3.30 All PFI contracts have the option of withholding a proportion of the unitary charge in the event of sub-standard performance, with deductions reflecting the severity of the failure. The scenarios whereby deductions can be made will differ between contracts. For 35% of respondents there are no provisions to fund rectification work and the main method to compel SPVs to complete required work is by withholding a portion of the unitary charge.55 However, this can be difficult - one contract manager told us that there is no contractual right to withhold the unitary charge on the grounds of incomplete rectification work. Deductions can only be made on the grounds of non-performance and unavailability, meaning that if the school building is not being maintained, but remains operational, the authority cannot withhold any payment.
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55 Question 12: Did or does the Project Agreement contain a provision for a retention fund to cover any rectification work? Number of responses: Yes - 28, No - 21, Don't know - 10, 21/59 = 35.59%, from a survey response of 59 (as 16 do not revert back to the authority).