58. Due diligence by the original Senior Lenders on a Project is likely to be required in most Major Changes, even where additional private sector funding is not being sought28. In such cases, the MOD may be required to meet these outlays. This charge should be factored into the necessary costs of the Change and acquisition team members should consider the guidance in paragraph 19 in this regard.
59. By contrast, due diligence should not be required on more minor changes where neither the contractor's ability to provide the services nor its risk profile will be affected. Depending on the terms of the principal funding agreements, the funders may still require/be entitled to perform due diligence on the Change, but it would be less appropriate in these circumstances for the MOD to meet these costs.
60. Again, it is difficult to benchmark the cost of funders' due diligence in relation to Changes, as this is driven by a number of different factors. Steps should be taken to ensure that the contractor has demonstrated that these costs have been managed29, where possible, and are reasonable. Further advice may be obtained from the MOD PFU on a case by case basis.
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28 Experience suggests that the capital element of the majority of Changes processed has been met by the MOD, rather than by additional borrowing.
29 For example, it may be possible to reach agreement with the funders that subsequent changes may be considered at a lower cost from the first as much of the review work will already have been done.