Concepts

The payment mechanism is based on a single Unitary Charge in monthly instalments, together with a series of performance standards against which the performance of the Service Provider will be judged, with adjustments being made from the Unitary Charge if those standards are not attained.

The performance standards, performance targets and the methods for monitoring performance are set out in the Output Specification.  The period, over which performance will be assessed against the standards, and for which adjustments shall be made, will be a calendar month.

The Service Provider is required to measure its own performance under the contract and report monthly to the Authority.  The Authority has rights under the Model Contract to check the accuracy of the measurement and reporting carried out by the Service Provider.

To accommodate the objectives of the payment mechanism, the formulae used to calculate payment adjustments include a multiplier, the aim of which is to generate proportionately greater costs to the Local Authority of managing such sub-standard performance.