2.68 A comparison of the expected cost of a PFI solution with the range of possible costs that might have arisen under conventional procurement has often been used as a measure of the value for money of a proposed PFI solution. In some circumstances, this form of comparison with a PSC may be useful. It may assist decisions at the early stages of a procurement when alternative forms of procurement are being considered if conventional procurement is a credible option and there is sufficient data on what the costs of a conventional procurement may be. But, as the PSC is only dealing with possible costs, and necessarily incorporates judgements and assumptions about the future which may not turn out to be correct, other factors may also influence the choice of procurement. During the evaluation of PFI bids a PSC may identify scope for seeking improved pricing offers from the bidders or, if the value for money of the PFI solution appears doubtful, reassessing the form of procurement. The cost comparison against a PSC can also be helpful in post-contract analysis as it can help departments to consider their approach to future projects where conventional procurement remains an option.
2.69 In this project MOD found the PSC useful in reaching its decision initially to go down the PFI route, and later when analysing the bids as the procurement progressed. The PSC also enabled MOD to negotiate a late price reduction from Modus as MOD used the PSC in its negotiations as a price level which the PFI price needed to at least match if MOD was to agree to finalising the PFI deal.