PFI HOSPITALS ‘‘
As far as I’m aware there’s been excellent communication on all PFIs through their joint performance management; where the level of ‘issues’ gets a little bit challenging and litigious is the concern
Ian Daccus, Estates and Facilities Strategic Partnership director at Capita
JB: “Do you think many of these cases will progress down the legal route?” ID: “I think it depends on the negotiation and the certainty of the non-compliance. When you have significant construction elements not built to the designed statutory standards, these elements have to be rectified, with all the associated cost. This is all central to why we had the PFI system in the first place – to have the perfect hospitals built, and then handed back in a perfect condition.”
JB: “So, as regards the sort of figures you are referring to, we may be talking about potentially quite significant construction defects and – where forensic teams find significant deficiencies – is the onus on the PFI consortia to rectify those before handback, or could they simply leave it to the NHS Trust to address thereafter?” ID: “I think this is the crux of what we’re discussing. The pre-handback process really does require the Trust to lift all those lids, and indeed any they may not have thought of – including the construction elements and standards. Quite often, once these PFI hospitals are open, they are such magnificent facilities that some of these elements were never looked at. It was more about getting on and operating them, and making sure that energy use, cleanliness, food standards, and the ongoing services provided by the consortium, are all working well. There were quite a few Trusts in the early years that found that their air-conditioning plant and some of some of their engineering services weren’t fit for purpose, or indeed properly compliant, for example. “Capita’s experience is not only that in some cases those more apparent elements weren’t installed in accord with the design criteria, but equally that the fundamental construction elements weren’t provided to those standards, and possibly were never looked at in sufficient detail. Trusts need to get onto the front foot sufficiently early ahead of the handback, to identify any concerns in the original design and construction, reviewing their lifecycle cost
replacement plans, and that sort of thing, and starting the process early.”
JB: “I’m presuming that with HTMs in place for many years, healthcare PFI contracts include stipulations that the building(s) covered must be maintained in accordance with the guidance?” ID: “Yes, they all have the requirement to be maintained to those standards – although some include specific derogations where there may have been some funding or other requirements of a shared nature, to allow them to partially comply. Generally speaking, though, they have to comply with all relevant standards for construction, and statutes, HTMs, and HBNs, as they were at the time constructed, and, in some cases, also for future updates unless derogated.”
JB: “Given that a number of the earlier contracts will soon come to an end, do you think Trusts have been able to adequately resource their in-house handback teams?” ID: “It’s definitely a challenge – as indeed it was at the outset – for the teams developing the contracts that led the PFI to financial close or contract signing to secure that skillset. The teams that have then operated and managed the PFI hospitals through the intervening period have varied by Trust, as have their approaches. We are now gearing up to a similar process where that extra input is needed again, as it was at commencement – and on a scale. With that workload the expertise needs to be sourced again. Some of this will be in the same way that teams of different professional specialisms were brought together to help with the contracts at the start of the PFI. This is also where the Infrastructure and Projects Authority comes in – as a helpful support to everybody.”
JB: “Do you think many NHS Trusts with PFI handbacks looming have brought in external consultants?” ID: “I think – depending on their
circumstances – yes, because there’s a whole range of expertise required, including legal support. Most PFI Trusts formed an extensive project team. There could have been 20 or 30 dedicated people dealing with the clinical planning design, capital and construction, and negotiation with all the different parties, while the consortia would have also developed their own team. “A real level of specialism was developed in the run-up to the PFI facilities being constructed, and then, in many Trusts, large parts of the team that had helped get the contracts to financial close moved on. These teams were partly disbanded once the hospitals opened. The remaining team then helps manage the PFI partner, while the PFI partner built, and then operates, the hospital. That’s a scenario that works well for the operational period, and these Trusts now need to gear up ready for handback to ensure, as best they can, that the hospital comes back in accordance with the contract – as that is what the NHS has paid for over the years.”
JB: “Do you think many Trusts have the in- house expertise to be able to pull together a team, or will many of them need to recruit to do it?” ID: “It’ll be a combination, and there will always be a need for extra resources. It wouldn’t be sensible to resource for the work that is required for a handback during what’s been optimistically an amicable relationship through the operating period.”
JB: “I believe the National Audit Office at one stage suggested the public sector ‘doesn’t take a strategic or consistent approach to managing PFI contracts as they end, and consequently risks failing to secure value for money during the expiry negotiations with the private sector’. Is that a fair point?” ID: “I think you could take two or three different views. The NAO’s criticism could be fair for some of the PFIs, but given the size and complexity of the risks the developers have taken, and I think there’ll probably be significant evidence to show that that this is not necessarily the case on the provider side. Where the IPA’s Centre of Excellence can help is in finding the right balance in the handback process to ensure that the value for money is maintained, and that the NHS gets the return on its investment over the years. However, simultaneously, it must do it in a way that allows that to happen in an effective way, if there are issues. If significant design and construction issues are discovered from detailed surveys, the liability sits with the PFI consortia. With the size of those potential issues, it’s best to start addressing them at least 6-7 years before the end of the PFI, to allow time to negotiate. The earlier, the better.
June 2024 Health Estate Journal 35
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