PPP, PFI and MIM
Public Private Partnerships, Private Finance Initiative, Mutual Investment Model
We review and support the renegotiation of public sector contracts to make savings, including reducing the cost of complex PFI contracts.
We have helped 57 public sector organisations to identify over £1.2 billion in savings. We can help achieve efficiencies across a range of areas from contract management strategy, refinancing and savings reviews to benchmarking, market-testing and establishing regional contract management hubs. Our PPP and PFI specialist team helps increase the commercial skillset and contractual knowledge of public sector stakeholders.
We support the Welsh Government by providing the expertise to fulfil the £500 million of PPP projects included in the 21st Century Schools Programme, conduct stakeholder engagement programmes and support councils to deliver operational PFI savings.
Support for public sector contracts: COVID-19
At Local Partnerships, we are doing everything we can to provide support to hard-working colleagues in the public sector. We have received a number of enquiries in relation to the complex contracting landscape that has been affected by the COVID-19 outbreak. We are already providing advice and support to councils, especially where public service provision is outsourced. We are also supporting a significant number of infrastructure-related projects that are delivered through the Private Finance Initiative (PFI).
The continued provision of core services is vital at a time when resourcing will be significantly impacted.
The flexibility and adaptability of contractors and contracts is essential. All sectors must work together to resolve issues to achieve a mutually beneficial outcome. Any solution must ensure that elements are only changed for an appropriate length of time.
We can help ease the pressure on contracting authorities to vary all forms of contracts quickly, whilst ensuring this is managed carefully and appropriately documented.
Dependent on the nature of the contract, there may be the opportunity to use commercial provisions to optimise service delivery (for example, rescheduling lifecycle maintenance where a facility is closed).
We are a wholly-owned public sector organisation and work exclusively for public sector.
We are a joint venture between the Local Government Association, HM Treasury and the Welsh Government.
We have in-depth experience dealing with the issues you or your contractor may be facing. Areas of support we offer are:
- reviewing the form of commercial arrangements in place and prioritising the interventions
- assessing whether COVID-19 would be treated as a Force Majeure event or not. This issue is treated differently in different contractual forms
- assessing the robustness of the contracting party due to issues such as the availability of facilities management resources and the financial resilience of the supply chain
- considering whether it is appropriate to alter a service specification in the short term (for example, increasing the frequency of cleaning rotas)
- interpreting the Procurement Policy Advice being issued by Cabinet Office. This new guidance is being issued to deal with pressing issues, including the need to procure other services quickly
Please contact Michael Berrington:
07717 700 111 | 020 7664 3266
In 2019 – 20 we helped our clients achieve :
Public Private Partnerships (PPP) and Private Finance Initiative (PFI)
We supported central and local government by advising on key contractual processes including benchmarking, market testing, insurance risk share, contractual variations, refinancing and termination.
We supported five councils to consider whether the refinancing of their projects would generate a material gain. We achieved financial close on the refinancing of three projects: Barnsley Building Schools for the Future (Phase 3), Norfolk and Suffolk Joint Police Custody Centre, and Coventry Streetlighting, generating savings to the public sector in excess of £10m.
We supported councils as they consider and implement the termination of their PFI contracts. Our work is to ensure that a robust business case is delivered and, where the termination progresses, there is effective negotiation of the termination sum to minimise the council’s financial exposure.
We assisted two councils to challenge the insurance risk share, resulting in repayments to the public sector of £670,000.
We have been developing the most effective approach to support PFI contracts that are due to expire over the next decade. In tandem with the Department for Education, we advised a pathfinder schools PFI project that will be used as a test case to determine the approach for all schools’ PFI contracts. Our work relates specifically to ensuring that the PFI facilities are in an appropriate condition, and there is a credible plan for continuity of service provision at the point of handback. Working closely with the Infrastructure and Projects Authority and sponsoring departments we help to ensure that, where possible, this is consistently applied across other sectors.
Mutual Investment Model (MIM)
Our multidisciplinary team of Public Private Partnership experts leads the procurement and delivery of the Welsh Government’s 21st Century Schools and Colleges programme. It incorporates a pipeline of revenue investment in the education estate across Wales under the Mutual Investment Model (MIM), with a value of £1.5bn. In July 2019 we launched a competitive dialogue public procurement for a private sector delivery partner to enter into a corporate joint venture with the Welsh Government that will deliver new schools and further educational facilities.
The final intensive dialogue meetings were successfully managed and conducted entirely remotely owing to the COVID-19 pandemic. This resulted in bids being submitted on time and in accordance with the requirements of the original programme.
We supported the A465 Heads of the Valleys road project, which was the first Welsh Government MIM project to enter procurement. The competitive dialogue procedure focused on enabling bidders to deliver proposals that offer value for money, whilst maintaining the appropriate risk allocation to ensure the project remains “off balance sheet”. It has had to navigate the impact of the UK’s exit from the EU by providing a mechanism to manage exchange rate and tariff risks. The procurement required bidders to provide innovative solutions to maximise the use of existing structures whilst striking the balance of risk on the reuse of structures between the private and public sectors.
We managed a large, predominantly consultant-led, team through a complex statutory and regulatory process, working with multiple bidders and solutions.
For more information about what we have helped our clients achieve, see our 2019-20 impact report.
Local Partnerships’ expert advice has helped us resolve a range of PFI contract issues. They identified savings within our projects and have supported us in their implementation. Their commercial expertise is helping us get the most from refinancing our BSF projects and is delivering significant savings. These are valuable resources in the current financial climate that the Council is able to reinvest into its front line council services.
Ian Rooth, Head of Finance, Barnsley Metropolitan Borough Council
Local Partnerships’ insight and knowledge on the PFI market has directly influenced how we’ve progressed with our PFI savings negotiations – in particular their understanding of the funding market has helped us minimise the risk of incurring potential costs by pursuing proposals that were likely to be considered unacceptable.
Andrew Gate, Commercial Services Team, North Tyneside Council
The Local Partnerships team has exceeded the original brief in providing very professional and effective support and advice in the review of two individual PFI contract provisions. The review team provided a comprehensive assessment that has the potential to offer further budgetary savings opportunities.
Jonathan Henry, Norfolk Constabluary
Our Impact 2019-20
Managing your contracts during COVID-19
Preparing for the expiry of Private Finance Initiative contracts
Support for public sector contracts – COVID-19At Local Partnerships, we are doing everything we can to provide support to hard-working colleagues in the public sector.
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Programme Director – PPP & PFI
Programme Director – 21st Century Schools MIM