5.1 The Government places great importance in ensuring that the public sector develops strong delivery and procurement skills for both conventional procurement and, as particularly addressed in this chapter, for PFI. The Prime Minister's four principles of public sector reform, the Cabinet Office Civil Service reform programme and the OGC's programme of skills development in central civil government are all aimed at securing excellence across Government and in the delivery of vital public services.
5.2 Delivery skills in general, and procurement skills in particular, have historically been insufficiently valued and undersupplied in the public sector. Particular problems have been experienced with ensuring that these skills are consistently in place where they are needed:
• procurement has not been sufficiently valued in the public sector as a career choice, meaning that high calibre staff often pursued other options and did not develop these important skill sets;
• some procurement professionals were attracted away from the public sector; and
• procurement expertise, where it was built up, was often dissipated after a single procurement as project teams disbanded, rather than being applied to whole investment programmes.
5.3 In markets where the Government is a major procurer of goods and services, its own actions may impact upon competition and hence the long-term value for money it can secure. The Competition Commission last year made a number of recommendations to improve competition in procurement, following which the Government announced that the Office for Government Commerce (OGC) would consider steps to increase competition and to encourage better long-term capacity planning in markets where the Government possesses significant purchasing power.
5.4 The Government recognises that procurement skills are at a particular premium in PFI procurement, because of its complexity, and the necessity therefore for high levels of expertise. Better procurement skills lead to lower transaction costs, better value for money in projects procured, and faster delivery of investment to public services. In PFI in particular, improved procurement skills:
• enable the public sector to maximise the benefits available in the procurement process by effectively conducting the long-term options appraisal necessary both to determine whether the PFI route is value for money, and to secure best value from PFI bidders;
• improve value for money, by reducing delays and lowering procurement costs for the public sector and actively managing the specialist advisers, such as technical, financial and legal advisers necessary for PFI;
• secure value for money from contract negotiations by achieving the Government's aims in risk-sharing, and ensuring a smooth and timely procurement process; and
• create an environment that encourages the private sector to bid for PFI projects, improving competition and delivering a stronger PFI market.
5.5 The Government has already taken significant steps to improve its ability to procure PFI projects, in the context of a wide-ranging programme to increase the public sector's delivery skills more generally. This chapter sets out these measures taken to increase Departments' and local authorities' ability to negotiate effective PFI projects quickly and with reduced cost to themselves and to the private sector.