5.11 Learning from, and building on, the example of the PRG's scrutiny of local authority PFI projects described above, the Treasury has established the Major Projects Review Group (MPRG), announced in Transforming government procurement2. Chaired by the Treasury, the MPRG is a panel of commercial experts from across government, set up to give Treasury ministers independent advice on the deliverability, value for money and affordability of the largest and most complex procurement projects at an early stage, before going to market, and again before the end of the competitive procurement process.
5.12 Projects are selected for review by MPRG on the basis of their whole life cost, complexity, and replicability. With respect to replicability, an individual project may not in itself be that expensive, but if it is a model that is to be repeated many times over in a programme of investment it becomes much more important to get it right. A further important factor is whether the procurement approach is in some way novel. All of the projects MPRG reviews are non-standard, and any large procurement project is likely to contain at least some elements that are bespoke to it. This makes it all the more important that there is effective scrutiny, to help mitigate risks for the projects themselves, but also to capture for wider benefit interesting innovations in the market.
5.13 The scrutiny points align closely with the Office of Government Commerce's (OGC) Gateway Review stages 1, 2 and 3 which guide the progress of public sector procurements. As an example, the Department for Transport's internal scrutiny arrangements follow this model closely, with the main board acting as the approval body. The Ministry of Defence (MoD) follows this model increasingly closely and, as set out in Box 5.2, has established a new scrutiny function within its commercial directorate to feed advice into its Investment Appraisal Board. The Treasury and departments are learning from each other in the development and importance they attach to central project scrutiny, with common approaches increasingly emerging from practical experience.
| Box 5.2 MoD's internal scrutiny process The MoD's internal scrutiny process is separate from its acquisition function. This provides an independent, non-advocate, expert and critical analysis of an investment proposal to determine whether the evidence presented supports the recommendation made to the approving authority over other options. This scrutiny tests the strength of a proposal by considering whether: • it is coherent, justified and affordable within the context of the wider defence programme and planning assumptions; • it will deliver the requirement and provide value for money; • risks have been clearly identified and appropriate arrangements to manage them put in place; and • the balance of risks and benefits has been addressed. The MoD also seeks to ensure that the negotiated contract terms achieve the desired outcome. This includes an assessment of the risks, governance and technical feasibility of a project, which advises the approving authority whether the requirement will be deliverable under the proposed commercial terms, and if there is an appropriate balance of incentives and protections to ensure the MoD receives an appropriate level of service from the contractor during the life of the proposed contract. |
5.14 The MPRG's working methods are still evolving. For example in some cases MPRG assessments are carried out together with, rather than in addition to, the relevant OGC Gateway Reviews where they are due to happen at around the same time; to reduce the burden on the project team the pipeline of future projects is settled earlier, so projects have more advance notice; and MPRG's areas of interest are decided and conveyed to the project in good time. Even during this early developmental stage, departments that have been through the process have welcomed the additional challenge and support it has provided.
5.15 Because of the expertise and experience of its members, MPRG can add value to projects, by challenging them and pointing out how they might mitigate key risks. Looking at these projects at an early stage and before they go to market, MPRG can help to ensure that concerns are addressed before full engagement with, and therefore significant bid costs are incurred by, potential suppliers.
5.16 The MPRG has advised on procurements relating to: the enabling retirement savings programme; Crossrail; the Nuclear Decommissioning Authority's competition for Sellafield; carbon capture and storage; the Defence Training Rationalisation Programme; and Pandemic Influenza Preparedness Programme. The Treasury's departmental report will provide further details of the MPRG's work to date.
5.17 Having established a working model that departments welcome and are increasingly familiar with, the Government is keen to extend those benefits to other projects for which additional scrutiny will be valuable. In particular, the scrutiny will seek to establish that in determining the delivery model, departments have rigorously applied the value for money principles set out in Chapter 4.