4.5 The PPP Contract details the deductions which should be applied to various availability and performance failures. These deductions are integral to the value for money for the public sector and must be enforced in accordance with the terms of the contract. It is sometimes suggested that making deductions erodes the working relationship between the Authority and Provider. This need not be the case. Inconsistent application of the payment mechanism, or more particularly sudden application of deductions after a period of non-application, may cause short term relationship issues. However, consistent and proper application of the payment mechanism as contracted from the outset should be a contributor to good relations.
4.6 The PPP Contractor is usually responsible for reporting any availability and performance failures. The Procuring Authority needs to have mechanisms in place to be able to verify the completeness and the accuracy of the reporting failures recorded within the monthly performance reports.
4.7 In some circumstances, Procuring Authorities may decide not to enforce the deductions in full. In these situations, Procuring Authorities must still record all performance and availability deductions. If deductions are to be waived this must be clearly highlighted with the reason for the waiver clearly documented - for example, the PPP Contractor was unable to access an area to rectify a service failure. These should be recorded by the Procuring Authority's Contract Manager and the approach and records approved on a regular basis by the Procuring Authority's Project Board or Project Director. The exact procedures will be covered in the Authority's Contract Management Manual.
4.8 Deductions should always be enforced for priority services such as availability, health and safety and security. Deductions should also be enforced in relation to the helpdesk operation and management and reporting of deductions. This ensures that the performance reporting is complete and accurate and is a robust basis upon which to assess the performance of the contract.
4.9 Where deductions are not enforced, the PPP Contractor should be notified as to the specific deductions which are not being enforced and the reasons why. These should be clearly recorded.
4.10 Deductions should be made from the monthly invoice as they occur. They should not be carried over and applied once the performance or availability failure has been rectified. This may result in the deduction being processed over two monthly periods if they occur over a month end. In these circumstances care should be taken to ensure that repeated failure deductions are correctly applied - for example, that they are not triggered by the same performance failure straddling a month end.