8.19 The PRG plays an important role in making sure that proper judgment and discretion are employed in the PFI procurement process, and that procuring local authorities have had access to and implemented all the necessary support. As part of this, ensuring compliance with the standardised PFI contract is crucial to avoid poor commercial deals and higher transaction costs for local authorities. For this reason the PRG already assesses compliance with the standardised PFI contract at an early stage and will take an increasingly robust line against non-compliant projects in the future, including the possibility of withholding credits.
8.20 Often, the PRG only has the opportunity to judge compliance with the standardised PFI contract if projects experience difficulties and revert to the committee for additional resources. In order to better promote compliance with standardised terms, the PRG is currently developing new mechanisms to apply a specialist evaluation of contract compliance:
• prior to, and as a condition of selection of preferred bidder, this would identify all derogations from the standardised PFI contract and any sector specific guidance, and ensure that adequate commitment letters have been obtained from bidders, subcontractors and lenders; and
• shortly before financial close, when a PFI project contract is signed, to identify and rectify late deviation from the standardised PFI contract.