The nature of Partnerships Victoria project deeds is that all project risks not allocated to the government party implicitly fall to the private party.
Government's preferred position is that this interface risk is allocated to the private party. Allocation of interface risk to the private party may entitle the government party to financial compensation if the private party's failure to deliver the contracted services interferes with government's ability to provide services.
Government may also retain a significant residual risk if it has a continuing, non-delegable duty of care to people receiving services provided by the private party. There can be similar residual risks to government where a project risk allocated to the private party materialises and there is a political or public interest imperative for government to deliver the services.
Government also bears risk if the private party is unable to continue to provide the contracted services due to circumstances such as financial failure of a major sponsor or the triggering of a major probity event (i.e. relating to whether the private party is a fit-and-proper legal entity to undertake the contracted services). While the government may be entitled to financial compensation under the project deed for such events, government ultimately retains responsibility to continue service delivery.