1.13 Some authorities may have been tempted to transfer as much risk as possible to the private sector. But if contractors accept inappropriate risk to win the competition, the subsequent realisation of those risks within a very competitively priced contract may lead to problems for the contractor and, therefore, for the authority. The due diligence carried out by contractors' banks may sometimes stop contractors taking on too much or inappropriate risk. Some contractors told us, however, that in their experience banks would accept a deal where too much risk was being transferred if the contractor provided a parent company guarantee. It is important to recognise that bankers' due diligence is done on behalf of themselves and may not give full reassurance about project risks to other parties.
1.14 The Gateway process, introduced by the Office of Government Commerce in January 2001 for civil procurement, aims to help to ensure that risks are allocated to the party best able to manage them. The Gateway process will require high risk PFI projects, and all information technology projects, to pass through five gateway reviews at key decision points in the procurement process. These decision points include before the procurement strategy is defined, before tenders from bidders are invited and before contracts are signed. Each of these points will provide incentives for authorities to review the proposed risk allocation and, if necessary, to amend it.