41. In the NAO's view PSCs "cannot be relied upon as a sole source of assurance. They are susceptible to manipulation" (p 102). Mr Humpherson added that "you should never regard the PSC as a pure pass-fail test and the only arbiter of value for money" (Q 257). The NAO also took the view that "financial modelling is error-ridden and given undue influence" in the choice of procurement route (p 102).
42. Dr Stone said value for money tests omitted potential benefits from delivering the project earlier by the PFP route: "The assumption is that however you deliver the service, the service and benefits to society will be identical, but if you deliver a new hospital or a new school earlier than would otherwise be the case I would contend that there are social benefits from that that matter and those are not measured. We assume that the results are unvaried and I think that is plain wrong" (Q 13).
43. Mr Humpherson emphasised that deciding which procurement route to take is "more than just a contract versus a model" and that the procuring authority is expected to look at a wide range of other factors, some fairly subjective, in addition to cost, such as assessing and valuing the flexibility of the different procurement options, and whether the public authority is absolutely sure that the prices quoted by the contractors are fair and reasonable (QQ 258-260).
44. A Value for Money test based on imputed costs of a Public Sector Comparator (PSC) should be a useful tool in assessing the relative costs and merits of private finance and traditional procurement. But its value is limited by shortage of relevant data and by the selective inclusion of optimism bias. Even if these deficiencies were addressed, as we recommend above, public authorities should not rely solely on PSCs when choosing a procurement route.