SUMMARY

PFP-1/E

Further Contractual Issues

"Basic contractual terms" provided standard clauses to illustrate how some of the points most common to PFI procurement can be incorporated into PFI contracts. There is no requirement on managers to use those clauses in each and every contract, because projects will all be slightly different and require their own details. The note covered many of the nuts and bolts of a PFI contract.

The intention of this note is to help managers deal with another set of issues. But these are somewhat more complex and involved issues: not so much the nuts and bolts as the workings of the mechanism. Because the issues covered are more complex and occasionally more contentions we have not produced standard contract clauses. The detailed treatment of each issue will probably be different in each contract certainly in each sector of PFI activity. It would be misleading to suggest that there is a single, simple model to follow, even as a starting point for drafting. Rather this note highlights for each issue:

• the considerations that are important;
• the range of possible ways of dealing with that issue which have been found to be appropriate for PFI
• some advice on what sort of approach might be most suitable for a particular kind of project;
• some indications of what we believe to be best practice, and (occasionally) of some practices which we recommend should not be followed. There may be special reasons for departing from this guidance in particular cases, but managers should think hard before doing so.

In some cases it has been possible to illustrate the discussion with examples drawn from actual signed PFI projects. Inclusion of a particular example does not imply that it is necessarily a model for all future contracts.