SE/STUC PPP Staffing Protocol
Draft Technical Guidance
Note on Scoping of Services and In-House Bids
The Scottish Executive Financial Partnerships Unit
has issued for consultation a draft technical advice note for
PPP projects. This advice note provides supplementary guidance
to the PPP Staffing Protocol on the factors to be considered in
scoping the services to include or leave out of a PPP and the
options in relation to in-house teams.
The advice note can be viewed at: http://www.scotland.gov.uk/pfi/technicalguidance.pdf
This UNISON briefing sets out our initial views
on this draft guidance note. We have had discussions with the
Financial Partnerships Unit (FPU) through the STUC and these will
continue until ministers consider this guidance after the election.
However, as Public Service Organisations are already referring
to this document we have decided to publish this briefing as interim
guidance to branches. This briefing should also be read in conjunction
with the UNISON Scotland guide to the PPP Staffing Protocol.
It is important to emphasise that this is draft
guidance. In UNISON's view the advice note is fundamentally
flawed and undermines one element of the Staffing Protocol dealing
with staff transfers. We have made it clear to the FPU that the
advice note lacks balance. It accepts that staff transfer is not
necessary, but then seeks to make that decision as difficult as
possible for PSO's to take.
This Technical Note has been prepared by Partnerships
UK (formerly the Treasury Taskforce). They are a private sector
controlled body tasked with promoting PPPs and therefore cannot
be regarded as an objective body. The following is taken from
Partnerships UK completed a capital raising exercise
in March 2001 which enables it to become a public private partnership:
a joint venture with the public sector owning a minority interest
and the private sector owning a majority. The governance structure
has been designed to balance private sector disciplines with Partnerships
UK's public sector mission. A majority of board members come from
the private sector and the public sector is represented by two
non-executive directors appointed by HM Treasury.
UNISON Response to the Advice Note
The key points in our response are as follows:
Organisation of the PPP Project
The Introduction continues to emphasise that
risk transfer (and therefore off-balance sheet status) is
necessary to secure funding. Whilst for policy reasons this
is required in local government schemes it is not required
in all schemes according to the Treasury. Even if risk transfer
is required the aim should be optimum not maximum
risk transfer. Risks transferred to the private sector will
all be charged back to the PSO, even if in practice they constitute
very little actual risk.
The guidance separates Facilities Management
into 'Hard FM' (services which impact on the direct value
of the asset like building maintenance) and 'Soft FM' (which
impact on the services provided in the asset like catering).
The guidance claims that if Hard FM remains in-house then
it is "very unlikely that satisfactory justification or an
off-balance sheet position could be achieved" (Note 1). UNISON
recognises that it may be difficult to exclude Hard FM from
a PPP project. However, we take the view that the hard/soft
FM difference is a matter of policy not law and therefore
sub-contracting and secondment options are viable. This view
is shared by APSE (Association for Public service Excellence)
who state "There is no legal reason why a sub-contracting
arrangement back to a public sector body should be treated
differently from sub-contracting to a private sector body".
The advice confirms that 'soft' FM can be
an 'element' of PPP projects and grudgingly states PSO's "will
explore any opportunities" (A1). But then throws up as many
obstacles as possible to this approach including:
Need for an integrated approach
Financial risk if DLO fails
Innovation if FM and design together
Value for Money (VfM)
No evidence is tabled to support any of these
assumptions. As was often the case in VfM analysis in the recent
schools OBCs. UNISON believes that the advice should be worded
from a different starting point. The case for including at least
soft FM in the project should be made by those who wish to include
them. As there is no requirement to include these services,
the presumption should be that they remain in-house along with
other services such as teachers in schools PPP schemes and doctors
and nurses in NHiS schemes.
There is a major emphasis on considering market
conditions and attracting sufficient bidders. The purpose
of a PPP is to focus on the needs of the service not the private
sector. The whole guidance is bidder led (A4), claiming it
is "The crux" of the issue (A4). There is no mention of the
benefits to PSO's of an integrated DLO/DSO (see below).
