2.  ANNUAL SERVICE PAYMENT

2.1  The Annual Service Payment for any Contract Year shall be calculated in accordance with the following formula100:

where:

2.1.1  ASPn is the Annual Service Payment for the relevant Contract Year;

2.1.2  ASPo is the amount set out as the figure for ASPo in Appendix D to this Part 18 of the Schedule (Payment Mechanism) (being the Annual Service Payment at the Base Date), subject to paragraph 2.2 of this Section B;

2.1.3  RPIn is the value of the Retail Prices Index published or determined with respect to the month of February which most recently precedes the relevant Contract Year; and

2.1.4  RPIo is the value of the Retail Prices Index published or determined with respect to the Indexation Base Month.

2.2  For the purposes of paragraph 2.1.2 (Annual Service Payment) of this Section B of this Part 18 of the Schedule (Payment Mechanism), ASPo shall be subject to cumulative adjustments as follows:

2.2.1  [with effect from each Market Testing Date (or such other date as may be established in accordance with paragraph 9 (Service Payment Adjustments) of Part 17 of the Schedule (Benchmarking and Market Testing) ASPo as at that date shall be adjusted to reflect the adjustment to the cost of the Market Tested Services following a Market Testing (if any and whether up or down) re-based to reflect the value of the amount of the adjustment at the Base Date, such adjustment to be calculated in accordance with paragraph 3 (Effect of Market Testing on Annual Service Payment) of this Section B of this Part 18 of the Schedule (Payment Mechanism);]101

2.2.2  [with effect from the date from which any adjustment made in accordance with Clauses 30.12 (Provision of Information and Employment Costs) to 30.15 (Provision of Information and Employment Costs) inclusive of this Agreement takes effect, ASPo as at that date shall be adjusted to include any adjustment required pursuant to Clauses 30.12 (Provision of Information and Employment Costs) to 30.15 (Provision of Information and Employment Costs) inclusive of this Agreement, re-based to reflect the value of the amount as at the Base Date;]102 and

2.2.3  with effect from the date from which any adjustment made in accordance with Clause 36.14(b)(iii) (Uninsurable Risks), Clause 39.2 (Relevant Changes in Law) of and/or Parts 22 (Variation Procedure) or 29 (Refinancing) of the Schedule to this Agreement takes effect, ASPo as at that date shall be adjusted to include any such adjustment pursuant to Clause 30.27 (Provision of Information and Employment Costs), Clause 36.14(b)(iii) (Uninsurable Risks), Clause 39.2 (Relevant Changes in Law) of and/or Parts 22 (Variation Procedure) or 29 (Refinancing) of the Schedule to this Agreement, re-based to reflect the value of the amount(s) as at the Base Date.

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100  Indexation of the full payment will be appropriate only where this matches the commercial agreement of the parties. Boards should consider the provisions of Section 15.2 of SoPC Guidance in this regard.

101  Required if there are Market Tested Servcies

102  Required if there is TUPE transfer of staff