[1.1]

1.1.1  Under most PF2 contracts, Soft Services will be provided by the Authority and hard services by the Contractor. In the minority of cases where Soft Services may be transferred to the Contractor (see Section 7 (Services and Service Commencement)) such as in Prison contracts, it is appropriate to include some value testing procedure, to apply at five yearly intervals, allowing for the Soft Services to be re-competed or re-priced. This means that the Authority Service Provider will only have to take a five year view on the price of his services and accordingly will not need to price contingencies for long term changes in costs. Similarly, although the Authority should ensure it obtains a competitive price initially by holding a well-run competition, it will take additional comfort if there is some means of ensuring the price it has agreed to pay in future years will not be in excess of future market prices for such Services.

This section accordingly only applies to the minority of PF2 projects where the Contractor is providing significant Soft Services (such as catering, cleaning and security). By "value testing", this guidance generally refers to either market testing or benchmarking, although other forms of value testing may sometimes be appropriate.