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Private finance initiative (PFI)
- PFI guidance
- New standard preliminary invitation to negotiate (PITN)
- New standard prequalification questionnaire
- New standard output specifications
- Standard contract
- Land and buildings in PFI schemes
- Design development protocol for PFI schemes
- Generic economic model PFI schemes
- Learning lessons from postproject evaluation
- Improving PFI procurement
- Changes to Treasury Green Book
- Investment in IM&T in the NHS
- Social Care PFI Initiative
- New hospital schemes
- Investment Guidance RouteMap
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Private Finance and Investment
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Last modified date:9 February 2007
The PITN is the first really competitive stage of the procurement process and the Trust's first opportunity to seek binding commitments from bidders in respect of various specific elements of the project. The new standard form PITN appears to be aiding that process. However, recent responses to the legal section (Section C) suggest that it may lack clarity, with the result that bidders are interpreting it as an invitation to produce lengthy responses. Consequently, we have amended Section C.
New Standard Preliminary Invitation to Negotiate (PITN)
The changes
Previously bidders were asked to confirm their acceptance to the generic standard form rather than to a project specific contract. Trust lawyers should now prepare a draft Project Agreement for the specific project, in conjunction with the PFU. This should include drafting to address project specific issues and any recent developments to the standard form which may not be included in the version on the Department of Health's website (for example, drafting to deal with Retention of Employment or positions agreed with the market on signed deals).
Bidders will now be asked to confirm their acceptance of this approved version of the Project Agreement, subject only to an exhaustive list of project specific changes. This should encourage bidders to focus their responses on project specific issues rather than changes to the standard form.
Bidders have also been asked to provide a commentary on the Trust's proposals for risk transfer. This requirement has been deleted since the Project Agreement sets out how all risks within the project will be dealt with. Trusts will, however, still need to produce a risk allocation matrix for their FBC.
The Office of Government Commerce has now issued its requirements in respect of refinancing together with the drafting to implement that. The drafting should be included in the Project Agreement and as such bidders' sign up to the standard form will negate the need for bidders to include their proposals for refinancing of the project and that requirement has also been deleted.
Tax Treatment for Construction Costs of NHS PFI Schemes (Composite Trader)
This is a new briefing note. As a result of guidance issued by the Inland Revenue, several bidders on current PFI schemes have raised the possibility of utilising a tax treatment (often termed "composite trade"
) which may enable Project Cos to reduce their tax burdens significantly.
Two points to note:
- this note is intended for briefing purposes only and cannot be relied upon as a definitive statement on the relevant tax law and guidance governing composite trader status. Bidders and their financial advisers may wish to consult with the Inland Revenue directly prior to proceeding further;
- for operational schemes, if Project Co does not contact the trusts seeking agreement to composite trader tax treatment than the trust should not contact Project Co to ask them to apply the tax treatment.
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