Content Headings

Key Issues

Example clauses

Notes and References

Authority Step-in rights

Step-in occurs when government elects to assume all or some of the service delivery obligations of the concessionaire for a period of time.  Situations in which government may exercise its contractual rights to step-in include:

(a)  Preventing or mitigating a serious risk to: 

(i)  the environment

(ii)  public health

(iii)  the safety of people or property;

(b)  Guaranteeing continuity of service;

(c)  Discharging a statutory duty; and

(d)  Otherwise dealing with a default by the concessionaire under the contract. 

Although step-in rights normally follow a concessionaire's default, it may also occur without the concessionaire's default, for example in the case on an emergency.

(a)  If the Authority reasonably believes that it needs to take action in connection with the Service:

(i)   because a serious risk exists to the health or safety of persons or property or to the environment _; and/or

(ii)   to discharge a statutory duty,

then the Authority shall be entitled to take action in accordance with paragraphs (b) to (e)

below.

(b)   If paragraph (a) applies and the Authority wishes to take action, the Authority shall notif he Concessionaire in writing of the following:

(i)   the action it wishes to take;

(ii)   the reason for such action;

(iii)   the date it wishes to commence such action;

(iv)   the time period which it believes will be necessary for such action; and

(vi)   to the extent practicable, the effect on the Concessionaire and its obligation to provide the Service during the period such action is being taken.

(c)   Following service of such notice, the Authority shall take such action as notified under paragraph (b) above and any consequential additional action as it reasonably believes is necessary (together, the "Required Action") and the Concessionaire shall give all reasonable assistance to the Authority while it is taking such the Required Action.

If the Concessionaire is not in breach of its obligations under the Contract, then for so long as and to the extent that the Required Action is taken, and this prevents the Concessionaire from providing any part of the Service:

(a)   the Concessionaire shall be relieved from its obligations to provide such part of the Service; and

(b)   in respect of the period in which the Authority is taking the Required Action and provided that the Concessionaire provides the Authority with reasonable assistance (such assistance to be at the expense of the Authority to the extent incremental costs are incurred), the Unitary Charge due from the Authority to the Concessionaire shall equal the amount the Concessionaire would receive if it were satisfying all its obligations and providing the Service affected by the Required Action in full over that period.

If the Required Action is taken as a result of a breach of the obligations of the Concessionaire

under the Contract, then for so long as and to the extent that the Required Action is taken,

and this prevents the Concessionaire from providing any part of the service:

(a)   the Concessionaire shall be relieved of its obligations to provide such part of the Service; and

(b)   in respect of the period in which the Authority is taking Required Action, the Unitary Charge due from the Authority to the Concessionaire shall equal the amount the Concessionaire would receive if it were satisfying all its obligations and providing the Service affected by the Required Action in full over that period, less an amount equal to all the Authority's costs of operation in taking the Required Action.

See SOPC Section 28.

Example clause adapted from Office of Government Commerce, UK, Standardisation of PFI Contracts - General, index reference C1, folder 5.