4.13 Public sector bodies seeking to establish a JV, whether they are Local Authorities, Departments, Agencies, NDPBs, etc, will need to ensure they have an internal corporate scrutiny mechanism which is capable of providing for effective VfM appraisal and formal sign-off of any JV proposal.
4.14 In addition sponsoring departments, where the JV relies on material levels of central funding (whether direct or indirect) or where formal consents are required, will also need to ensure they have an effective corporate internal scrutiny mechanism. The scope of this responsibility is not limited solely to those bodies for whom the department is ultimately accountable e.g. NDPBs and agencies, but any public sector body e.g. Local or Regional bodies if their JV relies on material levels of funding from the sponsoring departments, in particular if delegated limits for spending have previously been established, or consented, particularly where the transfer/sale of assets are involved.
4.15 In both cases this may mean convening a separate group of interested parties from around the public sector body. This should bring together those with the appropriate skills and expertise to understand the legal and funding risks associated with the proposal. At all levels there should be clarity established at an early stage over the approval process and who has sign-off responsibility. In the case of a sponsoring department this would normally involve senior departmental officials i.e. the Policy senior responsible officer (SRO), Head of Legal or Director of Finance. In the case of a local authority this would potentially be the Section 151 officer (i.e. the senior responsible accounting officer) and SRO for the project.
4.16 In the case of a project which requires approval from a sponsoring department the public sector body will need to determine whether the proposal should ultimately also be submitted to HM Treasury for approval, either given the novel and contentious nature of the proposal, if appropriate, or if it exceeds the delegated limits agreed with HM Treasury for this type of transaction.
4.17 Public sector bodies need to be aware in the particular context of JVs that delegated limit decisions need to take account not just of the capital value of the proposal but also the value of any assets being used in the JV and the whole life cost of the project if services represent a significant element. For example, this would apply if the proposal relates to a transfer of assets which are greater than the value of the equivalent delegated 'expenditure' limit. In such circumstances Departments should discuss with their counterparts in HM Treasury how best to scrutinise the project and at what stage the department needs to approach HM Treasury for formal approval. To assist in this process, HM Treasury is considering how its own scrutiny processes, such as the Project Review Group (which currently reviews only PFI Projects), can be improved to provide more effective scrutiny of PPPs, including JVs, to ensure these projects receive an appropriate level of expert scrutiny and are deemed deliverable, VfM and ready to go to market.