The Private Finance Initiative contract for the new Dartford and Gravesham Hospital (HC 423, 98/99)
The costs of the Public Sector Comparator will include provision for possible cost overruns. The accuracy of these calculations might be improved by refining the data available on cost overruns on past traditional procurements to be consistent with the status of the cost estimates used in the Public Sector Comparator under review. The calculations of the various provisions for cost overruns should be reviewed carefully to avoid any possible double counting.
The Newcastle Estate Development Project (HC 16, 99/00)
Where the Private Finance option has a higher direct cost to taxpayers, departments should, before signing the deal, consider carefully the indirect benefits in terms of risks reduced or transferred to the private sector and the value to their operations of higher service quality. If quantification is not possible, they need to set out clearly and comprehensively how they have arrived at the conclusion that the unquantifiable benefits outweigh the quantifiable costs.
The Contract to complete and operate the A74(M)/M74 Motorway in Scotland. (HC 356, 98/99)
The Department's assessment of the cost of traditional procurement reflected in their Public Sector Comparator was based on sensible methods. We recommend that departments should: invite an independent contractor to participate in the development of the Public Sector Comparator as this can provide an important perspective on project risks; and adopt a value engineering approach in their assessment of the most economical public sector alternative.
Departments will always have alternatives to accepting a private finance solution. Where a similar but publicly financed project is a realistic alternative, departments will have prepared a Public Sector Comparator. But where such a project is not an option departments should carry out and document a systematic financial comparison with the realistic alternative option or options to the privately financed deal that are available, such as doing nothing or achieving the same objectives in a quite different way. This will help departments to measure the value for money of the private finance deal, and should contribute to the discipline of any negotiation concerning its terms.
The Contract to develop and operate the replacement National Insurance Recording System (HC 12, 97/98)
When assessing the value for money offered by bids, any Public Sector Comparators should be based on the best available information but the degree of precision required in any case should be considered before committing resources to the calculation of a comparator.
The New British Embassy in Berlin (HC 585, 99/00)
Departments should put themselves in a position to identify the reasons for major differences between the bids and the Public Sector Comparator, both in overall terms and in different elements such as construction and operating costs.
The first four Design, Build, Finance and Operate roads contracts (HC 476, 97/98)
Where the result of a comparison is very sensitive to key assumptions, such as, the discount rate, there is a limit to how far it might be worthwhile refining the calculation. Spurious accuracy may result. In such cases a Public Sector Comparator provides indicative figures only.