19. Once the project team has established that there is an investment need to meet Departmental policy through the options analysis process, the project team must then establish whether there is a prima facie case for a PFI procurement given the nature of the proposed capital investment and services required. PFI should only be considered where the evidence of the benefits which PFI can offer indicates there is a prima facie case for it. These include:
∙ it is a major capital investment programme, requiring effective management of risks associated with construction and delivery;
∙ the private sector has the expertise to deliver and there is good reason to think it will offer VFM;
∙ the structure of the service is appropriate, allowing the public sector to define its needs as service outputs that can be adequately contracted for in a way that ensures effective, equitable, and accountable delivery of public services into the long term, and where risk allocation sharing between public and private sectors can be clearly made and enforced;
∙ the nature of the assets and services involved are capable of being costed on a whole-of-life, long-term basis;
∙ the value of the project is sufficiently large to ensure that procurement costs are not disproportionate;
∙ the technology and other aspects of the sector are stable, and not susceptible to rapid change;
∙ planning horizons are long-term, with assets intended to be used over long periods into the future; and
∙ there are robust incentives on the private sector to perform.
20. The project team must prepare a report for endorsement by MOD PFU setting out the relevant evidence. For those projects where MOD PFU accepts that there is no prima facie case for PFI procurement, the project team must discard PFI as a procurement strategy and pursue other procurement strategies. The project team will need to follow guidance in JSP507 to establish VFM for these other procurement strategies. Otherwise, where a prima facie case for PFI procurement strategy exists, the project team must evaluate whether a PFI procurement strategy will deliver a VFM outcome by undertaking the Stage 1 VFM assessments.