4.15 Where the required service and/or asset is of a particularly specialist nature there may only be one supplier in the market who is able to fulfil a procuring authority's requirements. These circumstances are likely to arise only rarely. Where this is the case and the authority is able to demonstrate this to the satisfaction of its own accounting officer and the relevant departmental PFU, the authority may wish to pursue a single source procurement.
4.16 If there is only one supplier this does not automatically mean that PFI is not an appropriate procurement route as the absence of competition may apply equally whatever the procurement route. As such the procuring authority should apply this Guidance in the usual way to ascertain if PFI is likely to be VfM.
4.17 If the assessment suggests that PFI is VfM then the procuring authority should consider what other protections can be put in place to ensure VfM is achieved in a single bidder environment. These might include:
• Requiring the bidder to undertake transparent market testing of those parts of the supply chain where competition can be generated;
• Where market-testing is not possible, gathering data on comparable procurements so the prices, terms and conditions can be compared and benchmarked. Understanding the extent of the adherence to SoPC terms;
• Ensuring that specialist technical advice relevant to the particular service is available either in-house or through appointing external advisors; and
• Examining the case for increasing flexibility in the contract term by limiting the initial term of the contract and/or incorporating break points in the contract such that the procuring authority can retender the contract should new suppliers enter the market.
4.18 Although the decision as to whether to proceed or not rests with the Departmental Accounting Officer, there is a requirement to inform HM Treasury where a project is proceeding as a single source PFI procurement. The procuring authority should also refer to guidance published by OGC on dealing with single supplier procurements.12
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12 OGC http://www.ogc.gov.uk/introduction_to_procurement_market_creation.asp