68 PFI has broadened LEAs' experience in terms of service planning, options appraisals, financial modelling, procurement, contract and project management. These lessons and experiences, combined with those learnt from the programme to develop asset management planning within LEAs, could usefully be recycled into non-PFI activities and projects. But the future expansion of PFI in other LEAs could suffer from a shortage of appropriate skills, experience and capacity. The Audit Commission has previously made a similar point about client sector inexperience in other sectors, but this remains a key issue (Refs. 3 and 4).
69 One way to improve is to provide training and guidance. As stated in Chapter 1, the quality and cost of the schools we examined will have reflected the conditions prevailing at the time of key stages in the procurement process - for example, options appraisals and the initial output specifications reflected the conditions mainly in 1997-98 and the quality of PFI providers' design solutions reflected conditions mainly in 1998-99 [Table 1]. There is now guidance on many aspects and both the procurement process and policy context have moved on (Appendix 3); the lessons learnable from only some of these initiatives will have been available to those involved in the schemes we examined. The DfES publishes standards about many things, from detailed specification of the lighting levels needed in classrooms, through to a wider vision of future needs in Schools for the Future (Ref. 9). It has further guidance in development. Other organisations also issue guidance and advice, including IDeA, 4ps and the Local Government Development Forum. But a more co-ordinated focus needs to be given to the growing scale of PFI in schools and, in any case, it is neither mandatory for LEAs to follow the guidelines nor easy for LEAs to be sure they are on top of every specific detail of a big project. A further positive step is that, funded by the DfES, the Commission for Architecture and the Built Environment (cabe) will be supporting LEAs in England by providing advice about the design aspects of their school PFI schemes. It remains to be seen how quickly these initiatives can bring about desired improvements, and the DfES needs to review how it can facilitate achievement of the many other ways to improve PFI that we have described, both at national and local levels.
70 Training and support can impart knowledge - but not where it does not exist. For example, we found a lack of knowledge about the whole-life costs of schools and a concern about unanticipated risks that had emerged. For example, Chapter 3 has examined the impact of vandalism - a risk that some contractors did not fully comprehend in early deals. As with the schemes that now cover this risk adequately, LEAs will need to ensure that the private sector 'works smarter' and does not just look to transfer costs in other areas back to them.
71 One drawback for LEAs is that information on actual construction and FM costs for the specified standards of service is not automatically available to them. The lack of open-book accounting distorts the balance between parties in negotiating leverage on the figures underpinning the contractors' financial models. This is of particular concern in negotiating variations to the scheme once it is up and running. Indeed, in its proposed revisions to the 'Green Book',I the Government recognises this problem of 'asymmetry of information' where 'sellers' and 'buyers' do not have access to equal information, which can lead to a breakdown in the market.
72 Inequality is not exclusive to financial information. As the skills in school building and facilities management rest increasingly with the private sector, more will need to be done to support LEAs in becoming informed clients so that there is an even playing field of negotiating, contracting and dispute-resolution skills. Otherwise, PFI contractors could increasingly dictate practice in these areas, which may well affect value for money in the longer term.
Table 1 | ||||||
| 1997 | 1998 | 1999 | 2000 | 2001 | 2002 |
OJEC notice issued | 3 | 7 | 1 |
|
|
|
Preferred bidder identified | 1 | 1 | 8 |
|
|
|
Contract signed |
| 1 | 2 | 8 |
|
|
School open |
|
| 1 | 1 | 8 | 1 |
'OJEC': the date of the notice placed in the Official Journal of the European Community, under European Union public procurement rules. The notice prompts private providers to register their interest in a scheme.
Source: Audit Commission, based on LEA documentation and visit information
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I The Green Book is a best practice guide to HM Treasury's policy for economic appraisals and evaluations for all central departments, executive agencies and devolved administrations.