RISK 3: Delivery of the ongoing service
Definition Failure to deliver the ongoing service to the required standards as set out in the contract.
Reason for overall assessment of this risk category in the eight case study projects: Low level of current risk to value for money We found that of our case studies only the Defence Animal Centre has suffered serious performance limitations to date, and this was on an early private finance contract of a type which is unlikely to be replicated. However any performance failures need to be addressed promptly and the Department was still addressing this particular issue at the time of our audit. The overall view that specified services were being delivered is corroborated by the results of our census of all projects. NOTE 1 This project did not proceed to contract and is not part of the current Department portfolio. |
2.20 Once contracts reach their full in-service capability, we found that project managers mostly consider that contractors deliver the service specified in the contract (Figure 15). 31 out of 39 project managers who responded to our census stated that the contractor had delivered the specified service as specified in the contract.
2.21 In the eight projects where the project managers reported some shortfall in service delivery, in all but one project, the Defence Animal Centre, project teams confirmed that the service is currently being delivered satisfactorily. We confirmed with the project managers that the other negative responses referred to either performance lapses that were not considered to be serious, or early problems such as late delivery of the asset.
In the Defence Animal Centre case study, the Department considers that the PFI contractor Realm has performed badly on estate management and the animal husbandry service. A particular problem has been the Indoor Riding School facilities which were deemed unsuitable and not fit for purpose by the British Equine Association, despite the contractor's attempts to repair it. The Department then asked Realm to replace the existing Indoor Riding School with a much larger one that meets the modern training best practice and safety needs at a cost to the Department of £705,000. As a result of the historic problems with the indoor riding school facilities and other problems with the service delivery the Department's employees at the facility have not been satisfied with the contractor's performance. These problems have arisen from a poorly drafted contract, which is not sufficiently precise in specifying the contractor's responsibilities. It has an ineffective payment and performance mechanism, which does not provide effective incentive. The Department has concluded that this project requires renegotiation.
15 | The majority of the Department's PFI projects reported that they are delivering the specified service |
One of the projects who returned a survey response did not respond to this particular question
Source: National Audit Office census of all the Department's PFI projects in operation | |
