1.8 In attempting to achieve the best value for money in PFI procurement, public sector bodies should seek to transfer the optimum, rather than the maximum, risk to the private sector, by allocating individual project risks to those best placed to manage them.
1.9 DVTA had identified its requirements for risk transfer at an early stage and concluded that the contractors were best placed to manage all the main risks (except for external changes affecting the demand for the service - such as changes in law). DVTA considered that the signed contract achieved the risk transfer it sought and fully transferred to the private sector the requirement to provide sufficient capacity to allow it to achieve its targets related to vehicle testing. The PFI contract contained relevant indicators in this regard:
• vehicle tests must take no longer than an average of 18 minutes to complete; and
• customer waiting times for tests must not exceed an average of 14 calendar days overall, or a maximum of 21 calendar days at individual test centres.
1.10 However, since contract signature in March 2001, the MOT2 equipment has not been accounted for as an asset in the financial accounts of DVTA, nor in those of the contractors. Given these circumstances, the issue of which party has assumed the greater proportion of the risks and benefits associated with the project does not appear to have been fully substantiated. Appendix 2 provides further background information on the accounting treatment for the MOT2 equipment.