PFI bidding problems highlighted in report

That is the conclusion of a National Audit Office report, published last month. It has led one PFI contractor to call for bid appointments to be fixed earlier in the process.

Focusing on the projects across all sectors between April 2004 and June 2006 the report reveals the average tendering period where there was several bidders to be 34 months, the same as it was in 2000-2003. Where there was only one preferred bidder, timescales increased to an average of a year.

A source at one leading PFI contractor, who wished to remain anonymous, said the NAO report confirmed what the industry already knew. ‘There’s only a finite number of people that can run these bids,’ he told CM. ‘But it’s the government that loses out through lack of competition.’

The source suggests that ‘competitive dialogue’ – whereby competing bidders work through to the detail design stage – is at the heart of PFI’s failings. ‘We’d prefer it if appointments were fixed sooner rather than later, one bidder is wasting their time and money – that could be deterring people from bidding the first place.’ He added that losers in the process would be less likely to make future bids.

He said that, of the previous four PFI projects secured by his firm, one had two bidders, while the others had three apiece. ‘Whether they were strong bids, however, is open to question.’

The NAO report also highlighted the degree of material changes during the negotiation stage when the discipline of competitive tension had been removed.

A third of projects underwent significant changes to both scope and specification.

Although some project teams had shared lessons learned with others, the NAO found that there was no system in place for this. Project teams were ‘reinventing the wheel’ and resolving common issues in isolation. The Construction Confederation commented: ‘The [PFI] process needs to capitalise on experience gained in previous negotiations. Without this it runs the risk of wasting the available capacity in the construction industry and hindering our ability to deliver best value.’