28 January 2005
Government auditors delivered some much-needed good news for the Department for Work and Pensions this week, heaping praise on its management of a Private Finance Initiative deal.
The National Audit Office said the Prime contract, which passed management of the social security and employment service estate over to Land Securities Trillium, brought the department the assurances it required for a good price.
The department had learned from the Inland Revenue's controversial Mapeley Steps deal, which transferred property management to a company registered in an offshore tax haven. Following this debacle, the government insisted on limiting the ability of PFI contractors to go offshore.
In this deal, the [DWP] determined that all the Prime companies in Land Securities Trillium's corporate structure are registered in the UK, and the contract places restrictions on [the firm's] ability to transfer any property to an offshore entity,' the NAO's January 26 report stated.
When the DWP took over responsibility for the Employment Service in 2001, the newly created department chose to expand the existing Prime contract rather than host a separate competition, a decision the NAO concluded was justified, given the circumstances.
Indeed, so impressed was the NAO with the DWP's handling of the deal that it is recommending other Whitehall departments follow suit. Auditor general Sir John Bourn said: 'Where public bodies can show that a non-competitive negotiation is the best option, the approach used for the expansion of the Prime contract provides a number of lessons on how to achieve good value for money — which should be applied in future.'
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