5.8 The Authority should also re-familiarise itself with the Contract's provisions relating to the ownership and transfer of assets at the end of the Contract term and assess them in the context of its strategy for the provision of services after this date. If there are assets owned by the Project Company, then under the Contract the Authority would normally have the right to purchase sole use assets to continue delivery of the service after the Contract ends. In such cases, the Authority must ensure that the funding required to make the purchase is budgeted for and available.
5.9 In some projects, however, service delivery may be reliant on shared assets or Project Company-owned assets (including IPR). In such cases the Authority must determine what rights it has with respect to transfer (or licensing in the case of IPR) and determine what issues may exist in transitioning service delivery to another contractor.
5.10 It is also usual practice for physical assets to be subject to a final condition survey towards the end of the Contract term to ensure that the Project Company continues to maintain them to the requisite quality right to the Contract end. This is particularly important when assets are to be handed back to the Authority. Any work required to raise the assets to the standard required under the Contract may be paid for through a retention fund, which is normally sourced by holding back a percentage of the service charge over the final few service payments. As such starting the analysis early is good practice as it allows any such set-off to be managed over the remaining term of the Contract. The period for and size of payments into the retention fund should be set on a project specific basis, by reference to the amount likely to be needed to rectify defects in the assets. If the Contractor carries out any maintenance as a result of the survey, it can be reimbursed from the retention fund or the Authority can use such funds itself to carry out necessary maintenance or rectification. Any shortfall in the fund in meeting required maintenance will need to be recovered from the Contractor. Any balance remaining in the fund belongs to the Contractor and should be paid to the Contractor together with accrued interest.
5.11 Again, the Authority must establish in good time what provisions the Contract contains relating to the condition of assets and a retention fund and either:
• decide if they are to be enacted upon; or
• determine whether alternative arrangements to the same or similar effect are required.