Post on 01-Jul-2018
april 2006 | pfi and ppp fOCUS 2
contents
Welcome 3
RecentNAOPFI/PPPreports 4
Currentworkinprogress 4
TheNAOPFI/PPPteam 5
FocusonRefinancing 6
FocusonAchievingGoodPracticeinPFI/PPP 10
Bringingaboutbeneficialchange 14
WElCOME
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welcometothisfirstissueofPFI/PPPinFocus.ThepurposeofthispublicationistogiveyouanoverviewofkeythemesfromourrecentPFI/PPPstudiesandanupdateonourcurrentwork.ItalsohighlightsrecommendationswehavemadeandgivesdetailsofeventswearerunningtopromotegoodpracticeinPFI/PPP.Ihopethatyoufinditinformativeanduseful.
HavingjoinedtheNAOinJune2005fromacareerinthebankingsector,Iamnowexperiencingwhatit’sliketobeontheothersideofthepublicprivatepartnershipandappreciatingthechallengesfacedbythepublicsectorwhenprocuringandmanagingprivatelyfinancedprojects.Comingfromaverylargefinancialinstitutionbenefitingfromhighdealflowandteamsofin-housespecialiststoadviseoneveryaspectofatransaction,thecontrastwithapublicauthorityundertakingperhapstheirfirstandonlyPFI/PPPdealisstriking.TheworkoftheNAOindisseminatingbestpracticethroughourreports,seminarsandworkshopshasbeenandremainsanimportantwayofbridgingthegapbetweenthetwoparties.
TheuseofPFIandPPPcontinuestoattractagreatdealofattentionandtoexcitearangeofviewpoints.IrrespectiveofthewiderdebatesaboutthemeritsofPFIandPPPdeals,theroleoftheNAOistoprovideindependentandimpartialanalysistoParliament.Intotal,wehavepublishedover50reportsonavarietyofPFIandPPPtopics,coveringdealswithacombinedvalueofover£77billion.Wecontinuetohaveaninterestinthevalueformoneyobtainedfromindividualdealsandalsoincross-cuttingthemessuchasrefinancingandbenchmarking.Fullcopiesofthesereportsandrelatedmaterialsareavailablefromourwebsite(www.nao.org.uk).
AspartofourcommitmenttohelpdepartmentsbringaboutbeneficialchangewehostanannualPFI/PPPconference(thisyear’swilltakeplaceon13thJune2006–seepage14forfurtherdetails)andarangeofworkshopsincludingourpopularworkshoponManaging PFI Relationships to Achieve Success.Furtherdetailsoftheseeventsaresetoutinthisnewsletter.Youmayalsofindourrecommendationsdatabaseusefultoyourownwork,andyoucanfindthisonourwebsite.
Finally,asalways,wewelcomeyourinputandideasforareasthatyouthinkweshouldexamine,andwearekeentorespondtoyourneeds.IfyoufeelanNAOexaminationcouldimprovethedeliveryofaservice,helpidentifyandspreadgoodpracticeorhighlightareasofconcern,wewouldliketohearfromyou.Pleasedonothesitatetocontactmedirectlyatanna.simons@nao.gsi.gov.uk,ormakecontactwithanyothermemberofourPFI/PPPteam.
Anna Simons Assistant Auditor General
Wider Markets initiative (HC 799, Session 2005-06), 27th January 2006.Thisreportlooksatprogressinimplementingthisinitiative,whichencouragespublicbodiestoimproveassetmanagementandtoseekopportunitiesforcommercialexploitationofassets(seepage11forfurtherdetails).
progress on the Channel Tunnel rail link (HC 77, Session 2005-06), 21st July 2005.Section1oftheChannelTunnelRailLink(CTRL)wascompletedontimeandslightlyundertargetcost.Section2isoncoursetobecompletedontimeandclosetotargetcost.Thereportnotes,however,thatpassengerrevenuesremainwell-belowforecastsandcallsfornewguidanceastohowtomakeforecastsmorerealistic.
