As each Partnerships Victoria project is unique, the contract director must comprehensively review the existing contractual arrangements to ensure they have a thorough understanding of the range of specific expiry provisions and how they apply to each party to the contract. These specific contract expiry conditions may include:
1. ownership and control of assets at contract expiry - the project assets and site usually remain with or vest in the State on contract expiry, but this is not always the case (e.g. Victorian County Court project). The Government's options are more limited if the private party retains ownership or control of the project assets at contract expiry. In some project deeds, the government party may have the option to ask the private party to decommission the project assets and remediate the site;
2. contract extension provisions - some project deeds include specific provisions for one or more extensions of the term for a pre-specified period on similar terms and conditions at the request of the government party and agreement by the private party. Of course, the project deed can be renegotiated by mutual agreement between the parties, but this is a larger and more complex exercise than the exercise of a contract extension provision under the project deed;
3. condition of assets at the end of term - unless the private party will own the project assets after contract expiry, the private party must ensure that the project assets meet the government party's return conditions at contract expiry. For the purposes of informing end of service considerations, the contract director must understand the condition of the project assets. The National PPP guidelines: commercial principles call for an independent, jointly funded, inspection four years prior to the end of the contract term. Contract managers should be aware of their project asset inspection rights under the project deed;
4. payment adjustments - the project deed may permit the government party to withhold service payments or seek a performance bond (usually up to a specific value) if, following the asset condition inspection, the government party is concerned that the Project Assets may not meet its condition targets on contract expiry; and
5. obligations on the private party if the government party elects to re-tender the services - if the government party elects to re-tender the contract services at the end of the contract term, the incumbent service provider must take all reasonable steps to ensure that the contract services continue with minimum disruption and risk to both government party employees and public users. Typically, these obligations will include providing project documentation such as asset registers or asset condition reports.
The contract director must review the end of term provisions in the project deed applying to the specific Partnerships Victoria project. Contract directors are encouraged to obtain appropriate professional legal advice to ensure they gain a thorough understanding of the State's rights and obligations under the project deed (and associated project contracts), and understand the implications of these rights and obligations for the end of term arrangements.