10.3.1 Where the Authority elects to retake possession of the Assets in accordance with Section 25.2.3 (i.e. where the Assets have no alternative use), the Contract must provide that the Authority pays a certain proportion of each Unitary Charge during the last few years of the Contract into a secured retention fund3 to ensure that it can call on sufficient funds to carry out any maintenance identified as necessary by the survey. The period for and the size of payments into the retention fund should be set on a project specific basis, by reference to the amount likely to be needed to rectify defects in the Assets.4
10.3.2 If the Contractor carries out any maintenance identified as necessary by the survey, it can be reimbursed from the retention fund. Otherwise, the Authority can use such funds itself to carry out necessary maintenance. If the amount retained is insufficient to cover all required maintenance, the Authority will have to recover the balance from the Contractor as a debt. Any balance remaining in the fund belongs to the Contractor and should be paid to the Contractor together with accrued interest.
10.3.3 Amounts may also be payable to the Authority in respect of arrangements for sharing of gains or cost savings as predicted from the Lifecycle Reviews immediately preceding the date two years prior to the Expiry Date, including the payment of the Authority's share of any Lifecycle Surplus as specified in Section 9 (Hard FM Maintenance Services). The Contract should provide that during the final two years of the Contract Term, the Authority may deduct 1/36 of the predicted Lifecycle Surplus from each monthly Unitary Charge otherwise payable to the Contractor (see Section 9.2 (Lifecycle Fund) for suitable drafting)).
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3 This may be achieved by establishing the account in the sole name of the Authority or charging the account to the Authority.
4 See footnote 1 above.