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U-Turn on PFI IT Procurement

16 July 2003

The Treasury has abandoned its support for the use of the much-vaunted Private Finance Initiative for public sector IT projects.

A major Government review published yesterday has determined that PFI model - ministers' preferred route for financing capital projects - is unsuited to the needs of IT procurement and had "not delivered the step-change in performance that the Government orginally intended, and still requires."

In particular, it notes that most successful IT projects had moved away from the PFI model "to obtain greater ongoing flexibility and looser output specifications".

"The difficulties with achieving appropriate risk transfer in IT PFI, because of the need for significantly greater flexibility than in other sector, the high degree of integration into the other business operations of the procuring authority, and the lack of third party finance, mean that it may not be the appropriate value for money procurement route for IT", the report stated.

The Government plans to consult on a range of procurement models to replace PFI in IT which it believes may be "better able to deliver".

Read the Treasury announcement
Download the 'PFI: Meeting the Investment Challenge' Report

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