16. As with all projects, the first step before assessing the VFM in procurement is to determine whether there is a strategic need for the Department to undertake the investment to meet a particular requirement. The project team will need to follow specific guidance in Chapter 2.2 of JSP507 on how to analyse the strategic need for a potential requirement and whether the Department needs to make an investment to realise that need. As far as it is practicable, the policy decision to invest funds should be separated from the decision to undertake a particular procurement route.
17. The specific steps that the project team needs to undertake are:
∙ Justify the Requirement: The requirement must be linked to delivering final Defence outputs, and the implicit benefits of committing expenditure to the project must exceed the costs.
∙ Set Objectives: The objectives of a proposal must be clearly set out in order to identify the full range of options which may be available to deliver the proposal. The objectives should be developed from the requirement, and should clearly identify the outputs expected as a result of implementation.
∙ Develop Options: A range of options meeting the established objectives needs to be identified. Options need to establish whether all elements are justified; what benefits do individual elements bring; and could better overall VFM be achieved if some elements were removed, or benefits achieved by other means. The list of options should include:
a) Do nothing;
b) Do minimum;
c) Investment Option/s;
• Reviewing and Evaluating Options: The costs and benefits of the options need to be appraised to determine whether an investment decision needs to be made.
18. DASA-DESA will assist the project team to evaluate and appraise options in order to determine whether investment is required to meet a strategic need for the Department. If a decision to undertake an investment is made then the next step is to establish where there exists a prima facie case for PFI procurement.