Although in theory it is sensible to compare costs to ensure that value for money continues, the practice of benchmarking and market testing is often difficult and sometimes impossible. This is particularly pertinent in the waste sector where the location and capacity of infrastructure assets may mean that there may be a lack of true competition within the Authority's geographical vicinity.
There may also a difficulty due to the inter-related nature of the services being purchased, and the absence of a ready comparator. Notwithstanding the practical difficulties, benchmarking and/or market testing have been successfully incorporated in a number of waste PFI contracts using the guidance provided in Section 15.5 of SoPC4.
Generally, only 'soft' services are appropriate for benchmarking and market testing. Soft services are those services that do not involve a significant capital investment in their performance or affect the value of any capital asset under the Contract. Services such as life-cycle maintenance should not be benchmarked or market tested.
Authorities should be aware that any benchmarking or market testing could result in either an increase or a decrease in the Unitary Charge, and the Contract will need to include arrangements for dealing with any potential outcomes.