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The 15-year agreement between the States and Brittany Ferries/Condor will allow Guernsey to pull the plug five years early if certain conditions aren’t being met.
The break clause came to light during this week’s Scrutiny meeting, which saw Deputies and Civil Servants dig through the process of the tender.
Express has already reported on the relationships between the islands, and our larger neighbour to the south, and how Economic Development revealed that both potential providers, Brittany Ferries and DFDS, passed the financial tests in place to run an inter-island route.
During the meeting it also came to light that this break clause, which Economic Development described as “in favour of Guernsey”, would allow the island to cut the tether eight years into the contract, with two years to wind down.
Pictured: (From left to right) Deputy Simon Fairclough, States Principal Scrutiny Officer Suzanne Le Ray, Deputy Yvonne Burford and Deputy Gavin St Pier.
President of the Scrutiny Managment Committee, Deputy Yvonne Burford directly asked the panel: “Can you tell me, are there any break clauses or termination clauses in the contract, and if so, could you describe them?”
Sarah Hutchinson, a Senior Commercial Lawyer at the States of Guernsey provided the panels answer, stating: “The Contract is a fifteen year term. There is a break clause in favor of the States at year eight, on giving two years notice, and that's to enable, if discussions about commercial investment aren’t satisfactory to the States, the States to make an early exit from the contract if it needs to.”
It was then clarified after a question from Deputy Gavin St Pier, that the Commercial Investments in question involve just the fleet, and not the mandatory refurbishing investments that have to be made during the contracts length.
Scrutiny set their sights on any potential extensions of the current contract, to which Ms Hutchinson stated: “There's a provision at the States' discretion absolutely, to extend for a five year period and a further five year period.”
Simon Steele, the Director of Procurement at the States, then laid out the details for any possible extension.
“There's a detailed KPI schedule within the contract, so the states at that point in time would make a determination based on the performance of the operator, investments that have been made at that point in time as to whether or not it's in the best interest of the states to take the decision to extend," he said.
These Key Performance Indicators are the targets that Brittany Ferries will need to match to warrant any contractual increase. It was clarified by Steve Wakelin, the Chief Strategy & Policy Officer at States of Guernsey, that the intention is to publish these metrics annually.
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