14 The lack of commercial skills to match those of the private sector can put the public sector at a disadvantage in the negotiation and management of contracts. Since our 2009 report on commercial skills for complex projects,10 the Government has taken steps to improve commercial skills across the public sector. Despite this, the public sector's skills are generally not as well developed as their private sector counterparts, which puts value for money at risk. The risk arises in particular during the life of the contract. Major contractors and investors can improve their returns through cost efficiencies not shared with the public sector, or, high margins on the changes in asset usage which are likely to occur over a long contract.11
15 Because of the length and complexity of PFI procurements, there is a risk of important knowledge not being passed on when advisers or key individuals move on to other work. Skill shortages leave departments over-reliant on advisers who may be expensive and are not always incentivised to deliver more quickly. For example on the procurement of the M25,12 we noted that the Highways Agency was over-reliant on advisers, in part due to insufficient commercial and technical skills.
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10 Comptroller and Auditor General, Commercial skills for complex government projects, Session 2008-09, HC 962, National Audit Office, November 2009.
11 Comptroller and Auditor General, Making Changes in Operational PFI Projects, Session 2007-08, HC 205, National Audit Office, January 2008.
12 Comptroller and Auditor General, Procurement of the M25 private finance contract, Session 2010-11, HC 566, National Audit Office, November 2010.