3 Getting better deals
15. This Committee has frequently highlighted
a lack of commercial awareness by public officials in project
procurement and contract management. Innisfree and Semperian attributed
the skills deficit across the Government in part to the public
sector not attracting the best people, because it could not pay
them as much as the private sector, and also because civil servants
tended to be attracted to policy, rather than procurement roles.[41]
It is difficult to draw any comfort from the Treasury's assertion
that the commercial and contract skills of people working on recent
PFI deals are stronger than five years previously, given the evidence
of our recent examinations of projects such as the PFI contract
to widen the M25 where up to £1.1 billion could have been
saved for the taxpayer.[42]
16. We remain concerned about contract management
capability: 36% of NHS Trusts have less than one full-time contract
manager on their PFI contracts and 12% have no one managing these
contracts.[43] Strong
contract management is fundamental to obtaining value for money
and we have asked the Treasury to report back to us on the progress
being made to address our concerns.[44]
17. The Major Projects Authority, which was mandated
in January 2011, outlined its plans to raise skill levels across
the public sector and to improve the scrutiny of projects that
were high risk and high value.[45]
We are concerned, however, that despite the risks to value for
money which we have highlighted, very few PFI projects are scrutinised
by the Major Projects Authority and the Treasury have yet to decide
what action to take to address this.[46]
18. In the past six months, some 15 years after
the first PFI deal was signed, the Treasury has launched a pilot
to trial the scope for negotiating efficiency savings in an operational
PFI project. The Treasury is proposing to issue guidance reflecting
the lessons learned from the pilot. The extent to which the public
sector can share in efficiency savings will be dependent on reaching
voluntary agreement on a case by case basis with the private sector.
Obtaining savings now should not, however, be at the expense of
service cuts to the PFI project or to neighbouring non-PFI projects.[47]
19. An example where there is scope for further
savings is maintenance charges. We have previously voiced our
concern about high charges for small additional works on PFI contracts.[48]
The public sector has not had data on supply chain profitability
and would not know the actual costs, for example, behind charges
by service providers to fix the windows on a project.[49]
20. There is a tension between the local negotiation
of many PFI contracts and the untapped potential for obtaining
value for money centrally using the Government's buying power.
Most of the 700 PFI deals signed to date have been negotiated
and managed locally.[50]
Innisfree and Semperian's strategy, however, has been to build
portfolios of projects overseen centrally which may create opportunities
for economies from better management across their portfolios.
We note the current work underway by the Major Projects Authority
for central negotiations with major suppliers. It was not clear,
however, whether the lessons from this work could be applicable
to PFI.[51]
41 Qq 40, 202 Back
42
Q 157; Committee of Public Accounts: Nineteenth Report of Session
2010-11, M25 PFI contract, HC651 Back
43
Q 171 Back
44
Q 203 Back
45
Qq 180, 181, 206 Back
46
Q 182 Back
47
Qq 131, 169, 172 Back
48
Committee of Public Accounts, Thirty-sixth Report of Session 2007-08,
HM Treasury: Making changes in operational PFI projects, HC332 Back
49
Qq 14 - 15 Back
50
Q 182 Back
51
Qq 180, 206 Back
|
