1 The staffing and management of
change
1. Under the Private Finance Initiative (PFI),
the public sector enters into a long-term contractual arrangement
with private sector companies to design, build, finance and operate
an asset such as a hospital or school. There are now over 500
operational projects with a combined capital value of £57
billion and future payments amounting to £181 billion (a
present value of £100 billion).
2. Operational PFI projects cost the taxpayer
nearly £5 billion each year. The public sector must ensure
that value for money is maintained during the operational life
of PFI projects. Value for money largely depends on the deployment
of adequate contract management resources.[2]
3. There are large variations in the level of
resources devoted to the management of PFI contracts of a similar
size (Figure 1). One in three contract managers at PFI
hospitals and one in six contract managers of PFI schools that
were surveyed by the National Audit Office described their teams
as under-resourced.[3]
Figure 1: Staff resources vary between individual projects of similar size
Source: C&AG's Report, Figure 13
4. Recent guidance published by Partnerships
UK, an organisation set up by the Treasury to provide support
and advice to the public sector on Public Private Partnerships,
and 4ps, an advisory body for local authorities, states that PFI
projects should have a full-time contract manager. There is a
need for some flexibility to suit local circumstances. For example,
smaller PFI projects might not need a full-time contract manager.
Yet over 15% of PFI projects surveyed by the National Audit Office
were not being managed on a full-time basis.[4]
5. At a local level, successful long-term PFI
contracts rely on establishing and maintaining professional relationships
between the public and private sectors. This is helped when the
public sector retains staff of the right calibre in contract management
roles for a reasonable period of time, typically, of around five
years. The public sector also needs to adapt its staffing of PFI
projects to changing workloads. More staff are needed, for instance,
at the time of a benchmarking or market testing exercise or a
large contract change. Public authorities have yet to budget with
sufficient flexibility to enable this to happen.[5]
6. The Treasury believes that public bodies should
have discretion over how they manage their PFI contracts. The
Treasury explained that the balance between the role of central
Government and the responsibilities of local procurement bodies
had shifted over the last 20 years. While responsibility and accountability
for decisions on individual projects now rests with local bodies,
the Treasury has nevertheless sought to assist public authorities
who have to manage changes to their PFI projects.[6]
7. The Treasury set up an Operational Task Force
in 2006 to provide assistance and training for operational projects.
The Task Force is operated for the Treasury by Partnerships UK.
By February 2008, the Task Force had held nine regional workshops,
each attracting 40 to 50 attenders, which were followed with training
courses running at around one a month and attracting on average
20 to 25 people. In addition, the Task Force's helpdesk has received
461 calls from 206 public sector organisations seeking assistance
in managing their PFI deals. Major government departments have
also established their own Private Finance Units to provide similar
services.[7]
8. The Treasury also supports the efforts of
the Office of Government Commerce to improve the public sector's
procurement performance. In response to this Committee's previous
report on tendering for PFI deals, the Government agreed that
there was a continuing lack of experience and skills within public
procurement teams across the public sector. To address the issue,
the Office of Government Commerce has begun the process of reforming
the Government Procurement Service with complex procurement and
PFI as priority areas for improved training packages.[8]
9. The exchange of procurement experts between
different areas of the public sector is another important way
to raise the quality of procurement. Exchanges are now being encouraged
by providing information on relevant vacancies and opportunities
to members of the Government Procurement Service. In addition,
the Treasury is now working to try to raise the standard of procurement
expertise across Government, for instance, through procurement
capability reviews of every government department.[9]
2 C&AG's Report, para 1.3 Back
3
C&AG's Report, para 3.8 Back
4
Qq 7-10, 60 Back
5
Qq 43-48, 54, 76 Back
6
Qq 33, 41-42 Back
7
Qq 25-27, 62, 106 Back
8
Committee of Public Accounts, Sixty-third Report of Session 2006-07,
Tendering and benchmarking in PFI, HC 754; Update on
the Treasury Minute to the Thirty-fifth Report, together with
the Fifty-seventh to the Sixty-fifth Reports from the Committee
of Public Accounts 2006-07, February 2007, Cm 7322 Back
9
Qq 43-45; 48-49, 61, 67-68 Back
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