| PFI Assurance Issue: | 6. Contracting strategy & terms and conditions of contract (Project Agreement) …to provide assurance that the PFI contract will be (or continues to be) viable, desirable and achievable where the contracting strategy is based on sound market intelligence & industry engagement, and the contract, negotiation & tender evaluation strategies are in accordance with legislation, procurement rules, mandated policy and best practice. | |||||||
| Commercial/Financial Assurance Guide Ref: | DE&S Commercial Assurance Guidance: 1. Commercial scope/Requirement, 3. Commercial Approach, 6. Market Analysis/Supplier Capability & capacity, 14. Contractual Process, 15. Contract Conditions, 18. Contract Signature & Implementation | |||||||
| Relevant MOD policy/guidance used as measure for assurance: | Relevant external policy/guidance used as measure for assurance: | |||||||
| • MOD PFU Guidance Note - MOD Standard Project Agreement v1 for PFI Projects • MOD PFU Guidance Note - SoPC Derogations Process • MOD PFU Guidance Note - Preparing the Invitation to Negotiate for PFI Projects • MOD PFU Guidance Note - Market Soundings for PFI Projects • MOD PFU Guidance Note - Pre-Qualification Questionnaires for PFI Projects • MOD PFU Guidance Note - Selection of a Preferred Bidder for PFI Projects • MOD PFU Guidance Note - Convergence Phase for PFI Projects using the Negotiated Procedure | • Legislation, EU Procurement Rules & MOD procurement policy • HM Treasury: Standardisation of PFI contracts (SoPC) Version 4 • Treasury Taskforce Technical Note 4: How to Appoint and Work with a Preferred Bidder • HMT Operational Taskforce Note 2: Project Transition guidance • Competitive Dialogue in 2008: OGC/HMT Joint Guidance on using the procedure • OGC Achieving Excellence Construction Projects Pocketbook • OGC Making competition work for you • OGC Early Market Engagement: principles & examples of good practice • OGC Achieving Excellence Guide 6 - Procurement and Contract Strategies • OGC Achieving Excellence Guide 3 - Project Procurement Lifecycle • OGC Achieving Excellence Guide 1 - Initiative into Action • OGC Best Practice - Improving procurement efficiency to achieve faster delivery • HMT Guidance Note: The Use of Internal Rates of Return in PFI Projects • HMT Guidance: Opinion Letters | |||||||
| Evidence Required for each Procurement Phase | ||||||||
| All phases: • List of dependencies, incl GFA etc & confirmation of supply from "owner" | ||||||||
| Up to Initial Gate: | Up to Market Engagement: | Up to close dialogue and Preferred Bidder appointment: | Up to Main Gate: | Up to Contract Award: | Post Contract Award24: | |||
| • Acquisition, Procurement & Support strategies (covering outline procurement plan with procurement options) • Prior Indicative Notice (PIN) • Market sounding results/report (Market/supplier assessment) • Case for dispensing with competition (if relevant) • Contract term - evidence of analysis & justification | • Acquisition, Procurement & Support strategies • Project Agreement (incl all schedules) • ITN/ITT • PQQ & results (assessment of contractors/bidders ) • OJEU/CB advert • Negotiation Strategy document • Negotiation strategies for all key issues (in master issues list) outstanding in PA • SoPC4 & MOD PAv1 derogations matrix and PFU/PUK approval • Market sounding results/report (Market analysis) • Legal advisors letter of support25 • Tender evaluation strategy/plan (selection criteria) • Case for dispensing with competition (if relevant) • Contract term - evidence of analysis & justification | • Acquisition, Procurement & Support strategies • Project Agreement (incl all schedules) • Master issues list (against every clause & schedule in PA) • Negotiation Strategy document • Negotiation strategies for all key issues (in master issues list) outstanding in PA • SoPC4 & MOD PAv1 derogations matrix and PFU/PUK approval • Bidders acceptance of Project Agreement (incl schedules) • Monthly dialogue/negotiation status summary reports26 | • Acquisition, Procurement & Support strategies (especially for fall-back plans in the event of default or termination) • Project Agreement (incl all schedules)27 • Negotiation Strategy document (for changes) • Negotiation strategies for all key issues - if required for changes • SoPC4 & MOD PAv1 derogations matrix and PFU/PUK approval - if required for changes | |||||
| • Tender evaluation report & tender evaluation panel minutes • Tender evaluation strategy/plan (selection criteria) • Legal advisors tender evaluation report • Legal advisors letter of support | • Legal advisors letter of support • Bidders acceptance of Project Agreement (incl schedules) | • Bidders acceptance of Project Agreement (incl schedules) • Transition Plans | ||||||
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24 The focus post contract award is assurance of ongoing vfm and continuous improvement. This may be demonstrated via benchmarking, market testing or vfm reviews.
25 External Assistance advisors letter of support addressed to MoD PFu must cover:
Whether the deal is appropriately structured to deliver the commercial outcome the MoD is seeking and that it is a realistic commercial position that represents value for money and is deliverable and financeable in the current PFI market;
Whether the commercial aspects of the project have reached an appropriate level of maturity to support the current phase of engagement with the market and identify significant areas outstanding where the MoD could be exposed to risk of increased cost or delay through lack of maturity; and
Whether the timetable proposed to deal close is realistic indicating key risks that may impact on the delivery of the timetable.
26 Using traffic light or RAYG system showing maturity of each clause, schedule and project document (e.g. sub-contracts, shareholders agreements) against the following maturity levels:
I principles established, but not yet drafted in detail
II largely drafted in detail, but not yet agreed with bidder(s)
III fully drafted and agreed with bidder(s) with no material outstanding issues
IV fully drafted and agreed with bidder(s) with no outstanding issues
27 Projects closed pre SoPC3, SoPC4 and MOD PAv1 mandates are not required to conform to these standardised terms and conditions. However, where major changes are being considered or where contract management highlights shortcomings in contract drafting, SoPC and/or MOD PAv1 drafting may be considered as proposed amended drafting subject to contractor and lender agreement.