Agencies administering a Project Deed should only consider waiving Abatements in exceptional circumstances, for example, where there are extenuating circumstances that have given rise to the Performance Failure.
Major Default Performance Failures and Default Termination Performance Failures are events where Project Co has incurred Abatements (whether or not the State actually makes some or all of those Abatements) to a specified level within a period of time which trigger a Major Default or Default Termination Event (as the case may be). In determining the relevant Abatement thresholds which constitute a Major Default or Default Termination Event, procuring agencies must consider the point at which the number or nature of Performance Failures are such that Project Co is considered to have significantly underperformed over a period of time. Abatement thresholds for Major Default Performance Failures and Default Termination Performance Failures are generally specified as Abatement amounting to more than a nominated percentage of the total Service Payment for a quarter, which is repeated over a number of consecutive quarters. The thresholds for Major Default Performance Failures and Default Termination Performance Failures are to be defined on a project specific basis.
Refer to section 2.38 for discussion on the impact of Intervening Events on Abatement.