The PSC should be competitively neutral with the private sector proposal. Competitive neutrality ensures that the analysis of private sector bids (including in-house bids) does not lead to preference by reason only of re-distributive mechanisms or other policy arrangements affecting either the private or public sectors.
Where applicable, the PSC should therefore incorporate State and Local Government taxes, levies or charges that may be payable by the private sector, as well as the cost of insurance that the public sector may otherwise insure through captive insurance.
An example of the main competitive neutrality adjustments to be made in the PSC is provided in Appendix 2.