1. This guidance note applies to all members of the acquisition community involved in PFI projects. It supplements existing policy and guidance on estates matters with regard to PFI projects produced by Defence Estates, HM Treasury and the MOD Private Finance Unit (PFU). The guidance itself is not mandatory; this is partly an acknowledgement of the principle and need for flexibility of approach. However acquisition teams are required to provide a full presentation, explanation and justification on their proposed procurement approach, incorporating the planning, design and estates matters in their Outline Business Case (OBC) and Market Engagement Review Note (MERN). Where there is significant difference from this guidance, explanation and justification is required. It is for acquisition teams to review and confirm the acceptability of its proposed approach with the MOD PFU and Defence Estates at the earliest opportunity.
2. This guidance should be read in conjunction with the following policy and guidance:
a. All PFI projects involving construction in the built environment must comply with the requirements of JSP 434 (Defence Construction in the Built Environment) which provides comprehensive 'best practice' guidance on all aspects of the delivery of Defence construction in the built environment. Its objective is to improve effectiveness within the context of practicality, achievability and value for money on an ongoing basis. In JSP 434, best practice is identified and derived from a combination of Ministerial commitments, mandated regulations and policies, industry best practices, research and applications to tools and improved performance, and business and commercial processes. In doing so it is acknowledged that construction is a significant, highly regulated, particularly diverse activity and, as such, will be subject to continual onward change.
b. The EC Public Procurement Regulations apply to MOD PFI contracts unless the nature of the work qualifies for an exemption. Reference must be made to the detailed policy and guidance on the mandatory procedures to be followed - available on the Acquisition Operating Framework.
c. Competitive Dialogue in 2008: OGC/HMT joint guidance on using the procedure.
d. HM Treasury mandates the use of standardised terms and conditions for PFI contracts. Therefore all PFI projects/programmes shall comply with HM Treasury's Standardisation of PFI contracts (SoPC) version 4 and the MOD Standard Project Agreement version 1 (including subsequent Addendums) unless specific and explicit authority to derogate from it has been obtained from HM Treasury1 and MOD PFU2.
e. MOD PFU Guidance Notes: Preparing the Invitation to Negotiate for PFI projects and Negotiation of PFI projects.
f. Further guidance on other site and estates issues to be addressed in PFI contracts can be found in Parts 2, 3, 5, 9 and 10 of MOD PFU Guidance Note: MOD Project Agreement version 1.
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1 For SoPC4 derogations which must be approved via the MOD PFU.
2 For MoD PAv1 derogations.