11.1.1 The Contractor will base its costings on a forecast capital replacement programme of plant, machinery, equipment, fixtures, fittings and furniture designed to maintain the building environment at the specified output standards. The Contractor will also consider the means of funding this expenditure throughout the life of the Project. The risk associated with assessing what will need replacing, when and how much this will cost, is one that the Contractor should take and therefore the Authority should not attempt to be prescriptive in this respect.
11.1.2 The Authority will find it easier to achieve this risk transfer if it starts by expressing its service requirements as an output specification. Bidders should be allowed to develop their own proposals which may, for example, incorporate alternative programmes of maintenance where assets with a longer life are used or used differently. An Authority should not attempt to impose its own system of asset replacement on bidders.161
11.1.3 The parties should, however, establish a planned preventative maintenance programme so that both parties know when parts of the Service are permitted to be "unavailable" without any payment deductions being made (see Section 8.10 (Planned Maintenance)). The Contract should also contain a mechanism by which either party can propose reasonable alterations to the planned programme (i.e. alterations which will not adversely affect the delivery of the Service).
11.1.4 Required drafting for a maintenance Clause is as follows:
11.1 Maintenance162
The Contractor shall ensure on a continuing basis that at all times its maintenance and operating procedures are sufficient to ensure that:
(a) the Service is continuously available;163
(b) it can maintain the design intention of the assets164 to achieve their full working life;165 and
(c) [the Assets are handed back to the Authority on the Expiry Date in a condition complying with the requirements of this Clause.]166
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161 Project specific amendments may be required in certain sectors. So, for example, in the maintained school sector, education and library boards do a lot of the cleaning at PFI schools. This will have to interface not only with the PFI generally but specifically in areas such as lifecycle and maintenance.
162 It may also be appropriate to include a further provision within this Clause requiring the Contractor to keep the physical assets in good structural and decorative order (subject to fair wear and tear).
163 This provision should cross refer to the relevant output specification.
164 These are the physical assets referred to in the definition of "Assets". In certain Contracts this may not be required and in others, such as IT contracts, equivalent provision may be needed in relation to any maintenance of IPR.
165 This will often be for the life of the Contract. To the extent a significantly longer period is required then this should be made clear as soon as possible in the competitive process (and certainly not after the bid documentation has been issued). If relevant, reference could be made to the output specification.
166 Paragraph (c) will only apply to the extent that the Authority has at least an option to acquire the Assets and the Contractor does not bear the residual value risk (see Section 20 (Treatment of Assets on Expiry of Service Period)).