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NAO warns public sector of high PFI risks

NEWS

PUBLIC SECTOR departments were this week warned against rushing into Private Finance Initiative deals simply to meet short-term project financing constraints.

The National Audit Office's latest examination of the PFI highlights the risk of 'departmental priorities being distorted in favour of those projects which are capable of being run as PFI projects'. It warns that the full cost of services provided under the PFI may be higher in the long term, and that departments should think carefully about entering PFI deals.

'A project which focuses on what the public sector wants without regard to what the private sector can supply is unlikely to be good value for money,' says the report.

'Likewise, value for money will be compromised if the public sector's requirement takes second place.'

The NAO has already examined eight PFI deals in detail including the Skye Bridge, the first four DBFO road contracts, the M74 in Scotland and the Dartford and Gravesham Hospital.

This latest report draws on the experience gained from these examinations and sets out a framework for setting up deals. It recommends:

setting clear objectives;

application of the proper procurement process;

getting the best available deal; and

ensuring that the deal makes sense.

Examining the value for money of deals under the Private Finance Initiative is published for NAO by the Stationary Office. Tel: (0171) 242 6393.

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