Skip the NI Direct Bar
Skip navigation

5.3 DFP Approval of PPP/PFI Projects

5.3.1

Many PPP/PFI projects will fall into the category of 'major projects' as defined in section 8.5 of NIGEAE and will therefore require DFP approval at SOC stage.

Beyond SOC stage, all PFI/PPP projects require DFP approval prior to commencement of procurement, based on submission of an Outline Business Case (OBC).

In addition, all PFI projects (but not generally other PPP projects)* require DFP approval at the following stages:

  1. prior to appointment of a Preferred Bidder, based on an Appointment Business Case (ABC) providing an update on key developments since the OBC - including a detailed BAFO or final tender evaluation and an updated affordability assessment; and
  2. prior to financial closure, based on submission of a Full Business Case (FBC).

*However, DFP reserves the right to require approval at ABC and FBC stages for individual non-PFI PPP cases. This may occur, for example, where the PPP is considered novel, contentious, repercussive or in some other sense significant.
5.3.2DFP approval at OBC stage constitutes approval to proceed to procurement, whether it is a PPP or conventional procurement, but does not include approval of expenditure required to implement the proposed project.
5.3.3DFP approval at FBC stage allows the project to proceed to the award of a contract and sanctions the expenditure required to implement the recommended option.
5.3.4Where DFP approves a PPP procurement at OBC stage, the FBC must be submitted subsequently to DFP for approval, even if the decision at FBC stage is not to pursue a PPP solution.
5.3.5DFP approvals will generally be subject to all the usual terms and conditions applying to the approval of capital projects including, for example, those laid down in Section 9 of NIGEAE.
5.3.6Departments should note the statement at 4.2.5 of Managing Public Money Northern Ireland (MPMNI): "In particular, departments should consult DFP (and ALBs their sponsor departments) at an early stage about proposals to undertake unusual transactions or financing techniques." For example, DFP would regard index-linked borrowing as a potentially risky financing technique and would expect departments to seek specific approval from DFP, preferably before permitting the private sector to bid on the basis of index-linked financing.
5.3.7Departments should also note the HM Treasury guidance Application Note - Interest Rate and Inflation Risks in PFI Contracts, which explains how to deal with interest-rate risk and warns of the risks of over-indexation of unitary charges, among other things.

Read on to OBC and FBC Requirements

Back to Topic Index