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Government working on 'new PFI' pipelines and centralised procurement units

Departments across government have “new PFI” pipelines of projects and are looking at centralised procurement units, similar to the Education Funding Agency tasked with the £2bn Priority School Building Programme, it was confirmed today.

Other departments “with PF2 pipelines” – understood to include defence and health – are in discussions to follow with a centralised model.

The PF2 documents say: “While the immediate PF2 pipeline is focused on accommodation projects, an asset class which has been a particular focus of the PFI reforms, the government wants to ensure that all suitable projects take advantage of the benefits of PF2.

“Looking forward the Treasury will work with departments to assess which future projects are eligible for PF2.”

There will also be a business case for one overall centralised, cross-departmental unit “kept under review”, the Private Finance 2 documents confirm.

“PFI projects are not generally procured by central units but by local authorities, NHS Trusts, Foundation Trusts or central government departments.

“The first PF2 programme, the Priority Schools Building Programme will, however, be procured by a central unit in the Department for Education, the Education Funding Agency.

“Other departments with PF2 pipelines will also be encouraged to establish a central procurement unit when they embark on a new programme.”

The documents say that “one of the most frequent suggestions raised in the call for evidence to address a perceived public sector skills deficit, was a proposal for the greater centralisation and improved professionalism of public sector procurement.”

Canada was held up as one of the examples that the UK should follow, it says.

The document continues: “The government recognises that departmental centralisation of procurement, while representing a significant step forward, does not go as far as establishing a single, centralised procurement unit.

“The business case for such a unit will be kept under review during the IUK and MPA assessments and when future pipelines are confirmed.”

Nick Prior, head of infrastructure and capital projects at Deloitte, said:  “While today’s announcement is certainly a step in the right direction, the challenge now is to turn those projects into reality through the new PF2 model or other procurement routes.

“Government agencies must have budgets allocated to fund those project pipelines. Otherwise, this will be just an academic exercise and not the spark for the much-needed shovels in the ground.”

Graham Robinson, global business consultant at Pinsent Masons, said:  “The pipeline is looking more meagre by the day. The main pipeline is the Priority Schools program, but this is probably at least 18-24 months away from being built.”


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