1. PFI Contracts were intended to be self-reporting. The SPV (and, consequently, the O&M Provider) is typically required to report to the Public Authority each month on its performance against the requirements of the PFI Contract, including a summary of any failures to meet those requirements and any Deductions for that month. This monthly reporting is typically supplemented by periodic reports on issues such as life cycle, forward plans for preventative maintenance and energy consumption. The Public Authority reviews each monthly report and, after resolving any queries, any Deductions for that month are finalised and ultimately deducted from the Unitary Charge.
2. Consultees frequently used the terms self-reporting and self-monitoring interchangeably when describing their PFI project(s). In its 2021 report on managing the expiry of PFI Contracts1, The Public Accounts Committee (PAC) noted "PFI contracts are, in theory, self-monitoring, which means the PFI company is responsible for reviewing performance and reporting back to the authority. Nevertheless, the authority still needs to monitor the PFI company's performance to ensure it is receiving the services it has paid for". Likewise, SoPC42 states "In many cases it will be appropriate for the Contractor to self-monitor, with Authority audit procedures and Authority rights to investigate complaints". Both the PAC and SOPC acknowledge there is still a need for the public sector to audit/monitor PFI Contract performance.
3. To provide clarity in this report, we deliberately draw a distinction between reporting and monitoring. While we agree that PFI Contracts are in theory self-monitoring (as the PAC report and SoPC sets out), we use self-reporting as the more appropriate term to describe those arrangements under a PFI Contract. This clarity is helpful when considering the need for the public sector to appropriately resource its monitoring/auditing function.
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1 Managing the expiry of PFI contracts 19 Mar 21 - Parliament (publications)
2 Standardisation of PFI Contracts Version 4, HM Treasury March 2007