HM Treasury: Making Changes in Operational PFI Projects

HC 332, Thirty-sixth Report of Session 2007-08 - Report, Together with Formal Minutes, Oral and Written Evidence

Author:

House of Commons - Committee of Public Accounts

Publisher:

TSO (The Stationery Office)

Price: £8.50

This report from the Committee of Public Accounts follows on from a January 2008 National Auidt Office (NAO) report on the same topic ('Making Changes in Operational PFI Projects (HC 205)' - ISBN 9780102951929), which is available to purchase below.

In this report, the Committee examines the following areas:

• staffing and management changes;

• the reasons for not putting larger changes out to competitive tender;

• the charging of management fees by SPVs (Special Purpose Vehicle), which are the separate companies created by the different companies involved in the PFI (Private Finance Initiative) deal; and

• the value for money of small changes.

With PFI the public sector enter into long-term contractual arrangements with private sector companies to design, build, finance and operate a particular asset, such as a hospital or school. There are now over 500 operational projects with a combined capital value of £57 billion, with future payments amounting to £181 billion.

With such long term contracts, changes will be needed to the services and assets provided under the PFI project. In 2006, £180 million was spent on changes. Major changes costing £100,000 or more accounted for 90% of the total value of changes to PFI projects in 2006.

Conclusions and recommendations include:

• In 2006, changes to operational PFI projects totalled £180 million but many operational PFI contracts are under-managed.

• There are limits to the Treasury's capacity to control the allocation of resources to contract management at a local level.

• There is insufficient central support for contract managers.

• At present, 27% of project changes over £100,000 are not subject to competition.

• Management fees cost the taxpayer over £6 million a year.

• There are large differences in the cost of making similar minor changes to PFI projects.

Extent	29 pages	ISBN	9780215523525
Size	A4	Price	£8.50
Format	Paperback	Published	02 Sep 2008
Availability	Colour copy: 3 - 5 days	Delivery	Delivery options and charges