Local Partnerships is a joint venture between HM Treasury and the Local Government Association (LGA), formed in 2009 to help the public sector deliver at the local level, supporting the delivery of investment in local infrastructure and local services.
Carillion liquidation: How will your services be impacted?
Carillion is a major supplier to the public sector, whether construction contractor or service provider. It is a key player in the PFI and PPP market and news that it has gone into liquidation is a major concern across the public sector.
Your immediate concerns will relate to the ongoing delivery of services – will it affect the operation of your schools, your hospital, your highways? How will services be impacted today, this week, or over the coming months?
Where Carillion is the FM contractor on your PFI contract it is essential that the SPV undertakes the role of managing the contract, ensuring continuity of service provision. Your PFI contract is between you and the SPV, not with the FM provider. There have been ongoing concerns regarding Carillion and all SPVs should be prepared to step in. Continuity of services is, ultimately, the responsibility of the SPV. When an FM provider fails to deliver services to the required standards, then it is for the SPV to ensure continuity of service provision. The will need to source alternative suppliers where necessary and to ensure that the actual service provider, which may be an SME as a subcontractor to the lead FM Provider, continues to get paid. Ultimately your contract hasn’t changed – it’s time for SPVs to step up to the mark and undertake the role for which they are being paid.
From your perspective it is critical that your SPV clearly communicates the measures they have put in place to ensure continuity of service and how they will step up to manage the contract effectively.
This will enable you to prepare a response plan to address any questions from within your organisation, and from your service users, about risks to public services.
You may also wish to review your contract and identify any step-in rights you may have, should the SPV fail to address the issue adequately. These usually relate to circumstances where health and safety is at risk and understanding your rights may help you plan for dealing with any such issues, should they arise.
Concerns over the coming weeks and months are likely to turn to maintenance and lifecycle issues. Lifecycle programmes for schools should be nearing time for issue to Authorities to review and approve. Again, it is the SPV’s responsibility to ensure that all lifecycle and hard FM work is completed. In addition, clarity over the value of lifecycle funds, and who holds that fund within the contractual structure, is important. Ongoing availability of your PFI facilities is critical.
Once the initial issues have been resolved, this could be used as an opportunity. There are ongoing issues regarding the extent to which SPVs actively manage contracts. Operational management is often passed to the FM contractor, with the SPV acting as little more than a “post box” – with scant review of information or active management. This is should be seen as an opportunity to ensure they are proactively managing your contract. As the SPV resolves the issue, any proposed changes to your contract, or your Contractor or FM Provider, are decisions that need to be carefully considered with appropriate advice and support to ensure ongoing quality of service delivery and value for money.
If you would like to discuss your PFI or PPP project please contact:
Rosie Pearson
[email protected]
07900 134 899
Simon Johnson
[email protected]
07795 693 380
Stewart Rolls
[email protected]
07554 334 915
