5.2  Ratchet - Service Performance Shortfalls

The mechanism for dealing with Service Performance Deductions needs to take account of repeat poor performance. This is a particular issue for individual stations or other accommodation within a Police or Fire PFI where continued poor performance can have an operational impact on the service. The proposed mechanism for dealing with this is to introduce an escalation mechanism for the performance points based on agreed thresholds on an accommodation by accommodation basis.

The mechanism provides for a point threshold below which no deductions will be made from the Contractor's Monthly Unitary Charge. This recognises that certain tests will fail despite the Contractor's best endeavours and that often minor failures below the points threshold are unlikely to adversely impact the overall operational service. Once the threshold is breached in a contract month any additional performance points incurred will convert to a deduction based on the agreed pound per point value. As the number of points accrued in the month above the threshold increases, the additional escalation factor will be applied.

♦  Each accommodation will have a Deduction Threshold of 20 points. If Performance Deduction Points accrue at a level less than or equal to the Deduction Threshold there will be no deduction from the Monthly Unitary Charge on an accommodation by accommodation basis in the Contract Month. Only Performance Deduction Points incurred in excess of the Deduction Threshold will be used to calculate the deduction from the Monthly Unitary Charge.

♦  The number of Performance Deduction Points that are accrued within a Payment Period for each Accommodation will trigger an escalation in the Performance Deduction Points awarded based on a banding mechanism, as shown below:

The bands shown above will partly depend on the number of KPIs and the number of instances of possible failure in a month.  

♦  The following example assumes a per point value of £[3] and shows how the escalator for Performance Deduction Points applies in calculating the deduction from the Monthly Unitary Charge:

Assume that within a single month, the number of points across all KPIs at Accommodation 1 accrued totals 120.  The deduction to be applied would therefore be:

This calculation would then be repeated for each Accommodation to determine the total Service Failure Deductions that apply in a month.

The bands shown above will partly depend on the number of KPIs and the number of instances of possible failure in a month