DET commissioned a number of studies into the benefits and limitations of the PFP approach and the private sector's capabilities.
In 2001, prior to the first contract, a consultant examined the procurement of nine new schools and advised DET that the PFP approach offered the greatest potential for improved value for money based on:
■ risk transfer - allowing those risks to be allocated to the party best able to manage them
■ use of an output-base specification - DET had until then used a traditional approach to procurement which was detailed and prescriptive as to the inputs required from the private sector and allowed little scope for innovation in facility and service delivery
■ use of long term contracts - allowing the private sector scope to recover the initial investment, develop alternative approaches to service delivery and focus on whole-of-life costing. The outsourcing contracts managed by DET were typically for three to five years, whereas under a PFP procurement it would be possible to obtain a contract duration of up to thirty years
■ performance measurement and incentives - payment to the contractor would only commence when a satisfactory flow of the services, to the required standard, was provided. Ongoing payments to the contractor would depend on it continuing to meet the specified performance criteria
■ use of private sector management skills - the private sector would have much greater discretion over how the educational facilities and related services equipment would be provided and maintained than they would under a traditional procurement.