Due Diligence over Sub-Contracts and Financing Documents - Section 33

99  Section 33 of SoPC deals with due diligence over sub-contracts and the financing documents.  These issues will be relevant to Local Authority social care PFI projects, particularly as on an early termination of contract, the Local Authority may be liable for Sub-Contractor Breakage Costs.

100  New guidance is given on breakage costs at Section 33.3.1.  Local Authorities should be aware that due diligence on the sub-contracts is important and Local Authorities will need to take legal and financial advice on these issues.  Local Authorities should request the anticipated levels of Sub-Contractor Breakage Costs, especially the profit element, as part of the competitive dialogue process so that this element can be evaluated.