2.22 Increasing competition for resources and a drive towards greater plurality in the use of the private, not-for-profit and third sector markets in the provision of front-line service has already been a factor in the establishment of a number of JVs. Example 5, below, provides one such example of the use of a JV to deliver long-term service delivery efficiency in the provision of back offices services to NHS bodies.
Example 5: Delivering shared service efficiency in the NHS through the SBS Ltd NHS Shared Business Services Ltd is a 50:50 joint venture partnership between the Department of Health and Groupe Steria S.A. which was set up in 2005 following an OJEU procurement process. It is now working with over 100 NHS bodies using recognised best practice processes and systems to deliver a range of back-office corporate services to the NHS. It uses external benchmarking to determine how efficiently it operates and the 2009 review places their Accounts Payable operation in the top quartile of all providers, worldwide. NHS Shared Business Services has achieved operational efficiencies for the NHS of between 20% and 30% in savings. Overall it has already delivered savings in the order of £40m across the NHS. In addition to efficiencies and savings, all profits due to the Department of Health as dividends will be shared amongst the customer base of NHS Shared Business Services. Source: Department of Health |
Many public service market outsourcing/commissioning processes may result in the externalisation of existing public sector provided services into social enterprises. Social enterprises are normally constituted using a non-profit distributing structure, e.g. a CLG, CIC or IPS (see Table 1.A) and typically there is no retained public sector ownership of the entity. Social enterprises and non-profit distributing structures are outside the scope of this Guidance however further information can be obtained from the Social Enterprise Coalition.16
2.23 There are also circumstances where an existing in-house public sector body provider may wish to participate in a JV with private and/or third-sector provider(s) in the provision of public services. It would be normal to expect the JV to have to compete for the services, however exceptions may apply (see Chapter 9). Advice should be sought on the most appropriate selection and appointment process for the JV partner(s), which may differ depending on whether the JV subsequently competes for the services under the EU rules or not.
2.24 Any public sector body considering such an approach should evaluate at an early stage the risk implications, possible conflicts of interests between its role as investor and commissioner, impacts on the competitive process and wider market implications. articular consideration should be given to the procurement and competition implications and need to maintain a level playing field. (Chapter 9 dealt in more detail with procurement and competition law issues).
2.25 There are particular difficulties in using such a JV approach in the context of bidding for a PFI project, in particular the impact on the risk transfer arrangements and performance mechanisms should be carefully considered.
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16 Social enterprises are businesses trading for social and environmental purposes. Further information can be obtained from the social enterprise coalition (www.socialenterprise.org.uk).