3.8 The Government is committed to ensuring that contract lengths are not driven by affordability requirements but by overall VfM. The length of the contract should reflect a variety of factors that need to be considered when selecting an optimum period over which a procuring authority wishes its services to be provided, ensuring an appropriate balance between affordability and VfM service delivery.
3.9 Following initial consultation in Summer 2006, the Treasury will enter further detailed consultation with departments and public sector bodies to establish appropriate sector specific contract lengths based on VfM. Caps will only be applied to new PFI projects that begin procurement after CSR 2007. Currently it is envisaged that the overall cap on contract lengths will be set at a maximum of 30 years with shorter contract lengths in some sectors reflecting the different service requirements in each sector - departments will need to demonstrate that projects in excess of 30 years can offer VfM. Consultation is likely to be finalised by early 2007 at which time specific guidance will be issued. While there is a process for further consultation to finalise sector specific contract lengths, procuring authorities should as part of their Stage 1 assessments now also include analysis on the choice of contract length.