26. The NAO's report referred to above advises that contract managers should: "[understand] the contract to be sure that a change request is actually a change and not covered under the existing agreement and pricing structures."11 This may be particularly relevant in defence projects where some payment mechanisms are driven by "take or pay" regimes or allow for flexible hours of availability for asset/services time.
27. Another element of good practice which is recommended by the NAO is that the public sector party should provide its private sector counterpart with the fullest possible specification of a Change at as early a stage of engagement as possible. This helps to ensure that the MOD achieves its objectives and that it can influence the performance, cost and time parameters for the Change as much as possible. It should also drive efficiencies into the process. The benefits of early engagement are recognised in SOPC 4 and the exemplar drafting in Addendum 2 to MOD PAv1 has been drafted accordingly.
28. One of the factors which will determine whether an acquisition team can provide a proper brief for a Change will be the extent to which the MOD customer/user is engaged and bought-in at an early stage. Acquisition team members should ensure that internal stakeholders are engaged as early as possible in the Change and that, once an initial specification is agreed, variations away from that are managed. In the same way as may be experienced in the initial procurement, variations made by the MOD during the negotiation of a Change can lead to delays and increase cost.
29. If a Change is being considered by acquisition team members who do not have a great deal of experience in processing Changes in operational PFI contracts, MOD PFU recommends seeking advice from as many different sources as may be possible or appropriate given pressures of time etc. Major Changes should be notified to and discussed with the MOD PFU. Other sources of advice include members of other PFI acquisition teams and PUK's Operational Task Force.
30. In the context of a Major Change, acquisition team members should ensure that their team is sufficiently resourced and include appropriate expertise to meet the challenge of implementing a Change, which can be resource intensive at times. This may include supplementing internal resource with, for example, external advice. Further advice may be obtained from the PFU on team resourcing and the need for/process involved in appointing external advisers.
31. More generally, acquisition teams within the MOD that are managing operational PFI contracts should identify an individual whose role includes responsibility for processing Changes. This should help to ensure that Changes are processed efficiently and that the principles of best practice (e.g. managing stakeholder input, as described at paragraph 28, above) are followed. The NAO recently emphasised the need for public authorities to properly resource the management of their PFI contracts.12
32. Where the original contract was let following a competition run in accordance with the European Procurement Regulations, acquisition team members considering Major Changes should consult with MOD Central Legal Services - Commercial Law in relation to possible procurement issues that may arise from these Changes13.
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11 Report by the Comptroller and Auditor General HC 205 Session 2007-2008, dated 14 January 2008, page 6, para. f ii
12 See Report by the Comptroller and Auditor General HC 205 Session 2007-2008, dated 14 January 2008, page 5, para. d.
13 Note that Partnerships UK's Operational Taskforce Note 3: "Variations Protocol for Operational Projects (entered into prior to Standardisation of PFI Contracts version 4)" dated March 2008, paragraph 2.21 suggests that "SPVs are private sector organisations and are therefore not required to follow the procedures set out in the EU Procurement Services Directive…" Nonetheless, the application of the Procurement Regulations should be considered for each Major Change.