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Old 17th Aug 2014, 23:28
  #138 (permalink)  
Xercules
 
Join Date: Apr 2008
Location: Wiltshire
Posts: 115
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3PR

MoD will already have had its benefit from AirTanker's 3PR. One of the necessary features of a PFI is that the contractor takes a "demand risk". This means that the pricing of the Contract is based on an assumption that the Contractor will make some of its income outside the contract with MoD. That theoretically comes from 3rd Party use of the asset. It could partly come, in this case, from MoD's use of the assets beyond the contract or from, in this case apparently, Thomas Cook' use. Unless the Contract stipulates a sharing mechanism, revenue from Thomas Cook would be all AirTankers. Unless the Treasury rules have changed markedly since I was last involved with PFIs, a sharing mechanism would seem to flout the rules of a PFI. The concept is meant to be that the expectation of 3PR lowers the price to the Government organisation.

You can believe that or not!
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