3.23 The centre of any PFI project is a concession contract within which the public sector specifies the outputs it requires from a public service facility, and the basis for payment for those outputs. The level of outputs required by the public sector is typically drawn up in close consultation with the public sector workers - doctors, teachers, firemen or policemen - who will be using the asset and support services provided through the PFI contract. This contract is the key document that sets out the risk-sharing arrangements between public and private sectors in a PFI project and is the subject of extensive guidance.
3.24 Public service requirements would normally be framed not as precise input specifications and designs for a particular asset, but as an output specification defining the service required; for example, supported hospital beds for a certain number of patients, or prison accommodation for a specific category of inmates. This approach helps utilise the private sector's ability to provide innovative solutions to meet these requirements. Once the public sector has determined the level of outputs it requires to run the public services, the private sector is then invited to submit proposals which meet the desired output objectives using best private sector expertise and know-how to deliver the service.
3.25 When the private sector has submitted bids to fulfil the public sector's requirements, the public sector evaluates these proposals, selecting the option which represents the best value for money. In making this evaluation the public sector should take advantage of the empirical evidence available, both qualitative and quantitative, and exercise objective judgement in selecting the best option, using appraisal and evaluation criteria, and a PSC to determine whether the PFI option offers better value than conventional procurement. It is vital that the public sector is equipped with the skills to do so. Chapter 5 discusses steps the Government has taken to ensure these skills are in place, and Chapter 8 lays out further measures to improve the quality and effectiveness of public sector clients. Chapter 7 discusses reform of the appraisal process to further ensure that all the relevant benefits and disbenefits of PFI procurement are taken into account at the earliest appropriate stage and throughout a procurement.