Q1 Chairman: Good afternoon. Welcome to the Committee of Public Accounts where today we are considering the Comptroller and Auditor General's Reports, Improving the PFI tendering process and Benchmarking and market testing the ongoing service component of PFI projects. We welcome John Kingman who is the Managing Director for Public Services and Growth Directorate from HM Treasury. Perhaps you might go through your colleagues, Mr Kingman, I think it might be easier that way rather than me just reading them all out.
Mr Kingman: With pleasure. On my left, James Stewart, Chief Executive of Partnerships UK (PUK);on my immediate right, Jeremy Pocklington, Head of our Corporate and Private Finance Team; and on my extreme right, Gordon McKechnie, who has recently joined us as our new Head of PFI Policy from Deloitte.
Q2 Chairman: Perhaps you might start by looking at paragraph 2.7 of the Comptroller and Auditor General's Report, the cost of all this. Mr Kingman, why are you letting tendering costs rise so much they are putting so many bidders off the process in the first place? Is that not rather basic?
Mr Kingman:I do not think that we are in a situation where we are putting bidders off, but this is something we watch rather-
Q3 Chairman: You have got twice as many projects only attracting two bidders, so if one drops out you have a monopoly situation, you are putting people off. The fact is that only the most experienced people, people prepared to put up with a very long tendering process are now taking part. You have made the process so complicated that you are getting less and less competition.
Mr Kingman: This is something that we do watch very closely for good reason. I do not think we are in a situation where we are seeing worrying shortfalls of competition on bids, but obviously if we were in that situation that would be very worrying.
Q4 Chairman: You are not worried that twice as many projects are only attracting two bids?
Mr Kingman: As I say, we do watch that.
Q5 Chairman: You may be watching it, what are you doing about it?
Mr Kingman: I might ask my colleague, Mr Pocklington, to say something about that.
Mr Pocklington: Thank you, Mr Kingman. I think we are putting in place an agenda of measures that are designed to improve public sector procurement skills in order to improve and ensure-
Q6 Chairman: I am sorry, I will stop you there. We are now the most developed PPP market in the world, there are 800 projects that have already gone through the mill. Do we have to wait for another 800 projects before you get things right?
Mr Pocklington: I think we have already put in place a number of measures-
Q7 Chairman: You just told me that you are now making further changes. You are adding another patch onto the broken wine skin.
Mr Pocklington: The measures that we are putting in place are showing early signs of improving tendering times-
Q8 Chairman: After 800 projects?
Mr Pocklington:-in certain sectors. A recent example is the Building Schools for the Future agenda where I understand that the average tendering time is 22 months, significantly lower than previous tendering times for the schools.
Q9 Chairman: Have a look then, Mr Kingman, at paragraph 3.1, will you? Why are tendering periods for PFI projects taking just as long now as they did four years ago? Why have times not improved? Here you are, the most developed marketing the world, 800 projects already under your belt and tendering periods take just as long as they do now as four years ago.
Mr Kingman: I think I should be clear with you, Chairman, we agree with the NAO that the performance described in this Report is not as it should be.
Q10 Chairman: No, it is a very bad Report, is it not?
Mr Kingman: I agree with the NAO that performance is not as it should be. I think it is not a correct reading of the Report that we have been, as it were, asleep on the job, we have done a great deal. We would like to see more progress. There are some early signs including, as Jeremy said, the Building Schools for the Future programme. I would also mention on their health programmes Partnerships for Health has completed 42 procurements with an average procurement time of 20 months and in a number of sectors we are putting in place targets to try and get this further down.