Protections against late service commencement - Section 4

15  Section 4 of SoPC is relevant to Local Authority social care PFI projects.  A new facility will take a period of months and/or years to construct and a Local Authority will want to ensure it is protected against prolonged delay by the Service Provider in achieving completion of the Works and commencing provision of the Services.  There are a number of mechanisms through which such protection can be obtained.

16  SoPC discusses the imposition of liquidated damages but points out that it will result in an increased Service Payment.  Liquidated damages are therefore not value for money unless the costs incurred by the Local Authority as a result of any delay is substantial.  Provisions for liquidated damages are not included in the Model Contract.

17  Section 4.5 of SoPC provides guidance on the use of longstop dates.  Local Authorities procuring social care PFI projects have typically incorporated a longstop date after which the contract may be terminated if the Service Provider has not completed the required works.  The longstop date should be applied to the whole of the social care service, rather than to any individual investment phase.  The Model Contract incorporates a longstop date.