4.2 In order to find the best value for money solution for the delivery of the future requirement, the Authority should follow the established process for option appraisal business cases.1
4.3 In developing the business case options, the Authority will need to consider fully the strengths and weaknesses of the possible arrangements in the particular context of succeeding a PFI Contract. Procuring Authorities should be mindful of Best Value obligations and consider all options to ensure value for money. A key consideration is the extent to which the original assets in the PFI Contract need a major overhaul. Options that may need to be considered include:
• Undertaking a repeat PPP style procurement. This is more likely to be an option where the supporting assets are at the end of their working life (i.e. more likely for equipment-based contracts) or require a significant level of reinvestment in refurbishment or redevelopment. Where such investment is required, the business case will also need to consider whether the financing is best provided by the private sector (i.e. a repeat PFI) or using an alternative model where investment finance is provided either by the public sector or by a mixture of public and private.
• Procuring one or more service contracts operating on the existing assets. This is probably the most attractive option in most cases for building and infrastructure projects where the assets have significant further life and without the need for major investment to maintain their availability, with the asset being used for a very similar purpose as previously but the actual services specification being required to be updated for new technology, methods of delivery or standards.
• Re-scoping the service requirement by splitting it up or combining it with other services. It is important for authorities to consider how different services may best be delivered and procured, and the grouping of services under the original PFI Contract may not make sense any more.
• Taking the service provision back in-house. The option to discontinue private sector service provision and take the assets and any residual service requirement back into the public sector.
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1 See guidance at www.ogc.gov.uk/documentation and templates business case.asp and other guidance issued by HM Treasury and individual sponsoring Government Departments.