The Latest Thinking On Procurement From The UK Treasury

Key Point

The UK Treasury is seeking to engage with the private sector to

develop innovative procurement methodologies

In our December 2007 edition, Angela Jeppesen commented on the

importance of assessing project delivery options when preparing a

business case for a Public Private Partnership (PPP). Since then,

HM Treasury (United Kingdom) has published a report,

"Infrastructure procurement: delivering long term value".

It provides some interesting analysis and commentary on recent

developments in procurement models used in the UK Private Finance

Initiative, which provides valuable insights for the agencies

responsible for major procurement and PPPs in Australia.

Some of the interesting comments and developments noted in the

report are:

Procurement models which rely upon public (rather than private)

funding will still benefit from application of the procurement

know-how developed from PPPs. While the UK Government will continue

to use both traditional publicly funded procurement models (such as

design and construct contracts) as well as the established

privately financed PFI procurement models, the UK Treasury is

seeking to engage with the private sector to develop innovative

procurement methodologies, particularly to deliver the (largely

publicly-funded) infrastructure required for the 2012 Olympics. It

seems likely that, just as the 2000 Olympics in Sydney sparked a

renewed interest in Australia in the possibilities offered by

privately financed procurement models to ensure timely delivery of

complex infrastructure, the 2012 Olympics could spark interest in a

range of alternatives to traditional publicly funded procurement

models and the established privately financed PFI procurement

models.

The UK Ministry of Defence has recently developed a procurement

model, described in the report as an "Integrator" model,

to deliver the Ministry's requirements for the required numbers

of fully trained aircrew for all UK armed services over a 25 year

period. The report notes that the model is suitable for projects to

be delivered over a long timeframe where

flexibility is required to specify deliverables as technology or

standards change over time. Under this model the public sector

agency procures a private sector party (the integrator) to manage

the delivery of a project from the procurement phase itself into

operation. Under this model, the integrator does not itself deliver

the works and services required for the project but remains

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