Best Value, Options Appraisal and PPPs

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Best Value, Options Appraisal and PPPs
Lee Digings Principal Consultant
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Key Topics

• Best value and procurement
• Making the right choice - options appraisal
• Delivering a successful outcome - project
  management

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Best value and procurement

• The story so far
• Abolition of Compulsory Competitive Tendering
  (CCT)
• Second review of Private Finance Initiative (PFI)
• Introduction of Best Value (Local Government Act
  1999)
• Government Review of Best Value (workforce
  issues)
• Review of Local Government Procurement (Byatt
  Report)
• Strategic Partnering Taskforce (pathfinders)
• White Paper Strong Local Leadership Quality
  Public Services
• Draft Local E-Government Strategy
• Introduction of Comprehensive Performance
  Assessment (CPA)
• Competitive Procurement (Audit Commission)
• Towards a National Strategy for Local Government
  Procurement
• Draft Circular on Best Value and Performance
  Improvement

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Best value and procurement

• Best Value
• Performance plan and key performance indicators
  (BVPIs)
• Best Value reviews
• Improvement plans
• Audit and inspection
• Government intervention
• (Draft Circular on Best Value and Performance
  Improvement)

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Best value and procurement

• How Best Value reviews secure improvement
• Broad scope
• Challenge, consultation, comparison,
  competitiveness (4Cs)
• Option appraisal
• Procurement and partnering
• Staff involvement
• Sustainable development
• (Draft Circular on Best Value and Performance
  Improvement)

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Best value and procurement

• Option appraisal
• The emphasis needs to shift away from routine
  market testing, to
• robust option appraisal, so that a much wider
  variety of options is
• considered, and the most appropriate option for
  delivering community
• objectives is selected. The consideration of
  alternative service delivery
• options (often referred to as the make or buy
  decision) is a key
• component of both competitiveness and the
  challenge element of
• reviews
• (Draft Circular on BV and Performance
  Improvement, para 42)

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Best value and procurement

• Procurement
• the whole process of acquisition from third
  parties . and
• covers goods, services and construction projects.
  This process spans
• the whole life cycle from initial concept and
  definition of business
• needs through to the end of the useful life of an
  asset or end of a
• services contract.
• (Review of Civil Procurement in Central
  Government, 1999)

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Best value and procurement

• Best value as a basis for awarding contracts
• The optimum combination of whole life costs and
  quality (or fitness
• for purpose) to meet the users requirement
• (Towards a National Strategy for Local Government
  Procurement
• p25)

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Best value and procurement

• Procurement strategy

Low risk High value
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Best value and procurement

• CCT culture
• The largest and most frequently-encountered
  barrier to competitive procurement . is the
  persistence of a culture that is rooted in the
  CCT regime. This can be evident in an adversarial
  approach to managing contracts in a lack of
  fairness when there is the possibility of an
  in-house bid in a readiness to accept
  superficial demonstrations of competitiveness or
  in the absence of a strategic framework (as
  opposed to one that is based solely on compliance
  with legislation) within which officers can
  select the most appropriate service design and
  means of procurement in each case.
• (Competitive Procurement, Audit Commission 2002,
  para 47)

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Best value and procurement

• Partnering culture
• Shared objectives
• Longer term commitment
• Sharing of risks and rewards
• Excellent communication
• Proactive problem solving
• Development of trust
• Evolves over time

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Best value and procurement

• Partnering culture (continued)
• Negotiated contract award procedure
• Member, staff and customer involvement
• Output/outcome specifications
• Incentives for continuous improvement
• Joint governance (e.g. a partnership board)
• Joint business/improvement plans
• Joint monitoring of performance
• A relationship as well as a contract

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Making the right choice

• Options
• In-house (restructuring etc.)
• Public sector consortium
• Local authority company (arms length)
• Non-profit distributing organisation (trust)
• Partnering contract (public, private or voluntary
  sector partner)

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Making the right choice

• Options (continued)
• Joint venture company
• PFI/PPP contract (design, build, finance and
  operate)
• Framework agreement
• Concession/franchise
• Market testing (with in-house bid)
• Outsourcing (no in-house bid)
• Closure or disposal

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Making the right choice

• Short-listing
• Benefits obtainable (4Cs)
• Capital investment needs
• Maturity of the market
• Critical functions
• Legal and procurement issues (including workforce
  issues)
• Existing contractual commitments
• Timing issues

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Making the right choice

• Business case
• Strategic fit
• Options (benefits, costs, risks)
• Affordability
• Commercial viability
• Achievability

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Successful delivery
MEMBERS
USER GROUPS
STAFF GROUP
PROJECT BOARD
Chief Officer
Senior Client
Senior Finance
Senior Legal
Senior HR
Project organisation
PROJECT MANAGER
PROJECT TEAM
Procurement
Finance
Client
Legal
HR
Property
ICT
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Successful delivery

• Procurement process
• Business case
• Procurement strategy
• Specification and draft contract
• Market sounding
• OJEC notice
• Pre-qualification (prospectus)

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Successful delivery

• Procurement process (continued)
• Invitation to tender
• Post-tender negotiation (where necessary)
• Contract award
• Implementation
• Monitoring and management
• Lessons learnt

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Successful delivery

• Gateway reviews
• Strategic assessment What do we need to do?
• Business case Is there a sound case for this
  option?
• Procurement strategy Are we ready
  to procure it?
• Contract award Are we sure this is the best
  value bid?
• Readiness for service Are we ready to go live?
• Post-implementation review What have we learnt?
  

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Contact us.

• IDeA Procurement
• Tel [phone]
• ihelp_at_idea.gov.uk
• www.idea.gov.uk/knowledge