2.27 In our 2006 report Reducing the Reliance on Landfill in England4 we found that the average procurement period for waste management contracts approved since 2000 was approximately two years. Similar findings were obtained in a survey conducted by the Office of Government Commerce in 2005. The average tendering time for contracts signed since the formation of the Department in 2001 has increased to 38 months, slightly higher than the average for all projects across central government of 34 months we reported in 2007.5 In part the increase in waste PFI procurement times reflects the fact that recent contracts have tended to be larger and more complex than the early contracts.
2.28 A further issue affecting waste procurement times is that there have sometimes been changes to authorities' plans for the method of delivering the waste solution, or affordability issues have required the scope to be reconsidered. Figure 17 shows examples of changes to projects between the Outline Business Case and Full Business Case stages. Figure 17 also shows that there can be considerable increases to the costs of projects whilst they are being developed. In the projects shown the cost increases were due to initial underestimates. The changes to the proposed technologies were made in part to reduce costs and were not a factor in the cost increases.
2.29 In each of the cases set out in Figure 17 the Department sought information from the authority to explain the change in technology and cost, including confirmation from the respective Councils that they were committed to funding the project. Nevertheless, changing the plans for the projects inevitably added to the procurement times.
2.30 There is scope for reducing waste PFI procurement times. The Department has set a target average of 24 months for future procurements, though only four, relatively simple, projects have previously been procured within 24 months. Achieving the Department's target will be challenging as the current difficulties in the financial markets are adding to the time needed to close some deals. Also changes to EU procurement rules, known as the Competitive Dialogue, now require material issues to be discussed with all final bidders before selection of the preferred bidder.
2.31 Achievement of the EU landfill targets depends on efficient procurement completed within timescales which have been accurately forecast. Procurement timetables set out in business cases were, like the cost estimates, often optimistic. We found that the projects signed since the formation of the Department in 2001 were signed, on average, 19 months after the date set out in the approved Outline Business Case6, reflecting delays in both the development and procurement phases.
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4 HC1177 (2005-2006).
5 Improving PFI Tendering (8 March 2007,HC149).
6 Based on 10 out of 13 projects signed since 2001 where there this was stated in the Outline Business Case.