PFI
Don’t put PFI contract expiry ‘on the back burner’
Paul Styler, director of Infrastructure Solutions at specialist consultancy, ETL, and Jackie Heeds, Partner at commercial law firm, Freeths, explore and address some of the common themes that Trusts face with PFI contract expiry, and the additional issues that such organisations need to be aware of – such as the potential to scope and extend the contract, and what steps they can take to minimise disputes.
You may think that it is years before your PFI contract expires, and that preparing for this is something which can be put ‘on the back burner’. Besides, there will be enough challenges with the day-to-day management of the contract which you will inevitably be facing, and in some cases this will already be stretching resources. So, having to consider the delivery of the contract expiry process as well may be a bridge too far. There is no mistaking the fact that that the longer that the contract expiry management process is put off, the greater the potential for issues (which could have been eradicated or minimised from the outset), and yet for Trusts with healthcare PFIs, the lights must remain on, the doors remain open, and frontline services continue, without disruption. So, you ask, what are the potential issues, and how can these be managed? These vary depending on your project, although there are some common themes in many contracts as they approach expiry. Being open to some of these issues, and putting plans in place to minimise potential risks, are key. Let us
consider some of the common themes, and how they may be tackled.
1: Handback requirements In line with the National Audit Office report and Public Accounts Committee findings, Trusts should be preparing for expiry if this is looming within the next seven years. That said, the majority of healthcare-related projects will expire
after 2030 (although there will be some due to expire ahead of that date). If your project is an early PFI contract, there may be no information on the handback process and obligations. It may contain provisions which lack clarity about the different parties’ roles and responsibilities, with clauses open to interpretation. There will therefore be several considerations for the Trust, including: n How do the handover provisions operate? You can’t assume that the drafting will be SoPC4 (Standardisation of PFI Contracts 4); the drafting could be bespoke, particularly as early project documentation preceded standardised contracts.
n Is there a survey process, and, if so, what is involved? What standards should be tested, and when?
n What will happen to the land, assets, equipment, and data? What condition are these expected to be handed over in? Will warranties be assigned? What data protection considerations are there?
n What provision has been made for employees? There may be potential TUPE and pension considerations.
The PFI-built Bexley Wing at the St James’s University Hospital site in Leeds incorporates a range of cancer treatment and therapy services. It was completed in 38 months, and opened in 2008.
2: Contract documentation These contracts were entered into in the 1990s and 2000s. Personnel who negotiated the contract may have long
October 2021 Health Estate Journal 73
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