2.22 A strategic infrastructure partnership (SIP) is an arrangement between a procuring authority and a private sector partner intended to address a series of infrastructure-related issues or projects over a set period of time. The SIP may take the form of a joint venture (see Box 2.3 later in the chapter) or it may be established by contract. Generally, and in contrast to the integrator approach described below, the private sector partner itself provides a significant amount of the works and services required by the contracting authority. Examples of investment programmes being undertaken through SIP structures are the LIFT programme (see Example 2.3) and the Local Education Partnerships (LEPs) in the BSF programme (see Example 2.4).
2.23 A SIP is often an exclusive arrangement. In return for exclusivity the private sector partner commits to a programme of continuous improvement through successive stages of work which is facilitated by the accumulating experience of working together. Stages subsequent to the initially priced portion of the programme are tested for value for money through means such as benchmarking and market testing, and the approach may involve open book accounting. Individual projects falling under a SIP arrangement can adopt a variety of delivery models, as appropriate to specific circumstances.
| Example 2.3: Local Improvement Finance Trusts NHS LIFT is a vehicle for improving and developing primary and community care facilities. NHS LIFT, as a national policy, is delivered by Community Health Partnerships, an independent company, wholly owned by the Department of Health, which in turn has established joint ventures between itself, the local NHS and the private sector partner. These limited companies, the LIFTCos, enter into 20 agreements to build, own, maintain and operate primary care buildings, which they lease to Primary Care Trusts, GPs, dentists, other local NHS providers or social care staff. LIFTCos organise their supply chains in a variety of ways to deliver value for money. Several operate as project delivery organisations, tendering key packages of work to a pool of suppliers. Others operate more fixed supply chains, with value for money assessed through benchmarking and market testing. The LIFT programme has established 45 LIFTCos with three more to come, and has delivered 162 new primary and social care facilities in 48 geographical areas in England, covering more than half of Primary Care Trusts. A further 48 facilities are under construction and more are planned. |
2.24 A SIP can operate either using a fixed supply chain or a competitive one. The contracting authority would expect to understand the details of the supply chain arrangements, and any impact on pricing and risk transfer arising during the competitive process, before selection of the private sector partner.
| Example 2.4: Building Schools for the Future (BSF) BSF is a 15-wave investment programme with over £9 billion allocated over the Comprehensive Spending Review period 2008-11. BSF's goal is to support the Government's educational reform agenda, by providing 21st century learning facilities aimed at improved educational outcomes. It is planned that nearly every secondary school in England will be rebuilt or renewed over the programme. Partnerships for Schools (PfS) is a joint venture between the Department for Children, Schools and Families (DCSF) and Partnerships UK (PUK) that has been set up to manage the delivery of the overall BSF programme. PfS supports local projects and ensures that investment in secondary schools is based on robust educational strategies. PfS works with local stakeholders to ensure that BSF schools and academies are well designed, are built on time at a reasonable cost to the taxpayer and that arrangements are put in place so that they are properly maintained over their lifetime. At a local level, Local Education Partnerships (LEPs) are usually set up, consisting of a private sector partner, the local authority and Building Schools for the Future Investments (BSFI), a joint venture investment vehicle between DCSF and PUK. The LEP then procures the delivery of approved projects, Approximately 50 per cent being PFI and 50 per cent design and build (DB), with DB generally being used for refurbishment and PFI for new-build schools. |
2.25 Alternatively, SIPs can be established on a competitive basis, where several strategic infrastructure partners are selected to deliver the needs of a large-scale programme. After a certain period of time, the public sector evaluates the performance of each partner against the performance of their competitors. Based on this evaluation, it can then reallocate projects between the partners, increasing the work allocated to the strong performers. This model has also been called a competitive partnership.
2.26 A SIP may be suitable where there:
∙ are successive phases of similar types of work;
∙ are multiple local procurers for similar types of project;
∙ is certainty over the kind of infrastructure, but uncertainty about the timing or exact phases of work;
∙ may be advantages from private sector commercial input in the planning phases;
∙ is scope over the life of the contract for the partner to increase efficiency through continuous improvement and innovation; and
∙ are procurement times and costs that would be excessive if each element of the programme were separately tendered.