Required drafting (see Section 5.2 of SoPC4 and Sections 3.2 and 4.5.2 of the Defra Derogations Guidance) as follows:

39.1 If, as a direct result of the occurrence of a Compensation Event:70

39.1.1 the Contractor is unable to commence the Works on or before the Planned Works Commencements Date at the Facility and as a direct result there is a delay to the Planned Readiness Date; and/or

39.1.2 the Contractor is unable to achieve the Readiness Date on or before the Planned Readiness Date at the Facility or following the Planned Readiness Date, before the Readiness Longstop Date; and/or

39.1.3 the Contractor is unable to achieve Service Commencement on or before the Planned Service Commencement at the Facility or, following the Planned Services Commencement Date, before the Acceptance Longstop Date; and/or

39.1.4 the Contractor is unable to comply with its obligations under this Contract; and/or

39.1.5 the Contractor incurs costs or loses revenue71 (including Third Party Income),

then the Contractor is entitled to apply for relief from its obligations and/or claim compensation under this Contract.

39.2 Subject to Clause 39.4 below, to obtain relief and/or claim compensation the Contractor must:

39.2.1 as soon as practicable, and in any event within [fifteen (15)] Business Days72 after it became aware that the Compensation Event has caused or is likely to cause delay, breach of an obligation under this Contract and/or the Contractor to incur costs or lose revenue (including Third Party Income), give to the Authority a notice of its claim for an extension of time for the relevant Planned Readiness Date or (following the relevant Planned Readiness Date) the Readiness Long Stop Date and/or the relevant Planned Services Commencement Date or (following the relevant Planned Services Commencement Date) to the Acceptance Longstop Date, payment of compensation and/or relief from its obligations under this Contract;

39.2.2 within ten (10) Business Days of receipt by the Authority of the notice referred to in Clause 39.2.1 above, give full details73 of the Compensation Event and the extension of time and/or relief from its obligations under the Contract and/or any Estimated Change in Project Costs claimed74; and

39.2.3 demonstrate to the reasonable satisfaction of the Authority that:

(a) the Compensation Event was the direct cause of the Estimated Change in Project Costs and/or any delay in the achievement of the Planned Works Commencements Date, Planned Readiness Date or Planned Services Commencement Date and/or breach of the Contractor's obligations under this Contract; or following the Planned Readiness Date delay in achieving the Readiness Date before the Readiness Longstop Date or following the Planned Services Commencement Date, delay in achieving Service Commencement before the Acceptance Longstop Date; and

(b) the Estimated Change in Project Costs, and/or time lost, and/or relief from the obligations under this Contract claimed, could not reasonably be expected to be mitigated or recovered by the Contractor acting in accordance with Good Industry Practice.

39.3 In the event that the Contractor has complied with its obligations under Clause 39.2, then:

39.3.1 in the case of a delay, the relevant Planned Readiness Date or following the Planned Readiness Date the Readiness Longstop Date shall be postponed by such time as shall be reasonable for the Compensation Event taking into account the likely effect of the delay.

39.3.2 in the case of a delay, the relevant Planned Services Commencement Date or following the Planned Services Commencement Date, the Acceptance Longstop Date shall be postponed by such time as shall be reasonable for such a Compensation Event, taking into account the likely effect of delay.

39.3.3 in the case of an additional cost being incurred or revenue (including Third Party Income) being lost by the Contractor:

(a) on or before the Services Commencement Date at the relevant Facility; or

(b) as a result of Capital Expenditure being incurred by the Contractor at any time,

the Authority shall compensate the Contractor for the actual Estimated Change in Project Costs as adjusted to reflect the actual costs reasonably incurred and, in the case of Change in Revenue, without double counting, for revenue actually lost (to the extent it could not reasonably have been mitigated) within twenty (20) Business Days of its receipt of a written demand by the Contractor supported by all relevant information;75

39.3.4 in the case of a payment of compensation for the Estimated Change in Project Costs and, in the case of Change in Revenue, without double counting, for revenue actually lost that does not result in Capital Expenditure being incurred by the Contractor referred to in Clause 39.3.3(b) above but which reflects a change in the costs and/or without double counting, loss of revenue being incurred by the Contractor after the relevant Services Commencement Date for a Facility, the Authority shall compensate the Contractor in accordance with Clause 39.6 below by an adjustment to the Unitary Charge in accordance with Clause 53 (Revision of Base Case and Custody); and/or

39.3.5 the Authority shall give the Contractor such relief from its obligations under this Contract as is reasonable for such a Compensation Event.

39.4 In the event that information is provided after the dates referred to in Clause 39.2 above, then the Contractor shall not be entitled to any extension of time, compensation or relief from its obligations under this Contract in respect of the period for which the information is delayed.

39.5 If the Parties cannot agree the extent of any compensation, delay incurred, relief from the Contractor's obligations under this Contract or the Authority disagrees that a Compensation Event has occurred (or as to its consequences), or that the Contractor is entitled to any relief under this Clause, the Parties shall resolve the matter in accordance with the Dispute Resolution Procedure.

39.6 Any payment of compensation referred to in Clause 39.3.3(a) above shall be calculated in accordance with Clause 53 (Revision of Base Case and Custody). 76

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70 In the event of a delay to the Planned Service Commencement Date the construction costs will most likely increase, due to a longer financing period. The Contractor is under a duty to mitigate its other costs associated with any delay (for example, by delaying recruitment, if this can be done).

71 This loss means not only out of pocket costs but also a claim for loss of profits (including a lost completion bonus) caused directly by the Compensation Event.

72 The Authority may extend time periods for notification deadlines if appropriate to 20 Business Days.

73 The Authority and the Contractor may wish to specify in the Contract precisely what details are required.

74 This figure will not calculate the compensation payable, but it gives an indication of the seriousness of the breach and so what actions should be taken by way of mitigation.

75 This payment can be in the form of a monthly payment as expenditure is incurred (or staged payments against milestones) and invoiced if the delay is for a significant period of time. In the event that the Authority wishes the Contractor to increase its financing to pay for the consequences of a Compensation Event (other than an Authority breach), then Section 5.2.3 (Calculation of Compensation) of SoPC4 should be reflected.

76 Authorities should not enter into arrangements whereby after the relevant effects of the Compensation Event have been calculated there is a reconciliation if the costs are greater or lesser than those agreed or estimated.