2.3 Current guidance states that PFI solutions should be pursued where they are likely to deliver better value for money, and that healthy competition is often the best guarantor of value for money.4 On this project there was little interest in the project in the market place. The Armouries, the Department and its advisors were unable to obtain any competing bids for the original agreement with RAI (paragraph 1.23). They nevertheless decided to proceed with the project, rather than consider whether the project should be cancelled or re-scoped to try and attract more private sector interest.
2.4 In addition to effective competition, the guidance recommends that, in most cases, value for money will also need to be demonstrated by comparison of private sector PFI bids with a detailed public sector comparator.5 On this project, although there was some consideration of alternative ways of involving private finance in the new museum in 1991 and 1992 (paragraph 1.22), no public sector comparator, which assumed the provision and operation of the new museum using entirely public funding, was prepared for the project prior to contract signature in 1993. This was because the Department had decided in June 1991 that the new museum should not be totally funded by the public sector but some of the funding should come from the private sector (paragraph 1.14). Also, this was an early PFI scheme and guidance on the preparation of public sector comparators had not been developed.
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4 Treasury Taskforce "Partnerships for Prosperity" (November 1997) paragraphs 3.08 and 3.10
5 Treasury Taskforce "Partnerships for Prosperity" (November 1997) paragraphs 3.10 to 3.12 and Treasury Taskforce Policy Statement No. 2 "Public Sector Comparators and Value for Money" (February 1998) paragraph 2.3.2