An Authority and its Contractor may, from time to time over the life of the Contract, decide that minor amendments to the payment mechanism are to their mutual advantage, e.g. by achieving a better match between key performance measures, incentives and changing operational priorities (cf. §1.64.2) . However, these amendments should not change the original Unitary Charge payment profile (in real terms), nor its indexation régime, without very careful assessment of the VfM implications.
The Unitary Charge payment profile and indexation régime are fixed at Contract signature, and are fundamental determinants of both the original VfM justification of the Contract and of the finance plan adopted by the Contractor at the time. In consequence, changes to the Unitary Charge profile or indexation régime may enable major changes to be made to the Contractor's finance structure which are disguised within a Refinancing proposal and the Authority must take great care to separate them out and evaluate them on a stand-alone basis.
In particular, Authorities should note that large incremental Refinancing Gains may be possible on the back of such changes regardless of the fact that, taken alone, these changes would not pass a VfM test. As a general principle, Authorities should assume that changes to the profile of Unitary Charge payments and indexation régime are not VfM-even if there are apparent affordability advantages-unless there is clear evidence to the contrary.
This is not to suggest that a change in scope of services initiated by an Authority on grounds of VfM may not give rise to an increase in Unitary Charges-but rather that such increases should only be made as set out in SoPC §12.4, and as a separate exercise to any Refinancing Gain calculation. Similarly, a reduction of the Unitary Charge to pay the Authority's share of a Refinancing Gain should only be made as set out in SoPC Annex 1 (Guidance Note on "Calculation of the Authority's Share of a Refinancing Gain") §1.5.2(b).