These are services provided by the private sector to the public sector, often where a significant part of the cost is capital expenditure. For example:
• a private sector firm selling kidney dialysis services to a hospital;
• the private sector providing accommodation and day-to-day care for the elderly; or
• the provision of prison places by the private sector through designing, building, financing and operating new prisons.
The public sector purchaser needs to be assured that the value for money of obtaining services in this way is better than the alternatives. Contractual arrangements must be on a commercial basis and not involve the public sector in underwriting the asset's use by other customers.