It is sometimes asserted that PFI/PPP contracts are self monitoring because the Contractor monitors its own performance using the contractual performance framework. Whilst it is certainly true, and desirable that the Contractor should monitor its own performance that is never the whole story. Contracts will normally include extensive explicit provisions in relation to the Authority's monitoring.
Under the WIDP Contract (Clause 32) the Contractor is obliged to monitor its own performance in accordance with the Authority's Requirements (Schedule 2). It is worth a simple reminder here that the Authority's Requirements will, under the WIDP Contract (Clause 2.1), rank higher than the Contractor's Proposals (Schedule 3) in the event of an inconsistency.
If monitoring reports are found to be fraudulent or two or more erroneous reports are submitted within a specified period then the Authority can notify the Contractor that it will increase the level of its own monitoring until such time as the Contractor can demonstrate to the reasonable satisfaction of the Authority that it can perform its obligations under the Contract. The Contractor must bear its own costs for assisting the Authority and indemnify the Authority for any costs the Authority incurs in increasing its monitoring as a result of the submission of fraudulent or erroneous monitoring reports by the Contractor.
The WIDP Contract (Clause 32) allows the Authority to undertake its own monitoring (at its own cost) at any time after the issue of the Readiness Test Certificate onwards and obliges the Contractor to use reasonable endeavours to assist. The Authority is entitled to notify the Contractor of the results and the Contractor is then obliged to have "due regard" to the Authority's comments.
The Contract Management Manual should document the system the Contract Management Team should follow in relation to reviewing the Contractor's monitoring reports and the direct monitoring of performance. As a minimum these should include the procedures for:
a) reviewing the Contractor's Monitoring Reports and producing a report on any matters arising;
b) setting and updating the tolerance level for poor performance for each aspect of the Service;
c) raising any issues relating to performance within the tolerance threshold with the Contractor;
d) escalating the issue within the Authority if performance failures exceed the tolerance threshold;
e) determining whether the Authority should formally notify the Contractor that it is increasing the level of monitoring as a result of the submission of fraudulent or erroneous monitoring reports by the Contractor; and
f) engaging the Legal Department if it appears that a performance issue is likely to result in a dispute with the Contractor.
For any waste facilities requiring an Environmental Permit, the Contract Management Manual should also highlight the fact that as the authorised process regulator, the EA will monitor the plant's emissions performance on a regular basis to assess whether it is complying with its Environmental Permit. The Contract Management Team may find that references to the EA's monitoring are helpful when dealing with queries from the public or members regarding emissions from the plant.