The latest version of the Model Services Contract (Version 2.0) (MSC 2.0) and its associated guidance (MSC Guidance) were published by the Cabinet Office on 11 April 2022. Their release follows the recent publication of the Digital, Data and Technology Playbook (DDaT Playbook) at the end of March. Accordingly, many of the changes made have a focus on data and technology projects and are designed to implement some of the key policies set out in the DDaT Playbook, including around avoiding technological lock-in through the use of open and interoperable data and software.
MSC 2.0 also has enhanced compliance provisions – including whistleblowing, modern slavery, employment law, and conflicts of interest. To help facilitate the push towards meeting the Net Zero target, a wholesale rewrite of the sustainability provisions has been undertaken.
In this alert, we summarise some of the key changes.
What has changed?
Intellectual Property Rights (IPR)
The IPR provisions have been heavily amended and moved to a new schedule. In line with the policy set out in Chapter 8 of the DDaT Playbook of considering IP ownership on a case-by-case basis, the new schedule now provides 5 alternative drafting options for the ownership and licencing of foreground IPR. The range from Authority ownership of foreground IPR with limited rights granted to the supplier, to the supplier having the right to commercial exploit or own the foreground IPR with the Authority having rights to utilise it and/or share in any profits from commercial exploitation.
New supplier collaborative working principles have been added, such as being open and transparent in sharing relevant information with other suppliers. These are designed to support service disaggregation.
The suggested supplier liability cap for data protection breaches has been changed from £10m per contract year to a range of £10 million to £20 million per contract year. The MSC Guidance sets out some of the factors that Authorities should consider when setting this cap.
The security requirements in the Security Management Schedule have been updated, including new encryption requirements.
MSC 2.0 seeks to address transition, exit management and disaggregation based upon the lessons learnt in practice with legacy contracts and public sector outsourcing. The Exit Management schedule has been updated, including adding two new Termination Assistance Services and updating the Ethical Wall Agreement.
A new 'Sustainability' annex to the Standards schedule streamlines and enhances existing sustainability and environmental provisions. New sustainability requirements introduced include around the Public Sector Equality Duty (in line with PPN 01/13 – Public sector equality duty), carbon reduction under PPN 06/21, the Supplier Code of Conduct v.2 and the Government Buying Standards. MSC 2.0 introduces some optional sustainability requirements.
Placeholders for Social Value requirements have been added to the service specification and KPI schedule. There is a new requirement to create and report on Social Value KPIs and remedies for supplier failure to meet these. The MSC Guidance sets out advice around how to set social value KPIs and remedies in light of the market maturity. It also requires Authorities to choose the most important Social Value KPI or PI for publication.
New Financial Distress Events have been added to the Financial Distress schedule, including late filing of annual accounts with no reasonable explanation and a public announcement that contains adverse commentary on the entity's liquidity or trading prospects.
There are amendments to outdated EU legislation throughout. For instance, UK GDPR provisions replace references to EU GDPR.
Want to know more?
Visit the Government website to view the entire MSC 2.0, guidance and list of changes.
You can also read our previous alert on the DDaT Playbook.