Under a Term Services Contract, if the Designer is working directly for the Contractor and they are part of the same group company structure just a separate legal entity in their own right, should they have a Professional Service Contract in place?
If the two companies are separate legal entities then they should enter into a formal contract with each other. You haven’t said which main Option the TSC is under but there could be an impact on how the Contractor is reimbursed for the design services under the TSC. Also if design services are being carried out under a TSC the Employer / Client should have added an additional insurance to the contract for defective design i.e. professional indemnity insurance.