1.17 Ultimate business risk cannot be transferred to the contractor because if the contractor fails to deliver the specified project, the public sector still has the responsibility for delivering the required public service. There have been notable cases where PFI projects have failed or been delayed with significant adverse consequences for the public sector. In its reports on the contract to develop and update the replacement National Insurance Recording System1 (NIRS2) the first sizeable IT project signed in 1995, the Committee of Public Accounts commented on the delay in implementing the project. The Committee said that departments should ensure that they understand fully the potential impact of delay on their business and customers and that it is the department's responsibility to draw up contingency plans to cover the risk that delivery of the project would be delayed.
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1 Committee of Public Accounts: 46th Report, 1997-98, HC 472, The Contract to Develop and Update the Replacement National Insurance Recording System