The refinancing of the norfolk & norwich pfi Hospital (HC 78, Session 2005-06), 10th June 2005.Anexampleofanearlyrefinancingwhichbroughtrisksaswellasbenefitstovalueformoney(seepage7).
department of Health - innovation in the nHS: local improvement finance Trusts (HC28, 2005-2006), 19th May 2005.OurexaminationlooksatwhetherLIFTisasuitableprogrammetosupportimprovedcommunity-basedhealthservicesthatmeetlocalneedswhileprovidingvalueformoney.Thereportispositiveaboutthebenefits
oftheinnovativestructureofLIFT-particularlytherequirementthatprojectsareagreedinthecontextofalocalstrategicplanandtheflexibilityitallows–butcallsforthestrengtheningofaccountabilityandperformancemeasurementframeworks(seepage12).
darent Valley Hospital: The pfi Contract in action (HC 209, Session 2004-05), 10th february 2005.ThereportprovidesanupdateonwhatwastheveryfirstPFIhospitalcontract.Thehospitalopenedtwomonthsearly,tothepriceagreedinthecontractandserviceperformancehasbeensatisfactory.Thereporthighlightsissuesinvolvedindevelopingbetterperformancemeasurementsystems,theseniormanagementeffortneededtomanageaPFIcontractinitsearlyyearsandarefinancing(seepage8).
accommodation for the department of Work and pensions: transfer of property to the private sector under the expansion of the priME contract (HC 181, Session 2004-05), 26th January 2005.TheDepartmentnegotiatedthisdealwiththeexistingcontractorbyintroducingcompetitivetensionintothenegotiations.Theoutcomewas£220millioncheaperthanacrediblecommercialalternative.
Recent nAo PFI/PPP RePoRts
cuRRent woRk In PRogRess
rECEnT naO pfi/ppp rEpOrTS
april 2006 | pfi and ppp fOCUS4
Thefollowingareexpectedtobepublishedsoon:
Update on pfi debt refinancing and the pfi Equity Market: ThisprovidesanupdatereportonhowthenewarrangementstosharerefinancinggainsareworkingandrecentdevelopmentsinthePFIequitymarket(tobepublishedon21stApril2006-seepage6).
national physical laboratory:ThisreportwilllookattheconsensualterminationofthePFIcontract.
Evaluating the implementation of pfi:ThisreportwillsetoutamethodologyforevaluatingtheimplementationofPFIacrossGovernment–seepage10forfurtherdetails.
THE naO pfi/ppp TEaM
pfi and ppp fOCUS | april 2006 5
TheNAOPFI/PPPteamcomprisesaround20professionalstaffunderthedirectionofJamesRobertson,PatriciaLeahyandDavidFinlay(seebelow).TheteamismadeupofexperiencedpublicsectorauditorsandstaffwhojoinedtheNAOfromcareersinbanking,economicsandprivatesectorcontracting
Inadditiontoourcoreworkofproducingvalueformoneyreports,weofferarangeofservicestosupportourstatedaim,whichisto“helpdepartmentstobringaboutbeneficialchangetopublicservices.”Theseincluderunningworkshopsandconferences;andourwebsitehostsafully-searchabledatabaseholdingalloftherecommendations
madeasaresultofourwork.WearealsoactiveontheinternationalsceneandchairtheWorkingGroupontheAuditofPrivatisationforInternationalOrganisationofSupremeAuditInstitutions(INTOSAI).Furtherdetailscanbefoundonpage15.
