5.52 In response to the ISFT, the participants' financial proposals should consist of the tariff and charging arrangements for the service to be provided. There may also be a number of options depending upon contract length. These will be submitted as variant Final Bids. Detailed advice will be provided by the Project's financial adviser.
5.53 Participants should be required to provide a financial model of their bid in the appropriate format. Participants should also be required to present the financial model so that the key criteria on which the evaluation of bids will be based are shown in a standard format. This will help the NHSScotland body and its advisers to construct suitable spreadsheet models to allow sensitivity calculations, comparisons etc to be made.
5.54 NHSScotland bodies should also indicate to participants the variables that they will seek to test. This will enable participants to have regard to this when preparing their models and for both parties to check the accuracy of the model by carrying out the same checks. Financial models are also discussed in Section 3 Technical & Commercial Issues.
5.55 The key components of the financial evaluation include:
• the annual tariff to be charged and the profile of payments over time;
• an assessment of the key financial assumptions on which the bid is based;
• the method of financing (including assumptions on funding and hedging costs);
• an assessment of risks;
• sources of income;
• project timetable.
5.56 Participants should be asked to state the interest rate assumptions on which the financial model is based. NHSScotland bodies should require bids to be returned with sensitivity analyses showing the effect of a rise of 0.25% and 0.5% above the relevant interest rates to the source of financing to be used. Bids should be requested so that, including an interest rate buffer, they are within the NHSScotland body's stated affordability ceiling at the time of submission of bids. This interest rate buffer should allow the NHS body some flexibility if interest rates rise between when bids are received and financial close. By the time of Full Business Case submission, an interest rate buffer of 0.25% above the relevant interest rate at the time of FBC approval will be required.
5.57 The evaluation of bids is discussed in more detail in Chapter 6 of this Section of the guidance.