The facts

On 31 March 2005 Ealing council entered into a PFI project agreement with Ealing Care Alliance (ECA) for the provision of care home services over a period of 27 years.

As is typical for a PFI contract, the project agreement included mechanisms for benchmarking and market testing every five years. 

In benchmarking, the cost of the services is compared against the cost of similar services provided in similar facilities and if this exercise indicates that the comparable prices are higher or lower than specified thresholds, then either party can call for market testing.

Market testing requires the parties to agree a procedure for retendering elements of services. Benchmarking and market testing can ultimately lead to adjustments to the cost of the services provided under the project agreement. 

…