1  Introduction and Basis of Guidance

This Guidance has been produced to supplement the Housing Procurement Pack (HPP) for those Authorities procuring a non-HRA PFI Project.  It should be read with the notes in the HPP standard form Project Agreement.

This Guidance is not exhaustive in relation to non-HRA Projects but rather is designed to highlight and give guidance on the key risk areas Authorities will be required to consider and resolve to deliver a non-HRA Project.  The Guidance sets out suitable drafting to be used for a number of provisions in place of the HPP standard form Project Agreement.  This drafting is not required or mandatory drafting.  However it has been approved by HM Treasury for standardisation purposes which means that it can be used without need for any further HM Treasury derogation approvals1.  It is designed to aid Authorities in putting together their own Project Agreements for their schemes and should be utilised as the base position.  Authorities should explain and justify any proposed different approach including the VfM position.

The Guidance and drafting set out in this document is predicated on the use of a traditional SPV project finance structure.  If different structures are used to deliver a non-HRA Project (such as a corporate or on balance sheet structure) then Authorities will need to take detailed legal advice on suitable amendments to the drafting set out in this Guidance to accommodate such a structure.  It also assumes that the Authority transfers an interest in land, for housing, to the Contractor.  If, on any scheme, the Contractor provides its own land, once again advice will need to be taken and amendments made.

Authorities should raise and resolve on balance sheet structure issues at the earliest opportunity with the Homes and Communities Agency (HCA), normally before commencement of the Invitation to Submit Detailed Solutions (ISDS) stage and before close of the ISDS stage at the latest.

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1  Where any of these provisions modify required drafting sections of SoPC4, they can be used without further HMT approval, but if further changes to such provisions are put forward, such further changes will require HMT approval though PUK in the ordinary way.