New contract schedules issued

The LSC has announced its approach to issuing new contract schedules, as current ones expire this month.

The Unified Contract has been extended until the start of the new family contracts in February 2012. Contract schedules for the Standard Contract come to an end this month, but instead of issuing a new annual schedule, the LSC will issue a two month one to align both contracts. Therefore holders of both types of contract should receive new schedules running to January 31st 2012 shortly. Unified Contract holders will receive a pro rata allocation of matter starts. Standard Contract holders will receive an allocation of matter starts calculated in accordance with para 1.36 of the specification; in short, the allocation will be at least 80% of your actual usage this year. Successful bidders for new family contracts, and holders of Standard Contracts, will receive schedules from February onwards early next year.

Standard Contract holders should beware of seasonal variations in demand. As the LSC are issuing new Standard Contract schedules for December and January, rather than extending existing ones, technically para 1.36 would apply to this short schedule. But of course the Christmas holiday falls right in the middle of that short schedule. Seasonal variations that even out over a year will not even out over two months. Those two months might represent an equal sixth of matter allocation but not an even sixth of matter usage. This could result in schedules issued from February 2012 – on the basis of at least 80% of usage in December and January – being set at too low a level to reflect genuine usage over a one year period. Hopefully the LSC will take a sensible approach and look at usage over a whole year rather than the short schedule.