Recommendations

14  Those engaged in taking forward PFI projects, both within the Department and in other departments, should continue to have regard to the recommendations set out in our earlier report on the Dartford and Gravesham PFI hospital. As a result of this current further examination of PFI in the NHS we make the following additional recommendations:

A  The strategic outline case for a PFI project should include a clear analysis of the risks of being locked into a long-term contract. It should also explain how these risks would be addressed if the PFI procurement goes ahead and whether, on balance, the benefits of a PFI procurement are likely to outweigh any disbenefits. In making this assessment a department, and all other key stakeholders in the project, should consider the extent to which there are long-term plans and the uncertainties attached to these plans. The outline case should indicate how the proposed project contributes to a department's strategy both in the short-term and into the proposed contract period.

B  As the Trust demonstrated in this procurement, PFI procurements will benefit greatly from the involvement of senior management, input from key stakeholders and the use of experienced advisers. Trusts may benefit from key stakeholders sharing their experience, particularly how clinical considerations should affect the design of the project.

C  The Trust moved directly from three bidders to a preferred bidder without an intermediary stage. This may reduce the time and costs of both departments and bidders, and is now part of the Department of Health's guidance. Other departments should consider whether this approach is appropriate. Certain safeguards are needed with this approach (see paragraph 2.21). These include making sure the three final bidders know that there will not be another opportunity to improve their bids and resolving outstanding contractual issues before the selection of the preferred bidder to keep the final negotiations to a minimum.

D  Other departments should consider whether it will be helpful to PFI procurements if greater use is made of the type of preferred bidder letter obtained by the Department in this project. This sought confirmation from the preferred bidder that, assuming the specification remained unchanged, it would commit itself, for a defined period, to the price it bid prior to its selection as preferred bidder. This confirmation,now reflected in Office of Government Commerce guidance5, may help departments to close deals effectively knowing that the contractor has agreed that price changes will only be allowed in exceptional circumstances.

E  The departmental approval processes for PFI projects should not, explicitly or implicitly, place undue emphasis on the need for projects to demonstrate savings, however small, against a PSC in order to gain approval. The emphasis should be on demonstrating value for money taking all benefits and disbenefits of the PFI approach into account. There is a risk that project teams may devote too much time refining their financial comparison calculations, at the expense of a more rounded and valuable assessment. Financial and wider non-financial should be considered in deciding whether to go ahead with a PFI procurement.

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5 Standardisation of PFI contract terms, OGC July 2002