7.38 The review of PFI IT procurement in Chapter 4 suggested that, even though the majority of projects had been delivered to the satisfaction of public sector users, there was still room for significant improvement. There are significant differences between the IT sector and other sectors whose characteristics are more aligned with those outlined above, in Box 7.1 and so fit better with PFI. In particular:
• the fast pace of change in the sector makes it difficult for the public sector to effectively define the outputs it requires in a long-term contract;
• the high level of integration of IT infrastructure into the other business systems of the client makes it difficult to delineate clearly areas of responsibility to the client and the contractor, and so make effective risk transfer considerably more difficult; and
• the lack of a market for third party finance in IT PFI removes a powerful driver ensuring appropriate and effective risk allocation in a project. This detracts from PFI's ability to secure value for money for the public sector.
7.39 The findings of the research suggest that better performance can be achieved in the procurement of IT if the public sector uses procurement models that better reflect the unique needs of IT projects. The research showed that in those IT PFI projects going particularly well, contracts had in fact been renegotiated to accommodate improved structures and better, more flexible outputs - suggesting that in practice a move away from a PFI model brought operational benefits by allowing for better risk allocation, better response to changing business requirements, and more effective incentive structures.