§ Mr. GrayTo ask the Secretary of State for Defence what the length is of the PFI contracts for(a) the River class offshore patrol vessels and (b) the RN ro-ros; and what criteria he uses to decide the optimal length of PFI contracts on such ships. [57237]
§ Mr. Ingram[holding answer 20 May 2002]: The River class offshore patrol vessel contract is an operating lease arrangement rather than a pure PFI deal. It has a duration of five years with the option to extend. The ro-ro contract is still being negotiated but the intention is that it will be a service-based PFI running until 2024.
The optimal length of any PFI type contract varies according to the circumstances of the particular deal. In practice this means taking account of the duration and scope of the requirement, the potential asset life and residual value at the end of the deal, and optimising capital financing charges. These key criteria are considered together with the scope for risk transfer to determine the length of contract that is expected to deliver the optimal value for money solution for the project.