1.14 The Government is committed to ensuring that decisions on investment, whether through conventional procurement routes or PFI, are informed by a sound evidence base and meet its requirements of equity, efficiency, and accountability.
1.15 Research conducted by the Government and others, particularly the National Audit Office (NAO), confirms the largely positive impact of PFI to date and highlights areas where there is scope for further improvements. Chapter 4 provides details of HM Treasury research of 61 PFI projects. The key findings were:
• 89 per cent of projects were delivered on time or early;
• all PFI projects in the HM Treasury sample were delivered within public sector budgets. No PFI project was found where the unitary charge had changed following contract signature - other than where user requirements changed;
• 77 per cent of public sector managers stated that their project was meeting their initial expectations; and
• there is scope to reduce procurement times, although there is evidence that new intiatives to tackle this problem are having an impact.
1.16 As outlined in Box 1.2, the NAO undertakes a rolling review of all Government procurement and procurement policy, including PFI procurement. In many cases the NAO's findings have been positive. For example, its investigation into PFI's construction performance demonstrated that over 75 per cent of PFI projects were delivered on time or early, and in no case did the public sector bear the cost of construction overruns, a significant improvement on previous non-PFI experience.
1.17 Equally, the NAO's critical review function has been demonstrably beneficial in highlighting areas of PFI procurement policy that required attention. For example:
• the NAO's recommendations on refinancing contributed to the Government's issuing of guidance on refinancing in future PFI projects and to the drawing up of the refinancing Code of Conduct; and
• the NAO's emphasis on the proper use of the Public Sector Comparator in the procurement process has provided support for the need for reforms to the value for money appraisal process laid out in Chapter 7 of this document.
1.18 Research has also provided valuable evidence on project performance in low capital value schemes and in IT, the results of which have informed decisions on when PFI may not consistently deliver value for money and where other procurement routes could offer a better alternative in future. This research is outlined in paragraphs 4.27 to 4.56.
| Box 1.2: The National Audit Office, Public Accounts Committee and other audit bodies The National Audit Office (NAO) is the primary body charged with assessing the Government's PFI programme. In this capacity it audits procurement policy, the conduct of procurement, and the value for money of selected individual projects, for both PFI and non-PFI procurement routes. In its capacity as auditor of central government Departments' accounts, it also audits the balance sheet treatment of Departments' PFI projects. The Public Accounts Committee (PAC) frequently follows up reports produced by the NAO with hearings and reports of their own, placing Government policy and activity under Parliamentary scrutiny, and making recommendations on policy areas. Individual Departments are accountable for projects they procure. HM Treasury is accountable for overall PFI policy. The NAO and PAC not only investigate, report and make recommendations based on significant individual PFI projects, but also conduct systematic reviews of important PFI policy areas or other aspects of the programme. Recent examples include the NAO's reports on construction performance in PFI and public sector contract management, and the PAC's overview report on securing value for money in PFI procurement. The NAO have published 31 reports to date on PFI, and the PAC has published 24 further reports. The majority of NAO reports (26) have investigated individual projects such as the redevelopment of the West Middlesex University Hospital. Five reports have looked at sector or general PFI issues, for example construction performance and PFI prisons. The full text of the NAO's reports is available on their website at www.nao.gov.uk. Reports published by the PAC are available, along with the Government's response to each report, on the House of Commons website at www.publications.parliament.uk/pa/cm/cmpubacc.htm The NAO now produces a database of its recommendations and those of the PAC on PFI policy - and also on PPPs and aspects of privatisation - which can be searched by topic area. It is available on the Internet at www.nao.gov.uk/recommendation. A number of other audit bodies have areas of PFI procurement within their remit, including the Audit Commission and Audit Scotland. The Audit Commission is responsible for auditing public money spent by local authorities, NHS bodies and others in England and Wales and has published reports on PFI in these areas. Audit Scotland plays a similar role for the Scottish Executive and public bodies in Scotland. |