• the department identified concerns about the design at several stages;
• during procurement, the department was of the view that its concerns about the design were surmountable;
• the procurement competition was weak and the department therefore had little scope to use competitive tension to encourage Laser to improve the technical quality of its bid;
• commercial opportunities to exploit surplus land further reduced the effectiveness of competition;
• the department wanted to ensure that the private sector remained unambiguously responsible for delivering satisfactory output;
• the principles of the PFI put considerable emphasis on transferring risk to the private sector for three main reasons:
1. to provide strong incentives for the private sector to control risks;
2. to pass each risk to the party best able to manage it; and
3. to encourage innovation and flexibility by giving the service provider discretion to determine how best to provide the service specified by the public sector.
• by procuring the new facilities through an output-based specification, the department sought to transfer design risk to the private sector;
• balance sheet treatment was a major influence on the department's procurement process;
• the department retained continuity in the project team;
• the department's estimate of the costs to procure the PFI contract, to manage its obligations during the construction phase, and to meet its residual responsibilities increased from £30 million to £53 million;
• the department reworked its cost-benefit analysis and concluded that despite the increase in the costs of its residual responsibilities, the project was still value for money;
• since awarding the contract to Laser in July 1997, the department has spent nearly £9 million on advisers;
• the department avoided compromising its contractual position
• as problems evolved the department set limits to its partnering role;
• by refraining from issuing variations, the department avoided compromising its contractual position on design responsibility;
• the department kept its options under review;
• the termination sum was reasonable within the terms of the contract;
• all parties got less from the project than they had hoped; and
• when the new facilities are completed the department expects them to meet its requirements.