3.11 PFI projects are not currently procured by central units but by local authorities, NHS Trusts, Foundation Trusts or one off teams within the responsible central government department.
3.12 There was, however, strong support in the responses to the Government's call for evidence on PFI reform for a centralised approach to procurement across government. International examples of centralised procurement units were held up by many industry stakeholders as a model the UK should follow. In countries such as Canada central procurement bodies, staffed by commercial experts that have a clear focus on delivery, were recognised by many as being a key factor in the countries relatively low PPP procurement times. They have also been credited with reducing the duplication and dilution of procurement capability across the public sector, allowing the benefits of repetition to be realised and enabling economies of scale and efficiencies to be achieved across a procurement programme.
Box 3.A: Infrastructure Ontario Infrastructure Ontario (IO) is a crown agency of the Ontario government and reports directly to the Minister of Infrastructure. IO delivers many of the province's larger and more complex infrastructure renewal projects. It also manages one of the largest real estate portfolios in Canada, provides real estate services, and provides the public sector and not-for-profit organisations with long-term financing to renew public infrastructure. These four major business lines are supported by more than 400 staff. The Ministry of Infrastructure, in consultation with other government ministries, identifies which projects will be assigned to IO or to a provincial ministry. Once projects are approved for assignment to IO by Cabinet, IO receives a Letter of Direction from the Minister of Infrastructure confirming the projects, including their year of construction start and total project budget. IO uses a form of PPP called the Alternative Financing and Procurement (AFP) model which transfers the risks of cost overruns and delays to the private-sector, where they are best managed. IO is recognized as an international leader in leveraging private-sector expertise to deliver projects on time and on budget, while maintaining proper public ownership and control of core public infrastructure assets. Collectively, IO's professionals have significant construction and project management expertise across various sectors, including, hospitals, courthouses, detention centres, roads, transit, highway service centres, data centre, sports facilities, education facilities and police station. |
3.13 Central procurement units have allowed public sector managers and stakeholders to set out their requirements for a project at its outset and retain their focus on delivering services to the public, as the management of the procurement process is left to procurement specialists.
3.14 In the past Local Authorities have procured PFI school projects. The first PF2 programme, the Priority Schools Building Programme, will, however, be procured by a central unit in the Department for Education called the Education Funding Agency (EFA). Other departments with PF2 pipelines will be encouraged to establish a central procurement unit when they embark on a PF2 programme. The Government recognises that departmental centralisation of procurement, while representing a significant step forward, does not go as far as establishing the single PF2 procurement unit. The business case for such a unit will, however, remain open and will be revisited through the IUK and MPA assessments when future PF2 pipelines are confirmed.
Box 3.B: Centralised procurement - the Priority Schools Building Programme The privately financed part of Priority Schools Building Programme is to be centrally-procured by the Education Funding Agency (EFA) on behalf of the Department for Education. EFA are engaging with the schools in the programme during the pre-procurement phase to develop the project's design brief. During the procurement process, the EFA project team will liaise regularly with schools and their representatives so they are fully aware of how the procurement is progressing but will manage engagement with bidders independently allowing schools to concentrate on the business of running their school. The centralised approach to procurement will enable the following benefits: • the deployment of a central team of experts to run the individual procurements and negotiate the commercial, financial and technical deal. Lessons from one deal to the next will also be able to be applied and further experience developed; • bidders will be presented with one procuring authority with a single set of requirements enabling procurements to run more swiftly and with fewer project specific changes; • schools can be batched in larger numbers and across local authority areas to ensure efficient procurement; and • standard form documentation which needs very little tailoring can be fully employed, again improving the speed and efficiency of the procurement. |