1.32 PFI contracts awarded recently to UKDS to operate new prisons at Ashford and Peterborough contain performance measures that are based on many of the KPTs which apply to public prisons. Penalty points will accrue if the contractor fails to meet a certain percentage of the target and the number of points will increase as the percentage by which the target is missed increases. This new system of performance measurement has also been introduced into the contracts for the two privately-managed prisons, Doncaster and The Wolds. The Commissioner for Correctional Services proposes to introduce this system into existing PFI contracts and is in discussions with the private contractors about how this will affect their risk profile and any resulting cost implications. Most PFI prisons are shadowing the new system to assess its effects. Rye Hill is committed to operating the new system from April 2003 and negotiations are continuing with the other six PFI prisons.
1.33 PFI contractors expressed reservations about the proposed system. In particular, they are concerned that there are a large number of KPTs and that some are based on inputs rather than outputs. They therefore concentrate on procedures rather than measuring results, such as an actual reduction in re-offending rates. Contractors felt that the proposed system was over-prescriptive as prisons already have to comply with high numbers of Orders, (long-term instructions issued by the Prison Service) and meet Prison Service Standards. These requirements reduce any scope for innovation and increase the levels of bureaucracy required to support compliance.
1.34 Progress to date has been slow in introducing new targets into PFI contracts to reflect changing priorities. Up until March 2003, Area Managers set KPTs in liaison with PFI prison Directors. The CPU negotiated with contractors over the performance measure which will apply to that particular target, for example, the number of penalty points for failing to meet a certain percentage of the target. The CPU and the contractors were therefore involved in annual negotiations that could prove difficult, particularly when prisons were not performing well, leading to delays in agreeing performance measures. The potential financial penalties for failure to meet targets are an important part of the risk profile and any changes will therefore have implications for the price. However, the new contracts recently awarded by the Prison Service are based on this performance measurement system and this suggests that such an approach is viable. Furthermore, the new performance measurement system would enable PFI prisons to be compared to public prisons more easily. Such a comparison is currently very difficult but is essential for assessing the relative performance of PFI prisons.