Risk transfer

The Performance Specification, by defining outputs, necessarily defines many of the risks that the proponents are being asked to take on. It is for the proponents to assemble the optimum means of delivering the results required, and they do this at their own risk of failure. If the facilities or services fail in some way, the department cannot be blamed if it has had no responsibility for suggesting how those facilities and services are to be provided, and has effective recourse through the payment mechanism.

For instance, if a Successful Proponent installs an excellent state-of-the-art heating system (at perhaps higher cost than the department might have been able to afford on its own), it should be able to deliver the stated outputs more cost-effectively over the life of the contract. Because this decision has been made by the proponent, not by the department, it is the proponent that takes the consequences of running costs being greater than anticipated. No approval by the department, signing-off of drawings, or agreement as to details, absolves the proponent from its contractual responsibility.