Defra develops standardised waste PFI contract

In a bid to make the procurement process easier, the Department is working with Nottinghamshire and Cornwall as they go through the search for a PFI contractor, aiming to develop a standard PFI waste contract by March 2006.

Test cases for the standard contract are currently being put together, with evaluations set to take place from September until the end of 2005. The government will be incorporating results of the test cases into a guidance paper early in 2006, in advance of the March launch of the standard contract.

As part of the build up to the new standard contract, a working group has been set up to discuss the issues of waste management contracts, and local authorities currently taking part in the PFI process are being consulted.

Pathfinders
Defra has commissioned public-private organisation Partnership UK to work with Cornwall and Nottinghamshire as “pathfinder” projects on which to base the standard contract.

PUK will work with the authorities, bidders and their banks in order to reach a position that satisfies all parties. These contracts will then form the basis of the guidance and standard PFI waste contract, which will be tested more widely within the market place.

Officials accept that some local authorities are too far ahead with their PFI contract procurement to benefit from a standard contract made available from March 2006.

Defra said: “Therefore, we will be reviewing current procurements to reach a position whereby, ahead of formally agreed derogations, projects can continue to progress towards contract signature. In so doing, we will be taking on board the views and concerns of a number of bidders and funders currently involved in waste PFI procurements.”

The initiative to press forward with the standardised contract and guidance was one of the outcomes of the Defra-hosted Waste PFI conference held in London in October 2004.

Defra's thinking has also been shaped by a stakeholder group hosted by the Institute of Civil Engineers, which included representatives from industry, local and national government, the investment sector, the advisory sector, the service sector and the civil engineering sector.