5.2 Public Private Partnership (PPP) Policy Framework and Guidance

The framework applies to all Northern Ireland Departments and their Agencies and NDPBs. It encourages the use of PPPs for the procurement of public services where it is appropriate to do so. Appropriateness must be judged in relation to:

• Value for Money (VFM) - PPP must deliver value for money compared to conventional procurement, as assessed in relation to a properly constructed Public Sector Comparator (PSC) where it is appropriate and necessary.
• Affordability - the PPP must be sustainable in the longer term (i.e. over the life of the contract) and compatible with the effective management of public expenditure.
• Best Practice - PPPs should be taken forward in an open and transparent manner consistent with social partnership arrangements but respecting commercial confidentiality. The need for consistency with the Public Contract Regulations (2006) and best procurement practice applies in full to PPPs.

The framework explains the role of the Strategic Investment Board (SIB), which includes working with Departments to develop strategically important PPP projects, assisted by the Public Private Investment Unit. The framework also lists various sources of guidance that are relevant in Northern Ireland.

HM Treasury and DFP Guidance

The latest important policy document is Infrastructure Procurement: Delivering Long-term Value (HM Treasury, March 2008), which sets out the next steps the Government is taking to secure VFM in its procurement of significant assets, infrastructure and long-term service provision. It recognises the continually evolving needs of the public sector, and also the changing approaches to complex procurement that have been developed over the past 15 years, in many cases building on experience of the Private Finance Initiative (PFI). It outlines a framework for infrastructure procurement that is designed to drive VFM across the full range of procurement approaches and ensure the effective scrutiny of key projects, while continuing to improve public sector procurement and commercial skills. Through this, the intention is to build on the techniques and processes learnt in PFI and apply them across a wider procurement spectrum. The document:

• analyses in broad terms the changing investment needs and challenges for the Government;
• sets out a range of approaches that have developed to address complex procurement issues;
• outlines the role of private finance and the important contribution it can make;
• illustrates the key principles and drivers of value for money that public sector procurers need to use to evaluate a broad range of procurement approaches; and
• sets out how the Government is developing a more risk-based, systematic approach to the scrutiny of major projects, while providing support to them and further enhancing the skills of the public sector.

In addition to the HM Treasury guidance, there is a small quantity of separate DFP guidance on PPP/PFI. Its purpose is mainly to explain how particular aspects of HM Treasury guidance should be applied in Northern Ireland. Currently, DFP guidance on PPP/PFI consists of this section of NIGEAE together with two Dear Accounting Officer (DAO) letters:

• HM Treasury published Value for Money Assessment Guidance in November 2006. The relevance and application of this guidance to Northern Ireland is explained in DAO(DFP)02/07.
• PFI: Strengthening Long Term Partnerships (HM Treasury, March 2006). DAO(DFP)08/06 clarifies the relevance of this policy document to Northern Ireland Departments and draws attention to some of its key points.