3. By the mid-1990s, DVTA's vehicle testing equipment was outdated and increasingly prone to breakdown, and several other factors posed significant risks to the integrity of its vehicle testing processes. Furthermore, the imminent introduction of EU requirements for testing of additional items would place further pressure on capacity (paragraphs 1.3 and 1.4).
4. A 1996 economic appraisal highlighted the potential for procuring the new, automated, equipment through the Private Finance Initiative (PFI). Following very difficult negotiations between DVTA and the preferred bidder, the contract for the project (known as MOT2) was signed in March 2001. With a total cost of £57 million, the contractors were required to design, finance and build 61 computerised and calibrated test lanes at DVTA's 15 test centres between 2001 and 2003, and maintain them for 15 years thereafter. DVTA's vehicle examiners would continue to be responsible for operating the equipment (paragraphs 1.5 to 1.7).
5. DVTA considered that the signed contract fully transferred to the contractors the requirement to provide sufficient capacity to allow it to achieve its targets related to vehicle testing. Since contract signature, the MOT2 equipment has not been accounted for as an asset in the financial accounts of DVTA, or those of the contractors. Consequently, the issue of which party has assumed the greater proportion of risks and benefits associated with the project does not appear to have been fully substantiated (paragraphs 1.8 to 1.10).
6. To date, DVTA has experienced difficulties in achieving the times specified in the PFI contract for carrying out vehicle tests. To address this, it has been monitoring test times being achieved, and engaged in ongoing negotiations and testing of the equipment with the contractors. As yet, no final solution has been agreed and negotiations are continuing (paragraphs 1.11 to 1.13).