WehavedeepenedtheindependentassuranceweseekwhenplanningourPFIstudiesandwhenconsideringtheconclusionsreachedtoensurethatarereportsareashelpfulaspossiblefortheCommitteeofPublicAccountsandgovernmentdepartments.Asever,wewouldbeinterestedinhearingyourviewsonourworkandonhowwecanhelptoimprovethevalueformoneyofPFIandPPPdeals.
the nAo PFI/PPP teAm
DAvID FInlAyDirectorofPFIDevelopmentdavid.finlay@nao.gsi.gov.uk
DavidFinlayisDirectorofPFIDevelopmentattheNationalAuditOfficeandisresponsiblefortheNAO’sexternalrelationswiththePFIsector.Heisacharteredaccountantwhosecareerhasspannedboththeprivateandpublicsectors.DavidwasoneofthefoundingmembersoftheNAO’steamofPFIspecialistsandhasledmanyoftheirimportantPFIexaminations.TheseincludetherecentNAOreportsontheDarentValleyandNorfolk&NorwichPFIhospitalsandtheircross-governmentstudyonPFIrefinancing.DavidalsorunstheNAOprogrammeofworkshopsonmanagingPFIrelationships.
PAtRIcIA leAhy DirectorofPPPpatricia.leahy@nao.gsi.gov.uk
PatriciajoinedtheNationalAuditOfficein1996afterworkingintheTreasuryandinvestmentbanking.ShehasdirectedarangeofPPPstudiesincludingthreeontheLondonUndergroundPPPaswellasontheLIFTinitiativeforprimarycareservices,thePPPforNATS,MoD’scontractfortheDefenceFixedTelecommunicationsSystem,theRadioCommunicationsAgency’sJointVenturewithCMGandthecommercialisationofresearch.Shehasalsocarriedoutreportsonprivatisationsandacquisitions.
JAmes RobeRtson DirectorofPFIjames.robertson@nao.gsi.gov.uk
JameshasbeenDirectorofPFIValueforMoneyStudiessinceJanuary2004.HeisaneconomistbytrainingandhasworkedpreviouslyinthiscapacityintheEmploymentDepartment,DepartmentofEnergy,DepartmentofTradeandIndustry,DepartmentforTransportand,beforejoiningtheNAOin1995,wasChiefEconomicAdvisortotheDepartmentforEducationandEmployment.
In2002thegovernmentagreedwiththeprivatesectornewarrangementswhichwouldprovideforrefinancinggainsonPFIdealstobesharedbetweenthepublicandprivatesectors.Innewdealsrefinancinggainswouldbeshared50/50.Indealsalreadyinexistencetheprivatesectoragreedgenerallytoprovidethepublicsectorwith30percentofanyrefinancinggainunderthetermsofanewvoluntarycodefortherefinancingofearlyPFIdeals.ThenewarrangementsforsharingrefinancinggainswereintroducedbytheOfficeofGovernmentCommercewhichthenhadresponsibilityforPFIpolicy.ResponsibilityforPFIpolicynowrestswithHMTreasury.
Ourstudyhasexaminedhowthenewarrangementstosharerefinancinggainshavebeenappliedtorefinancingswhichhavebeencompletedsincethosenewarrangementscameintoforce.ItalsolooksattheextenttowhichtheOGC’sestimatesforamountsitexpectedthepublicsectortoreceivefromsharinginPFIrefinancinggainsarebeingachieved.TheNAOreportwillalsocoverrecentdevelopmentsinthePFIequitymarketincludingtheemergenceofthesecondarymarket.
Thisreportwillbepublishedon21stApril2006
uPDAte on PFI Debt ReFInAncIng AnD the PFI equIty mARket
april 2006 | pfi and ppp fOCUS6
fOCUS On rEfinanCing
Focus on ReFInAncIng
Keyfindings:
n TherehavebeenrefinancingopportunitiesonearlyPFIdealswhichhavebeensuccessfullydelivered.
n Refinancingscanbecomplexandneedcarefulscrutinisingbythepublicsector.
n Anyproposalwhichincreasesrisktothepublicsectorneedstoberigorouslyassessed.
pfi and ppp fOCUS | april 2006 7
Therefinancingofthisdealgeneratedgains,innetpresentvalueterms,of£115million,andtheinternalrateofreturntotheshareholdersofOctagonincreasedasaresult:from16percentto60percentfollowingtherefinancing.TherefinancinggeneratedlargegainsforOctagonprincipallybecausetheywereabletosignificantlyincreasetheirexternalborrowings(from£200millionto£306million).Astheseadditionalfundswerenotimmediatelyneededtooperatetheproject,thiscreatedcashresourceswhichcouldbeusedtoenableOctagon’sshareholderstodrawimmediatebenefitsfromtheproject,withtheincreasedborrowingstoberepaidoutofplannedprofitslaterinthecontractperiod.Octagonwasabletosecurebetterfinancingtermsforanumberofreasons:theriskoftheenterprisewasloweroncethehospitalhadbeensuccessfullyconstructed,thePFImarketwasmaturing,andborrowingrateshadgenerallyreduced.
