PracticeConsultingEnd of the road for PFI IT projects

End of the road for PFI IT projects

Government agency the Office of Government Commerce has put the final nails in the coffin of privately financed IT contracts.

Link: Brown defends spending on PFI schemes

The move away from private finance initiatives, when dealing with large public IT contracts, was started in July with the publication of the OGC’s PFI: Meeting the Investment Challenge proposal, in which the OGC concluded that the model for funding such deals did not produce value for money.

The OGC has now released guidelines designed to facilitate successful IT contracting. The model for buying technology expertise presumes a ‘move away from PFI’.

Speaking to VNU News Centre, an OGC spokeswoman confirmed that the guidelines would push public sector purchasers towards other models of procurement, such as partnership arrangements, where risks are equally shared.

‘It doesn’t rule out PFI, but there is a move away from encouraging such deals,’she said.

The new guidelines will also help public sector bodies pass the Gateway Reviews. All large government contracts are required to undergo scrutiny to ensure that British taxpayers receive value for money in large commercial contracts.

‘Following the guidelines won’t guarantee success, but it should increase the likelihood of projects getting the green light,’ the OGC spokeswoman said.

The guidelines will help purchasers evaluate allocation and management of risks involved with the contract, as well as providing analysis of what suppliers can deliver.

Full details are available at: http://www.ogc.gov.uk/sdtkdev/new_content/decisionmap/0_index.htm

Under PFI agreements, private contractors were hired to develop IT systems that were then leased back to the public sector.

But early attempts, such as the Passport Office scheme, which resulted in massive backlogs for applicants, put banks off funding such schemes. Government watchdog, the National Audit Office, has been critical of PFI being used for IT projects.

Subsequently, the OGC has favoured public private partnership agreements, where risk is shared between contractor and supplier.

The new guidelines make it unlikely that new PFI deals will be reached

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