3.9 Benchmarking is a technique whereby a contractor's prices for certain services are compared with prices charged by other contractors for similar services. As Treasury guidance recognises, if the contractor's prices are higher than the prevailing market prices, then they should be adjusted on an agreed basis to reflect the differential.24 In including such provisions in a contract, departments need to balance the potential benefits with the impact this may have on the opening price of the contract. Also, alongside the possibility of benefiting from reducing market prices, departments may need to permit upwards adjustments to the contract price in the event of increasing market prices.
3.10 The public sector has tended to use benchmarking to assess the price for facilities management, information on which can be obtained easily from alternative suppliers. This technique could also be used to compare the terms of finance on an existing PFI project with those pertaining to more recently signed deals of a suitably similar nature. This will provide departments with a better platform from which to discuss the sharing of any refinancing benefits where this is justified. The Treasury intends to give further consideration to these and other issues related to benchmarking in its forthcoming review of guidance on PFI financing issues.
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24 The Standardisation of PFI contracts paragraph 14.4.1 (HM Treasury July 1999).