InthisearlyPFIhospitaldeal,thecontractualarrangementshadplacednoobligationonOctagontoshareanyrefinancinggainsarisingfromtheoriginaldeal.Octagonshared,however,approximately30percent(£34million)ofitstotalrefinancinggainwiththeNorfolkandNorwichUniversityHospitalNHSTrust.ThiswasinaccordancewiththevoluntarycodeforsharingrefinancinggainsonearlyPFIdealswhichtheTreasuryhadnegotiatedwiththeprivatesectorin2002.TheTrustcurrentlypays£37.8millionayeartoOctagon.
Therewere,however,risksfortheTrustinsecuringthesebenefits.Itagreedtoextenditsminimumcontractperiodbyfiveyearsandacceptedthepossibilitythatitsterminationliabilitiescouldincreasebyupto£257million.
TheNAOfoundthatthetermsofthebankfinancefortheoriginaldealappearcompetitiveforabankfinanceddealatthattime,althoughitmighthavebeenpossibletoimprovetheoriginaldeal.Alternativefinancingsolutionswerenotseriouslyexploredtoensurethefinancingtermsremainedcompetitiveduringatwoyeardealclosure:thiswasbecausetheTrustdidnotwishtofurtherdelaytheprojectandwasnotconvincedthattheoveralltermsofthedealcouldbeimproved.
Followingthisrefinancing,theTrustcontinuestopayafinancingpremiumcomparedtocurrentdealsbut,byenteringintothisdealinearly1998,itavoidedconstructioncostinflation(whichhasbeeninexcessofgeneralinflationinrecentyears)andreceivedthebenefitsofthenewhospitalearly.
Thereareotherfactors,however,whichcouldaffectcomparisonsbetweenthepricesofearlyPFIdealsandthoseofmorerecentdeals.SomeofthesehaveyettobefullyanalysedbytheDepartmentofHealth,andtheNAOrecommendsthattheDepartmentshouldcarryoutfurtheranalysistoidentifyhowthepricingofallelementsofPFIdealshaschangedovertime,includingwhethertheprivatesectorisdeliveringcostefficienciesfromtheirincreasingexperienceofdeliveringPFIprojects.
the ReFInAncIng oF the noRFolk & noRwIch PFI hosPItAlHC78,session2004-2005,10thJune2005
fOCUS On rEfinanCing
fOCUS On rEfinanCing
DarentValleyhospitalwasprocuredin1997underthefirstPFIhospitalcontract.Itopenedin2000,twomonthsearlyandforthepriceagreedinthecontract.ThePFIconsortiumTHCDartfordhasdeliveredthefacilitiesandservicestheNHSTrustcontractedforandtoaqualitythatoverallhasbeensatisfactory.TheTrustisalsobenefitingfromareducedannualcontractpriceasaresultofsharingingainsfromarefinancingwhichTHCDartfordcompletedin2003.
ThereportnotesthattheshareholdersofTHCDartfordhavereceivedmuchearlierandlargerbenefitsthanhadbeenprojectedwhenthecontractwasawarded.Byincreasingitslevelofborrowings,THCDartford’srefinancingyieldedbenefits,inpresentvalueterms,of£33million.TheTrustnegotiateda£12millionshareofthesegainsunderwhatwasoneofthefirstapplicationsofthenewvoluntarycodeforsharingrefinancinggainswhichtheTreasuryandtheprivatesectoragreedin2002.AsaresultoftheiradditionalbenefitsTHCDartfordshareholderswereabletorealise£37millionatthetimeoftherefinancing,justthreeyearsafterthenewhospitalopened.
