopt a “modular” approach with provisions that can be inserted when an agency relationship is used.
• It was felt that the current contract which is partly based on an old PFI standard form is lengthy and complex plus some of the drafting is dense making it difficult to understand. Accordingly, there is a hope that simpler drafting will be inserted, particularly covering provisions such as: 
  • TUPE and employment indemnities
  • change protocols; and
  • compensation to an operator for competing facilities sponsored by an authority

The current contract incorporates a form of lease with respect to each facility. It is considered that, potentially in an agency situation, a licence document might be adequate, and these provisions are being looked at.

The contract will have guidance accompanying it and it has been suggested that this might allow for how authorities might structure a procurement, in particular considering the flexibilities in terms of procedure used within the Procurement Act 2023.

If you are looking at a leisure contract or would appreciate an update generally, please contact Stephen Pearson or Mohammad Sajjad.