Procurement routes that require a whole life approach

Key procurement routes

The key procurement routes that require a whole life approach include the Private Finance Initiative (PFI) and Public Private Partnerships (PPP). (Another term used for long-term partnership procurement is a Design, Build, Finance and Operate (DBFO) scheme.)

Public Private Partnership procurement

The principle behind Public Private Partnership (PPP) procurement is that the private sector is used to deliver services where it will provide better value for money compared to traditional public sector investment. Services are provided for the long term - typically 20+ years.

The public sector client prepares an output specification which defines the service required from the asset.

The private sector finances, designs, constructs, maintains and operates the facility.

The public sector owns the asset, but creates a lease or licence for the private operator to deliver services for the period of the contract. Central government may provide support through grants and other financial mechanisms.

PFI sectors

The key government sectors which have attracted PFI funding include:

  • transport;
  • law and order;
  • education;
  • defence;
  • health;
  • waste and water;
  • accommodation; and
  • information technology and communications.

Prime Contracting

Prime Contracting is used by the Defence Estates where PFI is not an option. A 'Prime' Contract is a single high value contract for delivery of property management services. It is placed with one company or consortium. Payment is linked to performance and innovation.

Prime Contracting is a systematic approach to the procurement and maintenance of buildings. It draws on the best available tools, techniques and practices, including through-life costing, supply chain management, value engineering and risk management, to achieve significant efficiency of the completed building.

Prime Contracting is a long-term procurement route. Cost savings are expected via reduction in supply chains' costs, standardisation of procedures and the use of bulk purchasing power. It has been used effectively for high value complex equipment procurement projects for many years and has now been tailored to the defence housing requirement.