AlthoughbenefitingfromtherefinancingtheTrustalsofacesnewrisks.TheTrustagreedtoextendtheminimumcontractperiodbysevenyearsandtoacceptthepossibilityofincreasedliabilitiesintheeventofthecontractbeingterminatedearly.TheTrustconcludedthatthesearrangementswerevalueformoneytakingintoaccountthatthenewminimumcontractperiodof35yearsisinlinewithcurrentPFIhospitalcontractsandtheTrustconsidereditveryunlikelythatthecontractwillbeterminatedearly.ButtheNAOcautionsthatinfutureauthoritiesshouldundertakefurtheranalysisbeforeagreeingtoarefinancingwhichinvolvesincreasedlevelsofprivatesectordebtandhigherpublicsectorterminationliabilities.
Ondaytodaycontractmanagement,theNAOconcludedthat,althoughtheserviceperformanceoverallwassatisfactory,theTrustcouldhaveawardedlowerperformancescoresleadingtohigherpaymentdeductionsforservicelapseswhichoccurredsomeinareassuchascleaningandcatering.TheNAOrecommendsthatauthoritiesshouldlearnfromtheTrust’sexperiencebyeliminating,wherepossible,subjectivityinassessingperformancetoensurethatpaymentdeductionsarecommensuratewiththeimpactofpoorperformanceontheauthorityanditspatients.TheNAOalsopointedoutthatauthoritiesshouldplanfortheconsiderableseniormanagementeffortthatwillbeneededinmanagingaPFIcontractintheearlyyears.
DARent vAlley hosPItAl: the PFI contRAct In ActIonHC209,session2004-2005,10thFebruary2005
april 2006 | pfi and ppp fOCUS8
fOCUS On gOOd praCTiCE in pfi/ppp
Keyfindings:
n AnewNAOreportwillpresentanupdatedframeworkforassessingthedesignandimplementationofPFIprojects
n TheWiderMarketInitiativeisunder-employedandrequiressupportiveleadershiptosucceed
n TheLIFTmodelhasdeliveredbenefits,buttheaccountabilityandperformancemeasurementframeworksneedtobestrengthened.
TheNAOiscurrentlyworkingtoupdateaframeworkforassessingPFIdealsfirstdevelopedin1999.The1999frameworknecessarilyfocusedonissuesarisingduringtheprocurementofdealsratherthanduringthelifeofthecontractas,atthattime,fewdealshadenteredintotheiroperationalphase.Theupdatedversionbuildsonthe1999framework,drawingupontheexperienceofthemanydealsthathavebecomeoperationalsincethen.
TheassessmentframeworkisbasedonamatrixstructurethatdividesthelifecycleofaPFIprojectintosixphases(threebeforeadealissigned;threeafter)andsixbusinessmanagementthemessuchasthefitwithbusinessrequirementsandriskallocation.Ananalysissetsouthowthesixbusiness-managementthemesapplytoeachphaseofthelifecycle,highlightingthekeyissuesthatanevaluatorshouldconsiderineacharea.
Whilsttheframeworkisintendedtobeusedforretrospectiveaudit,ithasthepotentialtobeusedalsoasatoolfortheongoingmonitoringofprojects.Servicemanagers,leadprojectofficersandDepartmentalPrivateFinanceUnitsmayallfindittobeausefultool:itprovidesachecklistandhasbeendesignedtocomplementbutnotreplaceexistingguidance(suchasthatissuedbytheTreasury)orsoundmanagementofprojectsingeneral.
ThereportsettingoutthisframeworkisexpectedtobeplacedonourwebsiteinMay2006.
