29 November 2001 | David Arminas
The controversial public finance initiative (PFI) policy could enter a new phase after official encouragement to put the funding of the projects out to competitive tender.
In a report on the refurbishment of the Treasury building in London, the National Audit Office (NAO) says the innovative method of attracting finance saved £13 million.
The NAO document, Innovation in PFI Financing: The Treasury Building Project, says that in future, government departments should always consider putting funding out to tender.
Renovation of the 100-year old building was the first public-sector procurement contract to be subject to a separate competition for funding after the other elements of the 35-year, £170 million deal had been agreed.
The Treasury's decision to hold a funding competition was a condition of retaining Exchequer Partnership, a consortium including Bovis Lend Lease Holdings, Stanhope and Chesterton International, as the preferred bidder.
Sir John Bourn, head of the NAO, said: "The Treasury has demonstrated that there is scope for innovation in the private finance initiative and was rewarded with a significant improvement in the value for money of this deal.
He added: "I recommend that other departments consider whether this approach is appropriate when putting together future deals."