A Commercial Acceptance regime will be used on every Availability PPP Project.
Commercial Acceptance generally occurs when:
• the Works have been completed and all Returned Works have achieved Returned Works Acceptance (except for any Remaining Works and Returned Works Outstanding Items (see section 2.25.4.2 and 2.25.5)); and
• if applicable, the Commissioning Period activities have been carried out.
Given the importance to the State of timely achievement of Commercial Acceptance, clause 26.4 of the PV Standard Project Deeds provides that during the Development Phase the Independent Reviewer is required to continuously review the progress of the Works and determine whether it believes that Project Co will or will not achieve Commercial Acceptance by the Date for Commercial Acceptance (refer to section 2.26.5).
Consistent with the fact that the Maintained Assets are intended to be operating from Commercial Acceptance, the PV Standard Project Deeds assume that full Services delivery and therefore payment of each full Service Payment will commence from the Operational Commencement Date. This may need to be considered on a project specific basis if Services are ramped up over a period of time or some Services are provided prior to Commercial Acceptance.
On Linear Infrastructure Availability PPP Projects, the Independent Reviewer certifies whether or not Commercial Acceptance has been achieved. On Social Infrastructure Availability PPP Projects, the State will typically certify whether Commercial Acceptance has been achieved with input from the Independent Reviewer. This is because the criteria to achieve Commercial Acceptance are more government or Operator specific and less technical in nature (for example with a school, prison or hospital), and the State is the best party in terms of expertise and experience to determine whether the asset meets the purposes set out or inferred from the PSDR.
The State and Project Co may agree to direct the Independent Reviewer to issue the Certificate of Commercial Acceptance and agree that any outstanding work will be completed by Final Acceptance as Remaining Works. As the State will be paying for the Project Assets after Commercial Acceptance, this power should only be used in very limited circumstances, for example, for Minor Defects or in the context of a negotiated settlement for delayed Commercial Acceptance. Where outstanding issues will impact Operation or Functions, exercise of this power will require DTF agreement.
Certification of Commercial Acceptance is final and binding on the parties other than in the case of manifest error. The issue of the Certificate of Commercial Acceptance does not constitute evidence that Project Co has satisfied the FFP Warranties, approval by the State of the completion or acceptance of the relevant Works, or evidence that all or any other obligations under the Project Deed have been satisfied. Accordingly it is effectively confirmation of achievement of a milestone to trigger commencement of Service Payments.