A FRAmewoRk FoR evAluAtIng the ImPlementAtIon oF PFI (in preparation)
Focus on AchIevIng gooD PRActIce In PFI/PPP
april 2006 | pfi and ppp fOCUS10
SixphasesofaPFIproject
n StrategicAnalysis
n Tendering
n ContractCompletion
n Pre-operationalImplementation
n EarlyOperational
n MatureOperational
Currentandrecentstudieswithimplicationsforgoodpractice
fOCUS On gOOd praCTiCE in pfi/ppp
pfi and ppp fOCUS | april 2006 11
TheWiderMarketsInitiativebeganin1999.TheInitiativeencouragesgovernmentdepartments,agenciesandnon-departmentalpublicbodiestomakebetteruseoftheirassetsthroughthecommercialexploitationofphysicalassets,includingequipment,landandpremises,andnon-physicalassets,suchasintellectualproperty,dataandskills.Themainincentiveistherightfordepartmentstoretaintherevenuestheygenerate.
From2001,theTreasurycontractedPartnershipsUKtoco-ordinateandpromotethisinitiative.Performanceacrossgovernmenthasbeenpatchy,however,withwidermarketsactivitiesbeingconspicuousbytheirabsenceinmanydepartmentsandagencies.SirMichaelLyonscommentedayearagothattheInitiativewasripeforre-energising.
ThereportfindsthatmostWiderMarketsactivitiesaretakingplacewheretheleadershiphasbeensupportive.Theseincludeprojectsthathavehadtoovercomeinitialconcernsaboutthesuitabilityoftheactivity,orneededspecificlegalpowers,beforegainingbusinesscaseapproval.Thebenefitsofsuccessfulwidermarketsactivityincludereducingthepublicsector’scostbaseandimprovingitsskillbase,leadingtoanenhancementofcorepublicservices.
Onlyonedepartmentinfour,however,hasactivelypromotedsuchactivitysofarandthishasbeenasmuchdrivenbyfundingpressuresasawarenessofopportunities.Athoroughassessmentofwidermarketsopportunitiesisneededandshouldincludethepotentialtomarketintellectualproperty,data-setsandknow-how.WiderMarketsactivityrequiresfurtherencouragementofacultureofwellmanagedrisktakingandthedevelopmentofadditionalcommerciallyskilledindividuals.
PARtneRshIPs uk - hm tReAsuRy: wIDeR mARkets InItIAtIveHC799,session2005-2006,27thJanuary2006
fOCUS On gOOd praCTiCE in pfi/ppp
AnexampleofgoodpracticeinstructuringaPPPisgivenbytheNHSLocalImprovementFinanceTrusts(LIFT)model.OurexaminationaddressedwhetherLIFTisasuitableprogrammetosupportimprovedcommunity-basedhealthservicesthatmeetlocalneedswhileprovidingvalueformoney.ThereportispositiveaboutthebenefitsoftheinnovativestructureofLIFT–particularlytherequirementthatprojectsareagreedinthecontextofalocalstrategicplanandtheflexibilityitallows–butgoesontocallforstrengtheningofaccountabilityandperformancemeasurementframeworks.
LIFTprojectsaredesignedtodevelopprimaryandsocialcareservicesandfacilitiesinEngland,fundingforwhichhashistoricallybeeninadequateandpiecemeal.
KeyrecommendationsfromtheNAOreportinclude:
n Whenplanninganewinitiative,asystematicapproachtoevaluatingadvisoryfirmsandthequalityofcontributionsfromindividualadvisorsshouldbeestablished.Thiswouldhelpachievegoodqualityadviceandvalueformoney.
n EffectivereviewsofStrategicServiceDevelopmentPlansforLIFTschemesshouldbeundertakenregularly,inaccordancewithPartnershipsforHealthguidance.
n Guidanceabouttheinitiativeaimedspecificallyatkeygroupsofstakeholders(inthecaseofLIFT–clinicians,LocalAuthorities,PrimaryCareTrustseniormanagementandsecondaryandacutecarecolleagues)shouldbedevelopedanddisseminated.
n Inthelightofexperience,itnowseemsthattheaccountabilityframeworkofLIFTcouldusefullybestrengthened.ItwouldbebeneficialfortheDepartmenttoestablishprinciplesanddevelopguidancedefiningresponsibilityforlocaloversightoftheStrategicPartneringBoard.
