It is normal practice when a Government Department proposes to undertake a contingent liability in excess of £300,000 and outside the normal course of business, for the Minister concerned to lay a departmental Minute before Parliament giving particulars of the liability created and explaining the circumstances. The Department should refrain from incurring the liability until 14 parliamentary sitting days after the issue of the statement.
This Minute relates to the Centre for Environment, Fisheries and Aquaculture Science (CEFAS), an Executive agency of DEFRA, entering into a commercial arrangement with the Kuwait environment public authority (an authority of the Government of Kuwait) who have asked CEFAS to contract with them to provide a marine environment monitoring information system for Kuwait. This is proposed to be a four-year contract of marine science services for which the Kuwaitis will cover all CEFAS’s costs of around £40 million.
The Kuwait Government wish to enhance their national environmental management capability to world leading standards and are pursuing a strategy of working with the best international government bodies from strategic partner countries. This Kuwaiti Government objective is being delivered under their Environment Monitoring Information System Kuwait (eMISK) programme which spans marine, waste, terrestrial, air and subsurface environments. The Kuwait environment public authority have asked CEFAS to tender for the marine programme and this is supported by both countries at ministerial level, as set out in the inter-government declarations of the joint steering group.
The benefits of this work to both Governments are the significant contributions it will make to the long-term health of the Gulf marine environment. It will also engage the next generation of Kuwaiti scientists in bilateral co-operation with the UK, maintain and develop CEFAS’s international capability, and position both Kuwait and the UK in a leading position in this area of science.
The contractual arrangements between the two parties follow standard Kuwaiti national commercial terms and conditions and include two contingent liabilities relating to a performance bond and liquidated damages claims. These liabilities are limited to a maximum of 20% of the £40 million contract value. Professional indemnity insurance will be purchased, using contract funds, to protect the Department against these risks leaving a residual excess value of no more than £250,000. Only uninsurable risks remain which would be due to late delivery or third-party claims.
CEFAS and DEFRA have considered the risks of this indemnity and they believe the likelihood of such indemnities being called upon is very low. Agency or departmental budgets are expected to fund any liability call. If such budgets are insufficient then any payment would be sought through the normal supply procedure.
The Treasury has approved the proposal in principle.
If, during the period of 14 parliamentary sitting days, beginning on the date on which this Minute was laid before Parliament, a Member signifies an objection by giving notice of a parliamentary question or by otherwise raising the matter in Parliament, final approval to proceed with incurring the liability will be withheld pending an examination of the objection.