1.5 In 1995, consultants commissioned by DVTA to advise on the most efficient method of undertaking its vehicle testing operations concluded that any further productivity improvements could only be achieved through the introduction of new, automated equipment. An economic appraisal, conducted in 1996, concluded that the introduction of an Integrated Test Lane (ITL) concept, would provide the best value for money over the next 10 years, and also highlighted the potential for procuring the equipment through the Private Finance Initiative (PFI).
1.6 In line with then emerging best practice, DVTA's outline business case options included acquisition of the proposed ITL facilities through a PFI contract, and this subsequently emerged as the preferred option. In November 1996, the Department of Finance and Personnel (DFP) approved the outline business case, subject to the completion of a full business case before contract signature. When completed, in January 1999, this confirmed PFI as the optimal solution in value for money terms (see paragraph 3.20). Following very difficult three-year negotiations between DVTA and the preferred bidder, the contract for the MOT2 project was signed in March 2001. A detailed summary of the procurement process for the contract is provided at Appendix 1.
1.7 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 to refresh and maintain them for a period of 15 years thereafter. DVTA's vehicle examiners would continue to be responsible for operating the equipment. The contract cost was £57 million (in cash outflow terms). In addition to payments made to the contractors during the roll-out of the equipment, DVTA is required to make annual, index-linked, unitary payments2 (currently £3.25 million) to the contractors for providing and maintaining the facilities.
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2. The annual amount paid to the contractors in return for provision of the service.