DePARtment oF heAlth InnovAtIon In the nhs – locAl ImPRovement FInAnce tRustsHC28,session2005-2006,19thMay2005
april 2006 | pfi and ppp fOCUS12
Can you identify good practice in your current work? if you can, we would be interested in hearing from you.
please contact david Jackson on 020 7798 5477 or david.jackson@nao.gsi.gov.uk
Topics the naO will examine in 2006 include benchmarking and market testing. if you have had experience of this topic please contact david finlay on 020 7798 7546 or david.finlay@nao.gsi.gov.uk
nEWS
the nAo conFeRence - 13 June 2006
bringing abOUT bEnEfiCial CHangE
PFI/PPP woRkshoPs AnD semInARs
bRIngIng About beneFIcIAl chAnge
AspartoftheNAO’scommitmenttohelpdepartmentsbringaboutbeneficialchangetheNAOPFI/PPPteamisabletoofferarangeofPFI/PPPtrainingeventstodepartments.TheseeventscanberunasworkshopsforindividualprojectteamsorseminarsforlargergroupsofstaffengagedindevelopingormanagingPFI/PPPprojects.Thetrainingeventswhichcanbeprovidedare:
n Managing pfi relationships to achieve success: Apracticalworkshoponimprovingpublic/privatesectorworkingrelationships.Includescontributionsfromprojectleadersinboththepublicandprivatesectorsandabusinessrelationshipexpert.
n an introduction to pfi/ppp financing (including refinancing):Atrainingeventsolelyonrefinancingcanalsobeprovided.
n Senior executive briefing: AnoverviewofcurrentPFI/PPPissuesforseniorofficialsincludingthosewhomayhavenotpreviouslybeencloselyinvolvedwithPFI/PPPprojects.
Sincethe2004launch,theNAOPFI/PPPteamhasnowdeliveredover20workshopsandseminarstoprojectteamsanddepartmentsincludingseveralNHSTrusts,theMOD,theDepartmentofTransport,theTreasuryBuildingandGCHQPFIteams.EventshavealsobeenhostedbytheNorthernIrelandAuditOffice,theScottishExecutiveandtheInternationalProjectFinanceAssociation.
april 2006 | pfi and ppp fOCUS14
TheNAOisoftenperceivedpurelyasascrutinisingbody.However,ourmissionisactuallytobringaboutbeneficialchange.ThisiswhywedevotealargepartofourPFIworktopromotinggoodpractice,asyoucanseebothfromthereportsoutlinedaboveandfromouractivitiesdetailedonthesepages.
FurtherdetailsandbookingarrangementscanbeobtainedfromDavidFinlay,NAODirectorofPFIDevelopment,atdavid.finlay@nao.gsi.gov.uk
Eachyear,theNAOhostsaconferencetodiscussthelatestfindingsfromourreportsandtoconsiderthemosttopicalandinterestingdevelopmentsinthePFI/PPPworld.Theeventiswell-attendedwithdelegatescomingfrombothcentralandlocalgovernmentbodies,consultancies,banksandotheradvisorybodiesandfromoverseas.
Thisyear’sconferencewilltakeplaceonTuesday13thJune2006.Itwillbeaninteractiveconferenceallowingthoseattendingtovoteonkeyissuesandtoposechallengingquestions
tothepanelofdistinguishedspeakers.Therewillalsobeaseriesofspecialistworkshopsonoperationalissues,financing,newformsofPPPandlocalcommunityprojects.
FordetailsonhowtobookyourplaceattheConference,pleasevisittheNAOwebsite(www.nao.org.uk/conferences).
nEWSbringing abOUT bEnEfiCial CHangE
TheUKNationalAuditOfficeisanactivememberoftheInternationalOrganisationofSupremeAuditInstitutions,orINTOSAI.
