Overview

This guidance requires that the Discount Rate is adjusted to reflect the level of inflation risk in private sector tenders.  Section 3 sets out the methodology for identifying the level of inflation risk transferred to the private sector under the draft contract documentation, in particular the Payment Mechanism.  However, on receipt of bid submissions, bidders may offer alternative proposals for the treatment of inflation risk.  Where this is the case, the initial assessment of the Discount Rate will need to be reconsidered in the light of the private sector proposals.