The procurement process for PFI projects in England follows European procurement rules, in particular the procedures for Competitive Dialogue. Projects have usually been procured locally by the authority that will use the PFI facilities and services over the contract term. A local public sector contract manager will generally take over responsibility for the interface with the private sector contractor when the PFI facility is delivered.
A standardised form of PFI contract has been applied for PFI projects in England for some time (Standardisation of PFI Contracts, the current version being SoPC4)1, with refinements that have been introduced to reflect market developments and lessons learned from experience of PFI delivery.
Public sector procurement processes seek to maximise competition between bidders, to achieve an affordable, deliverable and value for money solution for the public sector; and to deliver a robust, effective contractual framework for the commercial and operational engagement between the public and private sector over the project life. However, there can be tensions between public sector procurement objectives - in the high level trade-offs between cost, risk transfer and flexibility, as well as in more complex areas such as competition and accessibility for small and medium sized enterprises.
In addition, the experience of PFI has been that procurement processes can be lengthy and costly for both the public and the private sector. Procurement can be delayed by complexities that are specific to the project (such as site due diligence and planning approvals), as well as by changes in policy, regulation or legislation, and by contract negotiation. The Government announced on 20 November 2011 a package of measures to improve public procurement process and dialogue with suppliers and reduce procurement times.2
Question 25: What further improvements could Government consider to the standard approach to PFI procurement in order to streamline the process and reduce costs, while meeting wider objectives for effective competition, accessing bidder innovation and maintaining a robust contractual framework? Question 26: Are there particular ways in which the private and/or public sector approach to contract management can be improved in order to manage contracts more cost effectively? |
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1 SoPC4 is available at http://www.hm-treasury.gov.uk/ppp_standardised_contracts.htm
2 The Cabinet Office announcement is available at: http://www.cabinetoffice.gov.uk/news/radical-package-unveiled-support-business-and-promote- growth