The decision is particularly problematic for schools and trusts where a three year renewal term does not align with their long term MIS strategy but also gives rise to potential public procurement issues.
We've set out the below guidance on some of the key questions that have arisen for those schools and trusts that are affected by this.
Please note though that this is general guidance only based on ESS' standard SIMS Annual Entitlement contract (ie which is renewed on 1 April each year). There are nuances to the contractual position and the options available and recommendations may differ for each school and trust.
We would advise that any school or trust that is affected by this issue seek legal advice and we would be very happy to discuss your ESS SIMS contract and specific circumstances with you.
Yes. Under the standard SIMS Annual Entitlement contract ESS has rights to vary the contract terms for any renewal term (including the duration of the renewal term) and to terminate the contract on giving 90 days' written notice before 1 April 2022 (ie on or before 31 December 2021). ESS has confirmed that no school or trust will be automatically moved onto a three year renewal term and that they are free to accept or reject the three year renewal contract. However ESS will not be offering one year contracts for its core SIMS products and has stated that any contract that is not renewed will expire on 31 March 2022.
There are possible legal arguments to challenge the right to terminate the contract on 90 days' notice and the three year renewal term as being unfair and anti-competitive. This is however a complex legal area which would need further detailed legal consideration (see further comments below).
For those schools and trusts that are subject to the Public Contracts Regulations 2015 (ie the maintained schools and academies), the change to the renewal term to three years is likely to be considered a 'material' change to the contract. Whilst there are justifications for material changes, for example where the need for modifications has been brought about by circumstances which the school/trust could not have foreseen, the increase in price must not exceed 50% of the value of the existing contract. For large trusts with multiple schools, the three year renewal term may also take the total contract value over the procurement threshold of £213,447*. It is likely that any such schools and trusts affected by this issue will need to re-tender the contract and accepting the three year contract renewal term would risk the school / trust being in breach of the procurement regulations. In the event of a successful challenge, the contract could be declared ineffective and the school or trust could be fined.
As compliance with the procurement regulations is an issue for the school/trust, arguing that the extension would be contrary to the procurement regulations does not necessarily provide a reason to force ESS to accept a one year renewal term. This does of course put schools/trusts in an impossible position as they risk either being in breach of the procurement regulations or left without a critical business system. This is one of the factors that would need to be considered in determining whether it is unfair and / or anti-competitive (see further comments below).
It is possible that ESS' conduct constitutes an abuse of a dominant position and may infringe competition law. This is however a complex legal area and further investigation and analysis would be required in order to come to a clearer view on whether there is a credible argument of infringement.
In summary, it would be necessary to demonstrate that:
We would advise that any school or trust that does not wish to accept the three year renewal term notify ESS as soon as possible (but in any event before 31 December 2021) and make clear that they wish to renew the contract for a further one year only. If ESS continue to refuse to accept a one year renewal term following collective pressure from the sector, schools and trusts will then need to consider whether to further challenge ESS's actions.
In their update issued on 7 December entitled 'Clarity for the future', ESS reaffirmed that renewing SIMS for a three-year term requires 'express consent', so no schools will find themselves locked into this unknowingly. ESS also confirmed that schools can renew their SIMS contract 'at any point up to or including 31 March 2022', though this would of course involve signing up to the three-year term.
On that basis, for those schools/trusts that would prefer not to sign up for three years, it would seem sensible to use the time between now and March 2022 to look into possible alternatives, including the potential for challenge as referred to below. If there turns out to be no other option than to remain with SIMS then this action can be taken at a later date.
If you would like any further advice on the SIMS contract renewal or if you'd like to speak directly with a member of our Academies and Schools team please contact James Barr on 07393 149 979, alternatively please complete the form below.
* Procurement threshold as from 1 Jan 2022 inclusive of VAT