Partnerships: for Better, for Worse?

Partnerships are the British government’s preferred method of procuring public sector services, and the policy is usually justified in terms of delivering value for money. Ex ante financial methodologies are prescribed to ensure that decision making is based on a sound appraisal of alternatives and the government has called for an evaluation of implemented projects. This paper seeks to contribute to that evaluative process by exploring ex post facto some of the issues and problems that arose in practice. Using a case study approach, the paper considers two failures of information technology partnerships to examine how risk transfer, which is at the heart of the partnership policy, works in practice. The cases show that the contracts failed to transfer risk in the way that had been expected. The public agencies, not the commercial partner, bore the management risk and costs fell on the public at large and/or other public agencies.

[1]  J. Froud.  The Private Finance Initiative: risk, uncertainty and the state , 2003 .

[2]  R. Ball,et al.  Private Finance Initiative – a good deal for the public purse or a drain on future generations? , 2001 .

[3]  A. Pollock,et al.  Pump-Priming the PFI: Why are Privately Financed Hospital Schemes Being Subsidized? , 1999 .

[4]  David J. Price,et al.  The politics of the private finance initiative and the new NHS , 1999, BMJ.

[5]  J. Shaoul,et al.  Private finance and “value for money” in NHS hospitals: a policy in search of a rationale? , 2002, BMJ : British Medical Journal.

[6]  W. Seal.  Accounting and Competitive Tendering in UK Local Government: An Institutionalist Interpretation of the New Public Management , 1999 .

[7]  Nicholas Deakin,et al.  The Enabling State: The Role of Markets and Contracts , 1994 .

[8]  J. Shaoul.  New Developments: A Financial Appraisal of the London Underground Public-Private Partnership , 2002 .

[9]  Benito Arruñada.  Audit quality: attributes, private safeguards and the role of regulation , 2000 .

[10]  Mike Wright.  Discounted cash flow , 1973 .

[11]  J. Shaoul,et al.  PFI in the NHS—is there an economic case? , 1999, BMJ.

[12]  R. Graham,et al.  PFI in the NHS , 1997 .

[13]  M. Ricketts,et al.  The economics of business enterprise : an introduction to economic organisation and the theory of the firm , 2002 .

[14]  J. Shaoul,et al.  Planning the “new” NHS: downsizing for the 21st century , 1999, BMJ.

[15]  Allyson M Pollock,et al.  Private pie in the sky , 2000 .

[16]  J. Shaoul,et al.  Appraising and Evaluating PFI for NHS Hospitals , 2001 .

[17]  J. Shaoul,et al.  NHS capital expenditure and the private finance initiative—expansion or contraction? , 1999, BMJ.

[18]  Anthony Wall,et al.  Substance, Form and PFI Contracts , 2001 .

[19]  R. Hodges,et al.  Accounting for the Private Finance Initiative in the United Kingdom National Health Service , 1999 .

[20]  D. Gaffney,et al.  Downsizing for the 21st century: a report to UNISON Northern Region on the North Durham Acute Hospitals PFI scheme , 1999 .

[21]  David Price,et al.  'The only game in town?' A report on the Cumberland Infirmary Carlisle PFI , 1999 .

[22]  P. King,et al.  Is the Emphasis of Capital Budgeting Theory Misplaced , 1975 .

[23]  M. Pendlebury.  Management Accounting in Local Government , 1985 .

[24]  P. Stewart,et al.  The contract state and the future of public management , 1996 .