At the end of the Contract the Contractor will cease to provide services to the Authority and the Authority will have no further obligations to pay the Contractor. At this point any cash still held by the Contractor will probably be paid out to the Contractor's shareholders to give the equity investors the final return from their investment. It is important therefore that the Authority has no outstanding claims against the Contractor after the Expiry Date as it will be much more difficult to recover any amounts due after that date. To protect the Authority the Contract may allow it to retain amounts from the final payments or payments of the Unitary Charge so that at the final reconciliation there are more likely to be amounts owed by the Authority to the Contractor than the other way round.
The WIDP Contract (Clause 45.3) gives the Authority the right to withhold an amount from the payments for the last two months of the Contract before expiry. The maximum amount is the average monthly adjustment/deduction in the previous six months. To the extent the final reconciliation shows amounts due by the Authority it will be liable to pay interest at the Prescribed Rate from the date the payment was withheld to the date the final payment is made.
The Contract Manager should ensure that the Contract Expiry Plan includes a reminder that the Contract allows the Authority to withhold amounts from the final two payments.