Benchmarking and market testing the ongoing services component of PFI projects

6 June 2007

Full report: Benchmarking and market testing the ongoing services component of PFI projects

“It is important that public officials test the cost and quality of facilities services to get value for money during the life of a PFI contract. My report highlights lessons in how value-testing should be carried out. In particular, public officials must have the necessary skills, must promote vigorous competition when value testing, and they must have a full understanding of whether and how the private sector’s price and service proposals offer value for money.”

The report recommends that the recent Treasury guidance be taken up by departments and that the Treasury should continue liaising with departments to identify suitable cost data to use in benchmarking. The NAO also urges that further steps should be taken to compare the cost and quality of facilities services under the PFI with conventional outsourcing experience.

Sir John Bourn, head of the NAO, 6 June 2007

Notes for Editors

 

*Benchmarking is the process by which the project company contractor compares either its own costs or the costs of its subcontractors against the market price of equivalent services

Market Testing means the re-tendering by the project company of the relevant service so that the Authority can test the value for money of that service in the market

** Sussex Partnership NHS Trust, University Hospital of North Durham, Queen Elizabeth Hospital Greenwich and Debden Park High School.

  1. Press notices and reports are available from the date of publication on the NAO website, which is at www.nao.org.uk. Hard copies can be obtained from The Stationery Office on 0845 702 3474. 
  2. The Comptroller and Auditor General, Sir John Bourn, is the head of the National Audit Office which employs some 850 staff. He and the NAO are totally independent of Government. He certifies the accounts of all Government departments and a wide range of other public sector bodies; and he has statutory authority to report to Parliament on the economy, efficiency and effectiveness with which departments and other bodies have used their resources.

Contact: Neil Gadhok
PN: 27/07
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