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Winding up, terminating or transitioning a contract

Things to think about when winding up or transitioning a contract to a new supplier, and when and how a contract can be terminated early.

Winding up a contract

Before the contract ends, think about:

  • organising a debrief meeting with the supplier or provider
  • getting a final report from the supplier
  • the final payment or return of unspent funds (if any)
  • the final report by the contract manager
  • current clients of the service - do they need to transfer to other services?
  • client records - how should these be handled? Will they be handed over to a new supplier? Check whether the contract covers this
  • a review of the supplier's performance and the service agreement.

Conducting reviews

Transitioning to a new supplier

Transitioning to a new supplier or provider will require planning. Think about:

  • identifying potential transition issues, risks and strategies to manage them - for more complex or significant contracts develop a transition plan outlining tasks, timeframes and resources
  • who will manage the transition process - one person or a transition team?
  • whether you'll need a communication strategy to keep people informed about the changes
  • how you can help facilitate the handover and communications between the outgoing supplier and the new one.

Terminating a contract early

The contract will list the conditions under which the contract can be terminated early. The two most frequent termination options are:

  • termination for convenience or termination on notice (sometimes mutually agreed)
  • termination for breach of contract.

If you're terminating the contract:

  • on notice, make sure you give the correct period of notice in writing
  • by mutual agreement, both parties should sign an agreement to formally end the contractual relationship
  • because of a dispute or breach, make sure that your legal team are involved, and that you follow the process and delegations they advise. Consider notifying other government departments which have a contract with the same provider because there may be an impact on other services.

Think about:

  • current customers or clients - what are their options?
  • “step in” - in some cases contracts enable the purchasing agency to step in and take over management and delivery of the contract. This is feasible only where the agency has the expertise and capacity to step in.
  • client records - how should these be handled? Will they be handed over to a new supplier? Check whether the contract covers this.
  • providing information and advice to the relevant senior manager according to your internal escalation process
  • the possibility of public concern about the contract ending
  • a transition or early termination plan to capture all of the above.