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Government urged to 'challenge use of private finance in public procurement'
Tue 03 May 2011
The National Audit Office (NAO) has urged public procurement officials to consider alternatives to private finance initiatives (PFIs).
A report from the group stated that prior to the credit crunch, the cost of debt finance stood at 20 per cent.
However, the NAO said this has since gone up to 33 per cent.
The organisation also noted that there is not enough data to indicate whether PFIs have delivered "better or worse value money" than alternative funding options throughout the procurement process.
As a result, the NAO has called on the public sector to challenge the "case for using private finance in public procurement" more heavily.
Amyas Morse, head of the group, said this would enable it to become a more "demanding and intelligent customer", and therefore help to reduce costs and save money.
Richard Tinham, commercial partner and procurement specialist at Winckworth Sherwood, said: "PFI has traditionally had a reputation as an innovative means for introducing funding into public facilities previously considered beyond the reach of the public purse.
"The evidence shows that such structuring comes at a cost. The findings will no doubt encourage public sector bodies to consider other means for levering taxpayers' money and is likely to lead to more public/public collaborative procurement exercise: an area in which Winckworth Sherwood specialises and provides expert vires, procurement and contractual advice.”
This comes shortly after John Collington was appointed as the government's first ever chief procurement officer.
