Basic Contractual Terms

PFI represents an entirely new procurement methodology for the public sector. As transactions are concluded, new complex contract structures are put in place. The process of negotiation for each contract completed so far has been lengthy as issues are encountered and resolved for the first time. Lessons can be learned from those transactions concluded to date; not only points of good practice, but also points of bad practice which should not be considered as precedent.

This document sets out certain terms and conditions in PFI contracts which we consider to be good precedents. These terms and conditions represent the first in a series of guidance from HM Treasury and the Private Finance Panel on the contents of PFI contracts. The first set of conditions will not, on its own, cover all of the requirements for Government contracts. A further set will follow covering terms which may be expected to very depending on the substance of the transaction, which will be of equal importance and relevance as this set. This series of guidance is being published following a commitment made in the procurement guidelines published by HM Treasury and the Private Finance Panel in April 1996.