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Friday 21st October 2016

PFI schemes under fire

8th March 2007

The NHS Private Finance Initiative programme has been criticised in a new report from the National Audit Office.


The public sector has spent at least £67m on lengthy tendering processes, said the public spending watchdog.

Looking at a sample of projects which were completed between 2004 and 2006, the NAO found the average length of tendering was 34 months. Even the most complex programmes should only take 18 to 24 months, it said.

The costly and time consuming process were also a major factor in deterring bidders, which meant the NHS may not be getting the best deal because of a growing lack of competition.

Between 2004 and 2006, it found a third of projects had only two willing bidders – twice as many projects as in previous years. Companies were also setting limits on how much they would spend on bids.

Negotiations to finalise the deal with a preferred bidder were taking 12 months on average, with some up to five years, said the report. A third of projects saw significant changes during these negotiations, altering the cost of contracts by 17 per cent.

The Confederation of British Industry (CBI) put the cost of delays at more than £100m for hospital projects alone.

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