21 PFI has introduced changes in the way public services are procured and managed. For example, PFI contracts require clearly defined performance levels and financial penalties to be levied for failure to meet those defined performance levels. Authorities and contractors have devoted a great deal of effort to create effective governance arrangements to manage their relationships. While the scope allowed for innovation has varied, the PFI method of procurement has shifted authorities' focus from the rigid specification of inputs to a concentration on critical outcomes.
22 Our recommendations for improving the management of PFI contracts are pertinent for other types of project. Departments and the Office of Government Commerce should, therefore, ensure that good practice developed under the impetus of PFI is also followed, where appropriate, in conventionally funded procurement and directly managed public services.
23 There is existing Treasury Taskforce guidance 'How to Manage the Delivery of Long Term PFI Contracts'. The Office of Government Commerce has also already issued best practice guidance called 'How Major Service Contracts Go Wrong'. This highlights how important it is to manage the relationship with service contractors and areas that might cause potential failure to occur. The Office of Government Commerce is also: considering commissioning the development of further contract management guidance based on its own feedback from departments, updating the standardisation of PFI contracts guidance and developing a PFI practitioner skills module to form part of the wider skills framework for government procurement. In addition, its Gateway review process will be used to monitor how contracts are being managed and to identify areas where guidance needs updating.