17. We were concerned that a contractor facing losses because it had failed to allow sufficient contingencies for risks occurring might seek to cut the level of service. The OGC said that an authority would have remedies against the contractor for failure to deliver the contracted level of service because there would be contractual payment deductions for poor performance.32 58 per cent of authorities surveyed by the NAO who had an agreed performance deduction review process had made deductions in accordance with that process.33 The Major Contractors Group said that these deductions put pressure on contractors, though some cases, such as a contractor taking a hospital ward out of action for maintenance, did not arise from an assessment of the contractor's performance under the contract, and would be expected to arise during the contract period. It would be unreasonable to expect every hospital ward to be available all of the time throughout a 30 year contract. Contractors would probably have taken the likelihood of deductions into account when pricing the contract and the OGC confirmed this was normal business practice.34
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