13  Market Testing of Service Contracts and Sub-Contracts

13.1  The Authority in considering exercising its option under clause 51.5 (Replacement of non performing Services Contractor) (in circumstances where clause 51.5(b) applies) will require the Service Provider to carry out or procure the carrying out of a Market Testing of the Services Contract in line with this Schedule 16 save that the Service Payment shall not be adjusted following such Market Testing.  The Service Provider shall be entitled to reflect the provisions of paragraph 13.2 in any Services Contract it enters into pursuant to this paragraph 13.

13.2  If, following the Market Testing carried out pursuant to paragraph 13.1, the Service Provider can demonstrate to the Authority's reasonable satisfaction that the circumstances contemplated in clause 51.5(b) (Replacement of a non-performing Services Contractor) of this Agreement are reasonably likely to recur (notwithstanding the exercise of Good Industry Practice and the good financial standing of the new Services Contractor), the parties shall negotiate in good faith such amendments to the Performance Standards (as defined in the Payment Mechanism) in respect of the relevant Service so as to make it fair and reasonable and to the extent that any such amendments reduce the risk profile in respect of that Service the Authority shall be entitled to a corresponding price reduction in respect of that reduced risk profile. In the absence of agreement on amendments to the Performance Standards and any corresponding price reduction the matter may be referred by either party for resolution in accordance with the Dispute Resolution Procedure.

13.3  If, following a Market Testing pursuant to paragraph 13.1, the Service Provider exceeds the relevant Service Failure Point threshold in respect of the same Service the Authority shall be entitled:

(a)  in respect of any Market Tested Service, to require the Service Provider to terminate the relevant Services Contract and if the Service Provider fails to do so within sixty (60) Business Days of being requested to do so, to terminate this Agreement; or

(b)  in respect of any Service that is not a Market Tested Service, to take such steps as it considers to be appropriate (either itself or by engaging others to take such steps) to ensure performance of the relevant Service to the standards required by this Agreement (or as close as possible to those standards as the circumstances permit and, in any event, in accordance with Good Industry Practice) until such time as the Service Provider shall have demonstrated to the reasonable satisfaction of the Authority that it will perform (and is capable of performing) its obligations in respect of the relevant Service to the required standard.

13.4  The Service Provider shall reimburse the Authority for all reasonable costs, losses, expenses or damages incurred by it in relation to taking the steps or engaging others to take the steps referred to in paragraph 13.3(b) and the Authority shall be entitled to deduct any such amount from any amount payable to the Service Provider under the provisions of this Agreement.