H.M. TREASURY

HM Treasury News Release

112/99

2 July 1999

Treasury Taskforce Launches Information Technology

Guidance for PFI Projects

Specific guidance on information systems and information technology services (IS/IT) in Private Finance Initiative (PFI) projects was announced today by the Chief Executive of the Treasury Taskforce, Adrian Montague. The guidance will assist the public sector, contractors, financiers and advisers in managing IS/IT procurements under the PFI.

The consultation document, published today, has been developed as part of the Taskforce's work on standardisation of PFI contracts generally. It acknowledges that some aspects of IS/IT projects necessitate a different treatment from other PFI deals, and sets out guidelines for the efficient management of the procurement process in future projects.

Speaking about the new guidance, Mr Montague said:

"Every IT project, whether in the public or the private sector, exhibits a range of risk characteristics. It is crucial that, from project inception onwards, all the participants understand and manage these risks properly - otherwise, there is a greater likelihood that the project will run into difficulties, either during the procurement phase or subsequent to the contract being let.

"Many of the problems will already be familiar from earlier experiences of IT PFI: lack of clarity in business objectives, lack of precision in project scope, volatile requirements and deficiencies in project management are all examples, as is an unquestioning dependence on leading-edge or unproven technology.

"We need to challenge the culture that allows these kinds of problems to build up and to threaten important projects, and to create a workable procurement and contractual framework for the IS/IT projects of the future. This guidance establishes that framework. It will assist Authorities, contractors, financiers and advisers to run procurements efficiently, and to ensure that documentation for future projects properly reflects the potential impact of major areas of risk."

The draft guidance aims to promote a common understanding as to risk allocation in IS/IT PFI projects and of the steps to be followed in the procurement process, with a view to ensuring:

consistency of approach, both generally and as to pricing in particular, across a range of similar projects; and

reduction in time and costs of negotiation, by enabling all sides to agree a range of areas that can follow the standard approach without protracted discussion.

The IT guidance will provide best practice approach to the headline stages in an IS/IT PFI procurement, from project inception, through preparation and OJEC, to selection of the preferred bidder and final award of the contract.

The Treasury Taskforce has been working closely with all parts of the public and private sectors on the general standardisation of PFI contracts, which work is to soon be published, and the IS/IT guidance is to be read in parallel with the general guidance. It is planned to issue the IS/IT guidance later this year, after the consultation process, as a companion volume or electronic update to the general work.

NOTES TO EDITORS

1. Copies of the guidance is available from the Treasury's Public Enquiry Unit on 0171 270 4558 or Adrian Murphy on 0171 270 4841. Press copies can be obtained from Malcolm Graves on 0171 270 5192. The document will shortly be available on the taskforce website: www.treasury-projects-taskforce.gov.uk