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Salford's hospital trust recently completed the UK's first pilot ‘batch' PFI project All public sector organisations strive towards continuous improvement. However, in reality, efficiency drives must be delicately balanced with maintaining the standard of services delivered to the general public. To maintain this equilibrium, senior management is focusing on ways to deliver more value for the taxpayer's money. A key focus for efficiency savings is the mechanism that is in place for procurement for private-finance initiative (PFI) projects. Joint PFI contracts are a common occurrence, particularly for smaller organisations in close proximity to each other. However, this method ties partners into long-term agreements and offers little flexibility in the future, but progress is being made in other procurement strategies. Working in tandem A recent development is the trialling of ‘batch' PFI – negotiating contracts for two organisations in tandem, using the same resources, but maintaining independent contracts. By progressing the deals as a batch, the strategy delivers significant cost savings by streamlining the involvement of advisers and documentation creation. The money saved can then be reinvested into citizen services. The procurement process in batch schemes isn't simple, but the financial results for the authorities involved far outweigh any difficulties which may occur along the way. There are few working examples of batch schemes, but one initial trial has proved extremely successful. North West NHS Trusts, the Salford Royal Hospital NHS Trust and Tameside and Glossop Foundation Trust, have recently completed the UK's first pilot batch PFI project in the NHS, and delivered significant cost savings throughout the process. The benefit to local authorities joining together during the procurement process can be a double saving. A single procurement process is used on the batch of projects, saving time and money compared with processes being carried out separately. Further savings can come from the private sector company that is providing the services, and bid costs can be reduced, as the private sector is agreeing on more than one scheme. But, with one team, and in the same time frame, this results in synergy savings, as the bidder can realise economies of scale over two or more projects.` Secret for success How are savings achieved? This is the most important and delicate part of batch schemes. The biggest hurdle is synergy between two or more local authorities. The authorities must have a common theme, work closely together, and have a high level of trust in each other to reach this goal. Separate contracts will be in place for each scheme, but the procurement process is carried out jointly. The aforementioned NHS trusts achieved their common goals by forming a joint batch scheme team, focused on completing the procurement process in a cost and time-effective way. The result was that the procurement process for both schemes signed within two weeks of each other, and both are now continuing with their own contracts. Following the successful completion of this NHS batch scheme, a template is now available to be used across a wide range of similar projects throughout the public sector. The template offers advice on how to make a batch scheme work, and sets out key benchmarks for long-term success. Template golden rules – the three Gs: geography – it is advisable that batch scheme partners have a close geographical connection. Schemes will have an increased chance of success if situated close or next to each other goals – all parties must set out honest, realistic and measurable objectives, and establish a clear timeline to progress the process, including contingencies. The need for flexibility will define whether public sector partners can work together for the joint procurement goal good working relationships – set up a joint public sector working group to give all parties a voice. Communication is key to give a clear understanding between public sector partners, to ensure all suppliers get one message. Considerations for the future While the template for a joint procurement process has been tried and tested, it is yet to be widely used across other public sectors. To date, only one Building Schools for the Future (BSF) scheme has successfully utilised the same process. The South Tyneside and Gateshead project achieved the same synergy as the trial NHS batch schemes, delivering financial benefits to the public sector in the area. Other BSF schemes have tried and failed to follow the batch scheme template, due to inflexibility or unrealistic goals. Successful schemes will need to follow the three golden rules to ensure failures are few and far between. The template for successful batch schemes has been set, but with efficiency continuing to be the key word for local authorities, displacing costs during the procurement process for new investments is now vital. The test now is for local authorities to meet the challenges head-on, and work together for a common goal. Tim Care is a partner at law firm Dickinson Dees

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HEALTH

Hatching the first batch

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