A number of current schemes (mainly schools)
are fairly advanced and the guidance seeks to encourage no
change in FM provision because of this (summary 9 and A3).
This is contrary to the Protocol, which set the November date
around the ITN stage.
Assumes without any evidence that private
sector FM is better VfM (A1) or necessary to achieve risk
transfer (A3). The large number of private sector FM failures
in Scotland are not mentioned.
Exclusion of FM services from the project
Exclusion of FM services from the project
by 'Best Value' testing at ITN stage
Sub-contracting of an in-house team
Secondment of staff
The exclusion option (favoured by UNISON)
is played down in a brief paragraph. There are no positive
factors described only the negative and even these assumptions
are presented without evidence. Key arguments UNISON would
use in favour of exclusion are:
The risk of collapsing the in-house service
leaving few options if the private sector service fails. Remember,
with a PPP project the PSO is committed for 25 years or longer.
The maintenance of teamwork. An issue particularly
highlighted in the NHSiS plan. By excluding FM services from
the PPP project the PSO has one team working to common objectives.
Reduce the cost of monitoring the private
No incentive to under cut the specification
for cost cutting reasons
No two-tier workforce. A key element of the
Economies of scale for the PSO in maintaining
a larger DLO/DSO with consequential economies of scale in
Stable industrial relations.
Avoids the risk of claims for sex discrimination
implicit in only transferring FM services.
No complicated "back to back" contractual
relationships with the initial responsibility placed on the
PPP contractor and then part of that responsibility being
passed back to the PSO.
Option 2 is similar to option 1. However,
there is no need to undertake a new Best Value exercise. It
is also not necessary (as claimed by the guidance) to go through
a form of testing the price and quality against the PPP contractor.
The guidance focuses on price with little mention of quality
factors. In fact the guidance could be described as 'son of
CCT'. Again there is no mention of the monitoring costs of
a PPP – the emphasis is on need to monitor the DLO.
Option 3 does have its complications, which
is why it is not UNISON's preferred option. However, again
it is presented as an option with many obstacles to be overcome
and the reader is left with the impression that it would be
more trouble than it is worth. In practice this is a standard
contractual relationship which most DLO/DSOs are perfectly
capable of undertaking in accordance with the APSE guidance.
Option 4 (secondment) is an option which should
apply to hard FM as well as soft FM. However, it is dismissed
in a short paragraph presumably because it is not popular
with PPP providers. It may be untested in the schools sector,
(which appears to be the author's primary experience) but
there are Scottish examples in the water industry. In England
this has also been used in Liverpool Council with staff seconded
to a joint venture company established with BT in 2001. Again
these are not mentioned along with any explanation of the
benefits to the PSO and the PPP, which are similar to those
set out for option 1.
Note 1 covers the differences between Hard
FM and Soft FM, which are covered above. The emphasis is on
the problems 'additional interfaces' could cause. However,
these interfaces only exist if PSOs include FM services in
the first place.
Note 2 simply highlight the need to bring
standard contract documentation up to date to reflect the
PPP Protocol. Again all the emphasis is on the risk of keeping
FM in house. No mention of the advantages or risks inherent
in external FM provider.
Note 3 again assume all advantages in privatising
In summary, an unbalanced document that appears
to be aimed at promoting the transfer of all FM services to the
PPP project. This undermines a key element of the PPP protocol.
Branches are advised to follow the advice in the
UNISON guide to the PPP Staffing Protocol and press for the exclusion
of at least soft FM services from the PPP project, using the arguments
set out above. Hard FM can be addressed through secondment or
sub-contracting. The aim remains to ensure that no staff have
to transfer to the PPP project.
For Further Information Contact:
Dave Watson, Scottish Organiser (P&I) email@example.com
UNISON Scotland Guide to the PPP Staffing Protocol
The Involvement of DLOs and DSOs in Local Authority
PFI Schemes 2002 (APSE)
and the APSE circular to local authorities in Scotland
on the guidance note at http://www.apse.org.uk/