Q51 Nigel Griffiths: Staying with the example that we have just been given.
Mr Kingman: I assume that you would not contend, for example, that we should have the power to require local authorities to do things.
Q52 Nigel Griffiths: Oh, I think so. If you are spending £50 million pounds on a school or something like that, there should be a certain requirement that you have a contract manager, otherwise you get what we are getting at the moment and that is that in one sixth of the cases they do not.
Mr Kingman: There is local democracy; we do not have the authority to require local authorities to do things.
Q53 Nigel Griffiths: Well you require local authorities to go for the PFI option.
Mr Kingman: No.
Q54 Nigel Griffiths: Yes, if they want the funding-and I have to say I am a supporter of PFI-and you are entitled, since the money is coming from you, to say whether the terms are reasonable. It seems to me to be reasonable to have a contract manager.
Mr Stewart: There are two issues that local authorities and hospital trusts have to deal with. These are long-term contracts and they rely on good partnerships between the public sector and the private sector, that means good relationships. A continual challenge is to retain people in those contract management jobs for a reasonable period of time. When I say "a reasonable period of time", I think five years plus is a reasonable period of time. That is a challenge in this environment. The other challenge they have is that the workload of the management contract does go up and down, so by the time of benchmarking, market testing, which this Committee talked about a few months ago, obviously more resource is required and if there is a big variation, again they have to supplement their resources.
Q55 Nigel Griffiths: You have thrown up something interesting there. Obviously, yes, it can be difficult getting people up to capacity on projects that they have never dealt with before. Why then do we not have a central group of people, peripatetic, who have the expertise that can go in?
Mr Stewart: We do have those central groups. For the larger departments there are private finance units, so, for instance, the Department of Health has a private finance unit which is probably a first port of call for support in those situations and if more specialist expertise is needed, then someone like PUK might also offer support. One of the primary roles of the helpdesk is not actually to provide the help, but often to identify the source of where that help might be.
Q56 Nigel Griffiths: Do you have a list of contract managers that the helpdesk can suggest people hire?
Mr Stewart: We do have knowledge of all the contract managers. As you say, we might often say: "Why don't you talk to so and so who has just been doing this before".
Q57 Nigel Griffiths: Can they hire that person?
Mr Stewart: Normally those people are within a public sector environment and will hopefully offer that help for nothing. We are talking about one local authority potentially talking to another local authority who has been through a similar situation.
Q58 Nigel Griffiths: That is what has led us into the problem though. Unless they can hire that person who is the contract manager-and that generally does not happen but you may be able to give me a case-is there not a case for having a central pool of contract managers on these multi, multi million pounds projects?
Mr Stewart: You cannot say there is a general rule that one should create a pool of contract managers. The first port of call is the existing support which comes from within departmental units. They have the ability to come to PUK. What we are certainly encouraging is sharing of knowledge and expertise and help between authorities.
Mr Kingman: James is being bashful. One of the reasons we set up Partnerships UK was precisely to provide that kind of service, so that public sector procuring authorities could hire PUK to help them, so that they could actually manage these things properly.
Q59 Nigel Griffiths: Right. But we are in the position where a third of PFI hospitals do not have contract managers and you seem to be pooh-poohing the idea that you might supply them and, given that these are usually more than £100 million as contracts, if I am not mistaken, I am surprised that health authorities, perhaps previously starved of funds, not used to procuring new hospitals, have any expertise at all in- house of that order; indeed that is what they tell me.
Mr Kingman: What we are saying is that we would very strongly encourage them to hire an ongoing contract manager.
Q60 Nigel Griffiths: Why do you not make it a requirement is what I am asking and then instead of having two thirds complying with that not unreasonable request, you would have the whole show?
Mr Kingman: There is a tension between our desire to promote good practice and not actually hamstringing the whole of the public sector by saying the Treasury knows best about everything and there are no circumstances in which you can do something different.