In addition to non-payment or abatement of service charges where contracted services are not delivered or are delivered below the specified service standards, it may be appropriate to require payment of liquidated damages or other compensation if the deficiencies prevent or otherwise hinder government from delivering the core services, or delivering them to the necessary standard.
Because liability to pay liquidated damages is likely to be priced into the unitary charge, liquidated damages will only assist achievement of value for money in situations where the impacts of cost on the delivery of government core services are so great that they warrant the additional expense. Such measures, if adopted, allocate to the private party the cost to government of any adverse effect on the delivery of core services arising from non-delivery or sub-standard delivery of the contracted services. The private party will, in most cases, pass the risk of such a cost to an appropriate sub-contractor.
For further information on liquidated damages, refer to the contract development and management supporting document.