9.4.1.  Overview

Go-Co entities are typically Government facilities run by the private sector either for profit or not-for-profit, depending on their specific circumstances. The Government retains ownership of the assets (e.g., a laboratory or processing plant) and a contractor operates the facilities and provides the necessary staff to achieve the objectives set by the Government or its delegated public service body.

The contractor or contractors operate an entity, often known as a Parent Body Organisation ("PBO"), which is employed by Government to manage its operations. The PBO could be a single company, a joint venture or a consortium of companies. It is typical for the PBO to own shares in a delivery company which employs the staff. The Government can choose to retain a golden or special share in the delivery company, which allows it to take control in specific circumstances, thus having effective control over both assets and the means to operate them if necessary.

The Government contracts with the PBO through a Parent Body Agreement, which sets out the share ownership in the delivery company and the management mechanisms. In addition the Government agrees the management and operation services that are required in a Management and Operation contract between the Government and the delivery company.

The PBO is incentivised by means of a management fee, or dividends, from the delivery company. This fee is dependent on a number of key performance criteria, as defined in the Management and Operation contract.

A simplified diagram of the way in which a typical Go-Co operates, is set out in Figure 9-1.

Figure 9-1: Simplified stucture and relationships in a typical Go-Co