A report published by a prominent UK parliamentary committee warned that the failure to prepare for private finance initiative (PFI) contracts expiry could cause serious disruption to “vital public services such as schools and hospitals” and that the mismanagement of the expiry process “could result in large sums of taxpayer’s money being wasted.”
PFI was introduced in the early 1990s in a public/private partnership to bring private sector skills and finance to public services. Law firm Pinsent Masons commented that “The report raises some important practical considerations and concerns about what might happen in relation to replacing the PFIs. Getting the legal and practical aspects right is going to be crucial. For many procuring bodies properly establishing procurement strategies early is going to be important – perhaps four or five years before the relevant PFI contracts are due to expire. Many procurers and their partners are already facing up to this; many are not.”
And that “Existing PFI contracts can differ vastly when it comes to expiry, handback and how asset condition is monitored. Sectoral practices and needs vary markedly, and the recommendation around sector specific guidance identified in the report is therefore particularly important. But most important for all stakeholders – read and understand at an early stage what the contracts provide and, crucially, what issues they don’t adequately address.”
More than 200 PFI contracts are due to expire in the UK over the coming decade.
Read the indepth article here on Pinsent Masons