UK PFI handbacks: remember the value of technology, data and IP assets

As private finance initiative (PFI) project stakeholders prepare for the expiry and handback of over 500 UK PFI contracts, large physical assets unsurprisingly get the attention. But don't overlook the value of the technology, data and other intellectual property (IP) assets that are interwoven into the project. A bit of thought upfront can streamline handback of these "intangible" assets and help maximise the value that they carry.

Tech, data and IP reliance

Buildings and physical infrastructure are naturally the focus of forthcoming PFI handback processes. Against the backdrop of the PFI contract, stakeholders will navigate important practical points like minimising disruption to the asset or service and responsibility for operation and maintenance.

However, operating the asset inevitably relies heavily on technology, data and other IP. There may be automated "door key" and security technology, or energy usage monitoring technology. Perhaps there is an online platform which holds all maintenance documents and information, or the helpdesk function utilises a software application where users of the building can log issues and receive responses.

These technology and IP assets have real value but they will often have been put into use many years after the PFI contract was agreed. That contract may well not clearly cover what happens to those assets on handback. That presents both opportunities and risks.

Investigating the various rights and obligations that are in place for technology, data and IP assets and doing this earlier rather than later will put parties in a good position to frame the discussions over how they are handed back (or in some cases retained). 

Four starting-point questions

As a starting point, four questions could be a useful for starting point for stakeholder dialogue around IT, technology, data and IP and PFI handback.

What IT or technology is currently being used to support the operation and maintenance of the asset or service?

Superficially this may seems straightforward. However, over time different systems may have been implemented and that may have happened piecemeal, without deeper levels of co-ordination. 

What do the contracts say (if anything) about IT and technology, data and other IP?

The contract will always be the starting point to understand the parties' rights and obligations on handback.

In particular, how is the "asset" that is to be handed back defined? Is it confined to the physical asset only or does it include supporting IT, technology and data?

What are the parties' co-operation obligations regarding the handover itself? For example, is there an obligation to provide record keeping information gathered over the course of the contract and what type of records does that obligation cover?

Where does responsibility sit for any issues on or after handover?

Many UK PFI contracts date back to the 1990s. It is highly likely that a good proportion of those contracts did not anticipate the extent to which modern day technology is now critical for operation and maintenance of many PFI assets. Also, contracts may not have been formally varied to deal with new technology and software which has been implemented during the course of the PFI project. As a consequence, contracts may therefore have significant gaps regarding technology asset responsibilities.

Who actually owns the rights in the IT and technology assets?

Are there any provisions regarding the ownership of intellectual property rights in the IT and technology and any licences?

This can be complex – there may be lots of different creators and owners and IP rights. A complex ownership landscape increases the risk of third-party IP infringement claims.

Issues can be fixed; for example, by agreeing assignments and licences, but enter into discussions with a clear view of strengths and what is required to fix the issue.

Are there any data-related issues?

Some PFI project contracts will not have been updated to take account of the significant developments in data protection; for example, the General Data Protection Regulation.

It is likely that responsible operators will be looking to comply with relevant legislation but where the underlying contract is out of kilter with the modern regulations, liability risks arise.

Again, getting early clarity on this will put you in a better position to achieve a handback resolution which suits you. 

Osborne Clarke comment

After you have gathered the relevant information, what is your preferred way forward?

• Prioritise: Not all technology systems in use and data generated will be critical for the handback discussions. You can use the questions to filter and prioritise. How you prioritise will depend on your role in the PFI project and the value which the relevant technology, data and IP asset has for you.
• Build your position into your handback strategy: When you have identified the main technology, data and IP assets and worked out the ownership and rights and obligations position, you can build that into your overall handback strategy. 
• Avoiding disputes: All stakeholders want handback to run smoothly and to avoid disputes and litigation. That applies to the technology, data and IP handback as much as the physical assets. Being prepared will significantly improve your chances of a friction-free (or at least reduced-friction) handback.

This is the latest Insight in our series on PFI handbacks and "sunset" projects, with previous coverage including a look at how to get ahead and avoid disputes prior to handback and what happens to the project company at the expiry of UK PFI contracts?