Wehaveastrongreputationforexpertiseinprivatisationandpublic-privatepartnerships,andassuchhavechairedtheINTOSAIWorkingGroupontheAuditofPrivatisationsinceitwasformedin1993.Theroledemandstechnicalknowledge,credibility,andatouchofdiplomacytoo:theworkinggroupcurrentlyhas40members(andgrowing),withgreatdiversityincultures,economicbackgrounds,andlegalandgovernanceframeworks.
Ourroleaschairistohelpidentifyandexamineemergingissues,andtoencouragememberstosharetheirknowledgeandexperiencewiththerestofthegroup.Weorganise
annualgroupmeetings(mostrecentlyinBrasilia,inSeptember2005)andkeepinregularcontactwithourfellowmembers.
TheNAOisproactiveinsharingitsknowledgeandexperienceofPFIandPPPwithoverseasbodiesinterestedinassessingvalueformoney.Forinstance,wehaveproducedasetofguidelinesonprivatisationandrelatedtopicssuchaseconomicregulationandpublic-privatepartnerships.Wehavealsostartedputtingtogetherarangeoftechnicalcasestudiestoofferpracticalexamplesandadvicetomembers.
MoredetailsofthisaspectoftheNAO’sworkcanbefoundonthewebsiteat:http://www.nao.org.uk/intosai/wgap/home.htm
pfi and ppp fOCUS | april 2006 15
InteRnAtIonAl woRk
wAnt moRe InFoRmAtIon About the PFI & PPP RecommenDAtIons DAtAbAse?Emailusat:pfigroup@nao.gsi.gov.uk
orwriteto:ColinRatcliffe,NationalAuditOffice,157–197BuckinghamPalaceRoad,Victoria,LondonSW1W9SP
©NationalAuditOffice2006|LayoutandproductionbyNAOInformationCentre|DGRef:6609RC|PrintedbyHeronsgate
the DAtAbAseSince1997,wehavepublishedover50reportsofourinvestigationsintoPFI/PPPdeals.Inthesewehavemadearound1,400recommendationscoveringawiderangeofsubjectsrelatedtothesetwoimportantprocurementfields.Fortheconvenienceofclients,contractors,financiersandothersusing,orinterestedin,PFI/PPPwehavecollectedtheserecommendationsintoadatabaseonourwebsite,withthegoalofitbeingusedtosupportinformedresearch.
keywoRD AnD text seARchesIfyouhaveaqueryaboutaPFIorPPPissueandwanttodiscoverwhatrecommendationsarerelevant,youcansearchdirectlythroughthedatabase.Toaidyoursearchwehaveclassifiedourrecommendationsbypre-setkeywords.Wehavealsoincludedatextsearchfacilitysothatyoucantailorsearchestoyourrequirements.
lInks to electRonIc veRsIons oF ouR RePoRtsTherecommendationsthatcorrespondtoyoursearchcriteriaarereferencedtothereportsfromwhichtheyaredrawn.Yoursearchmayrevealarecommendationthatyouwanttoexamineinthecontextoftherelatedreport.Tohelpyou,wehaveprovidedalinkthatwillplacetherecommendationwithothersthatappearedinthesamereport.Afurtherlinkwilltakeyoutoanelectronicversionoftheparticularreport.
ADDItIonAl FeAtuResWehavebuilttwoadditionalfeaturesintothedatabasetoprovideyouwithmorerelevantinformation.ThefirstisthatPPP-relatedsearcheswillalsoidentifyrelevantrecommendationsdrawnfromourpublishedinvestigationsintoprivatisations.ThesecondistheopportunitytosearchforPFI-relatedrecommendationsandconclusionsdrawnfromthepublishedreportsoftheHouseofCommons’CommitteeofPublicAccounts,togetherwiththerelatedTreasuryMinutes.
how to FInD the PFI & PPP RecommenDAtIons DAtAbAseYoucanfindourdatabaseofPFIandPPPrecommendationsat:www.nao.gov.uk/recommendation
got A queRy?no tIme to tRAwl thRough All ouR PublIsheD InFoRmAtIon?tRy ouR PFI & PPP RecommenDAtIons DAtAbAse
www.nAo.gov.uk/RecommenDAtIon