The purpose of the Public Sector Comparator (PSC) is to:
■ determine whether there is value for money in delivering the project as a ; and
■ provide a management tool to the project team during the procurement process.
The PSC is essentially a refinement of the feasibility analysis completed in the project initiation phase that incorporates the outputs identified in the output specification. While the feasibility analysis is intended to identify whether the project provides positive benefits to the community net of costs, the PSC provides an assessment a priori that the project provides value for money to Government.
The PSC should not be used solely as a pass/fail test. Although the PSC will facilitate pass/fail decisions when there is a wide difference between the PSC and private bid prices, public private partnerships procurement is a complex process that relies to a large extent on judgement, skill and experience. In the majority of cases, the difference between the PSC and the private sector proposal will be relatively narrow, and arguably a properly constructed PSC should logically lead to this outcome. Consequently, the agency will need to make professional judgements as to the value for money to be derived from contracting with the private sector. The PSC is the primary management tool for assisting these decisions.
A PSC is not required for financially freestanding projects that do not rely on budget outlays or where delivery by the public sector is not contemplated.
The PSC is also closely related to the benchmarking that agencies would normally undertake to assess the efficiency and effectiveness of outputs. The PSC represents the base case for the quantity and quality of service outputs that can be delivered by the agency within current resource constraints, adjusted for competitive neutrality effects, for example, taxes and charges or exemptions from legislation or administrative regulations.
The starting point for the PSC is to identify all the costs and benefits to the agency as if it were to deliver the full range of outputs as a conventional procurement. The major part, if not all, of the PSC can be derived from the analysis undertaken in the project initiation phase. This will include the cost of assets such as buildings or equipment procured conventionally, as well as the whole of life operating costs of those services and any external income. The final PSC will include the costs of the risks being retained by the public sector and identify those to be transferred to the private sector.