South Norfolk MP Richard Bacon has said the private sector is cooling its enthusiasm for PFI, as a new report finds that potential bidders are being put off by high bid costs and lengthy tendering periods, and that key elements of the PFI tendering process have worsened.

Mr Bacon was speaking as the National Audit Office (NAO) published its report into improvements in the PFI tendering process today. The report finds that PFI projects are attracting fewer bidders prepared to submit detailed bids.

Potential developers are being deterred by high bid costs and long tendering periods, and also by what they see as weak project preparation, inadequate planning and poor procurement skills within the public sector. The report also finds that developers are taking advantage of greater opportunities overseas to reduce their exposure to the UK market.

Mr Bacon, a member of the Commons public accounts committee, said today: 

“Under this government the public sector has few choices outside PFI for the funding of capital projects.  However, it is clear from this report that the private sector is cooling its enthusiasm for PFI. The danger is that as the number of bidders decreases, so will the chances of a robust tendering process to ensure that taxpayers get value for money”.

Norwich Schools Deal Examined

One of the PFI projects examined in the NAO’s report is the Norwich Area Schools PFI scheme.  The £79 million project aims to provide Norwich with five new primary schools, as well as extending Taverham High School.  Norfolk County Council signed a 26-year contract with construction services firm Kier Eastern in March last year. 

The county’s previous experience with PFI in schools was the abortive £92 million deal with Jarvis, which was axed in November 2004 when Jarvis could not find a suitable local contractor to carry out the work.  Jarvis had been one of only two bidders in the process at the Invitation to Negotiate stage.

Mr Bacon added: “The collapse of the County’s £92 million deal with Jarvis perfectly illustrates the importance of a healthy tendering process where bids are held up to proper scrutiny.  I sincerely hope this new deal delivers for parents, pupils and teachers, but there are plenty of examples in Norfolk where excellent facilities have been delivered without the need for PFI”.

8 March 2007

See also:
LOCAL NEWS: MP ope

PARLIAMENT: MP wants expert advice for PFI projects
SPEECHES: Improving value for money in PFI projects