| ACHIEVABILITY While PFI may allow a more efficient and effective combination of public and private sector skills, determining the rules that will govern the relationship between the two sectors does involve significant transaction costs. In particular, the procurement process can be complex and significant resources, including senior management time, may be required for project development and the ongoing monitoring of service delivery. Authority capacity and capability, together with private sector side aspects will have direct consequences for procurement times and the level and quality of market interest. PFI needs a robust competitive process to fully deliver its benefits and so the choice of procurement route should be informed by an assessment of the likely market appetite. | ||
| Issue | Questions | |
| Market Interest | Is there evidence that the private sector is capable of delivering the required outcome? | The project team will need to show by reference to contracts for similar or analogous services that the private sector is capable of delivering the services required. |
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| Does a significant market with sufficient capacity for these services exist in the private sector? | The project team will need to provide evidence that capacity for these services exists in the market the private sector can provide the similar or analogous services. |
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| Is there likely to be sufficient market appetite for the projects in the programme? Has this been tested robustly? Is there any evidence of market failure for similar projects? | The project team will need to liaise with MOD PFU to determine how market appetite for this project can be assessed and whether there is any evidence of market failure for similar projects. |
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| Have any similar programmes been tendered to market? Has the procuring authority's commitment to a PFI solution for projects of the type covered in this programme been demonstrated? | The project team will identify whether similar projects have come to market and whether they have been successfully delivered. The project team will need to state whether there are any inherent factors that affect the procuring authority's commitment to a PFI solution. |
| Other issues | Is the procurement feasible within the required timescale? Is there sufficient time for resolution of key procuring authority issues? | The project team will need to show that it has sufficient expertise and appreciation of the PFI procurement process to deliver within the required timescale. If it does not, the project team will need to identify: • the actions it will undertake to manage the procurement process • the process to build up relevant expertise and skills The project team will need provide outline plans for how it intends to undertake the procurement. |
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| Is the overall value of the contract significant (sufficient for the public and private sector to justify their transaction costs?) | The project team will need to demonstrate that capital value of the project is more than £20M and that total contract costs are sufficiently significant so that transaction costs do not erode VfM. |
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| Does the nature of the deal and/or the strategic importance of the work and/or the prospect for further business suggest that it will be seen by the market as a potentially profitable venture? | The project team will need to liaise with the MOD PFU to answer the question. |
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| Does the procuring authority have the skills and resources to define, deliver and support the service throughout the procurement and the subsequent delivery period? | The project team will need to demonstrate that it has appropriately skilled staff to define, deliver and support the service throughout the procurement and the subsequent delivery period. If it does not, then the project team will need to provide a plan has to how it will recruit skilled staff or train staff to obtain the relevant skills and competencies |
| OEVERALL ACHIEVABILITY | Overall, is the accounting officer satisfied that a PFI procurement programme is achievable, given an assessment of the market, procuring authority resources and the attractiveness of the proposal to the market? | The project team will need to provide a brief narrative summarising whether there is sufficient client side capability to deliver an achievable procurement that is both attractive to and deliverable by the market. |