Summary of reform measures in PF2

Equity: To strengthen significantly the partnership between the public and private sector the Government will:

•  look to act as a minority public equity co-investor in PF2 projects; and

•  introduce funding competitions for a proportion of equity to attract long-term investors into projects prior to financial close.

Accelerating delivery: To ensure that procurement is much faster and cheaper than in the past the Government is:

•  improve public sector procurement capability by strengthening the mandate of Infrastructure UK and supporting departmental centralised procurement units;

•  committing that the tendering phase of PF2 projects, measured from project tender to the appointment of a preferred bidder, will not be allowed to take longer than 18 months unless an exemption from the Chief Secretary is agreed;

•  introducing a standardised and efficient approach to PF2 procurement and launching a comprehensive suite of standard documentation; and

•  strengthening the scrutiny of project preparation by introducing additional Treasury checks at the pre-procurement stage.

Flexible service provision: To improve the flexibility, transparency and efficiency of services:

•  soft services such as cleaning and catering will be removed from projects;

•  procuring authorities will have discretion on the inclusion of certain minor maintenance activities at the project outset. There will be additional flexibility to add or remove certain elective services once a contract is in operation;

•  an open book approach and a gain share mechanism for the lifecycle fund will be introduced to facilitate the sharing of any surplus lifecycle funding; and

•  periodic reviews of service provision will be introduced.

Greater transparency: To transform the approach taken to transparency the Government will:

•  introduce a control total for all commitments arising from off-balance sheet PF2 contracts signed;

•  require the private sector to provide equity return information for publication;

•  publish an annual report detailing project and financial information on all projects where Government holds a public sector equity stake;

•  introduce a business case approval tracker on the Treasury website; and

•  improve the information provisions within the standard contractual guidance.

Appropriate risk allocation: To improve value for money there will be greater management of risks by the public sector, including the risk of additional capital expenditure arising from an unforeseeable general change in law, utilities costs, site contamination and insurance.

Future debt finance: The financing structure for PF2 will be designed to enable access to long-term debt finance, and in particular, the capital markets.

Delivering value for money: Government will develop and consult on guidance which will replace the existing Value for Money Assessment Guidance.