Q71 Mr Mitchell: Turning to local authorities, I cannot see how health authorities, to take the case examples on page 24 of the Report, case example four, the great success of Leeds, is paralleled by a much bigger set of case examples, five, examples of mess-ups and cock-ups and overcharging and general inadequacy. I cannot see that the small local authorities and health authorities, which are inexperienced in these matters, are going to be competent to deal with these powerfully articulated, very professionally managed firms which are used to it now.
Mr Kingman: We absolutely agree that that is a challenge and that procurement authorities around the public sector have not always had the skills that they ought to have done. What we have done is seek to put in place ways of supporting them through things like the Operational Task Force, standardised contracts, which I think help, and practical help and support through Partnerships UK.
Q72 Mr Mitchell: But how does a small local authority know the difference between a good and a bad client? How is it in a position to evaluate the terms it has been offered? Are we going to get a situation where they are trying to catch up running from behind?
Mr Stewart: I think the greatest challenge for any public body, and one of the prime causes of delays and cost increases, is the problems in setting the specification and actually defining the requirement they want. I think on the evaluation side things are relatively okay because, to be honest, they always have a financial adviser and the financial advisers have done this in many other cases before and on strict evaluation they get legal and financial advice which supports them, and so I do not think the evaluation is a problem. What I think is much more difficult is articulating and refining the requirement.
Q73 Mr Mitchell: Would it not be better if you had a Treasury team, a fire brigade, that went in and advised local authorities that are doing this?
Mr Kingman: We do, in the form of Partnerships UK.
Q74 Mr Mitchell: You are reviewing it when it comes in centrally, you do not send people out to advise them.
Mr Kingman: We do.
Mr Stewart: Partnerships UK had 50 to 60 people during the period that this Report covers and I think there were probably 200 projects in procurement, so there is a limit to the extent to which a central team can put people on the ground on these individual projects. Partnerships UK, as agreed with our advisory council, which is full of people from the public sector, the remit that we have agreed and criteria that we use to select projects is that we will work individually on large-
Q75 Mr Mitchell: That is a counsel of despair, is it not, you have not even set up a training scheme to tell people in the public sector how to handle these?
Mr Stewart: We have not but certainly the Treasury and other central bodies have set up training schemes so there is a training scheme run for the public sector
Q76 Mr Mitchell: Which is available to local authorities and health trusts?
Mr Stewart: It is. I would add that training can only take you so far. As people have pointed out, these are complex procurements and there is nothing like actual experience of negotiating these contracts, and just being told how to do it for two days or even a week is not really sufficient.
Q77 Mr Mitchell: It is a bit of a side issue but I can perhaps see the case, although I do not like it, for a building contract for a hospital or a school but I cannot see any case for a 30 or 35-year contract for catering. That just puts an incumbent in an extremely powerful position of dominating the market, what is the incentive on them to improve matters?
Mr Kingman: As I mentioned earlier, we are rather carefully neutral. We are not in a position where we are positively advocating the use of-
Q78 Mr Mitchell: Who is doing it then?
Mr Kingman: There are situations, particularly where it is integral to the nature of the project, where it can work, but we would expect contracts of that kind to be subject to regular market testing. That is what our guidance says. That is to say that the incumbent can lose, as they have done in as I say 46% of those to date.
Q79 Mr Mitchell: Might a bidder for a PFI contract say, "We will build the hospital we also want the catering"?
Mr Kingman: That is correct.
Q80 Mr Mitchell: That is monstrous.
Mr Pocklington: Well, as we have said, this is purely a value for money decision as to whether or not to include soft services.