11. As noted above, there is a strong likelihood that PFI projects will be subject to change. The Treasury recognises that PFI contracts will need to adapt to changing requirements. Its research found that 83% of projects reported that their contracts always or almost always accurately specify the services currently required. Whilst this leaves a minority of projects where there may be a gap between what the contract provides and current needs, the Treasury considers the results of the research as evidence that most contracts were working well in adapting to change, and that the relevant incentives within contracts are working. At the same time, the Treasury recognised that if PFI contracts are to continue to adapt to changing public sector needs during contract periods which may run for 30 or more years, it is important that the contracts are flexible to allow variations to service delivery to be made and that the terms on which these variations are made can be demonstrated to be value for money. The Treasury will be making amendments to the standard contract terms to improve their ability to deal with variations.
12. The NAO is collecting data on contract variations which have already been made and this will be taken into account by the Treasury in the revisions to the standard contract clauses and related guidance on PFI contract variations. The data which the NAO is collecting will form the basis of a report for the PAC on contract variations later in 2007.