11.2.2  Performance bond during the operating term

(a)  In considering the appropriate type and structure of any operating term bond, government may take into account a range of factors, including:

(i)  the value for money implications of requiring a bond;

(ii)  the level of overall security provided by the private party to support its operational obligations;

(iii)  the commercial incentive of the private party to meet its obligations; and

(iv)  other project specific requirements.

(b)  Following consideration of the factors described above, government may seek one or more of the following:

(i)  an up-front operating term bond directly from the private party;

(ii)  an ability to increase the amount of the up-front operating bond as a result of repeated or severe breach;

(iii)  where no bond is required at project commencement, the right to require that such bond be provided at any time during the operating term where a repeated or severe breach occurs; and

(iv)  a requirement that the private party procure a performance bond or parent company guarantee in respect of the operating sub-contractor's obligations (on similar terms to the construction sub-contractor performance bond).