5 In the event of poor service delivery against pre-agreed performance standards for each support service, the Department can award Deficiency Points. Defence Management has 24 hours within which to rectify the poor performance or further Points are awarded. Additional Points are awarded if the poor service provision occurs when a key event is being held.
6 Defence Management is allowed to incur a pre-agreed number of Deficiency Points - that number varying depending on the support service concerned - over a three-month period before the Department can make deductions to Defence Management's fee. Once this number is exceeded, the number of Deficiency Points awarded determines the level of financial deductions made, with larger deductions being made the more Points are awarded. The deductions to be made are capped for each individual service at 20 per cent of that element of the PFI fee which relates to the costs of that service, and in aggregate at 10 per cent of the total of those support service elements within the PFI fee (£8.3 million- just over 30 per cent of the total PFI fee of £26 million - Figure 8).
7 The 10 per cent aggregate limit placed on the deductions means that, in the first instance, only 3 per cent of the total PFI fee is at risk from poor service delivery. However, the contract also allows that, if Defence Management's performance is sufficiently poor for it to be in default, the Department can suspend payments to Defence Management until performance improves.