7.27.1 An Authority may feel it needs to use the Contract to allow it to intervene at Sub-Contractor level to protect its interest if a Sub-Contractor is underperforming (e.g. the Authority may want the right to direct or require the replacement of the Sub-Contractor). This approach should only be allowed as a final resort, since ordinarily it should be for the Contractor to manage its Sub-Contractors and intervention by the Authority will affect the degree of risk transfer achieved (see Section 7.25.1.2 (Monitoring of Sub-Contractors). The Authority should instead rely on the payment mechanism and its termination rights to address sub-standard performance.
7.27.2 Deductions under the payment mechanism and, ultimately, the risk of the Authority terminating the Contract for under-performance, should be a sufficient incentive on the Contractor to manage its Sub-Contractors' performance. The Contractor will typically ensure it has the right under the Project Documents to replace its Sub-Contractors before the Authority's right to terminate arises under the Contract. Concerns regarding Sub-Contractors' performance may be further addressed in the Contract by requiring a temporary increase of monitoring at the Contractor's expense in specified circumstances as well as requiring the Contractor to provide an acceptable plan outlining how any defects in the Service will be put right. Both of these measures impose costs on the Contractor and are only acceptable if there has been a persistent and verifiable period of under-performance (see Section 19.8 (Other Remedies for Poor Performance) regarding termination arrangements and calibration).