PPP Strategic Partnerships Database 2012-2013
Executive Summary
The number of PPP strategic partnerships has increased 35% in just two years with 18 additional contracts valued at £8bn.
65 strategic partnership contracts have been awarded since 1998 worth £14.2bn and employed over 28,600 staff when the projects commenced.
Strategic partnerships originated in ICT and corporate services, but have extended into planning, education, police, fire and rescue and property services.
60 contracts are currently operating, four were terminated and one completed the contract term, but was not renewed. A further two are being terminated in 2014.
The new Strategic Partnership Performance Ratio is 22.0% (combining contract terminations, major reductions in the scope of contracts, and significant problems in contracts).
Three companies – Capita, BT and Mouchel have a 58.9% market share of operational contracts by contract value and 63.2% share of staff employed.
67.6% of staff were TUPE transferred with a further 2.5% transferred under TUPE Plus. In addition, 26.8% of staff were seconded or transferred to a joint venture company between the authority and contractor.
Just over 38% of operational contracts are in the North (the North East, North West and Yorkshire and Humberside regions) with 32.8% of contract value and 38.4% of jobs. The North had a 50% share of contracts in 2011 and the shift southwards illustrates significant increases in the value of contracts in the West Midlands, London and the South East/South.
Fifteen local authorities developed strategic partnership projects, in many cases reaching the procurement stage, but ultimately rejected this approach. One of these authorities later retendered and established a strategic partnership. One local authority (Newcastle City Council) submitted an in-house bid, which was successfully implemented.
Four ‘whole service’ twenty-five year highway services contracts are operational worth £6.1bn and employ 1,015 staff.
45 waste management contracts are in operation, virtually all PFI projects valued at £29.8bn, of which nine include household waste collection and other local environmental services.
Seven-year trends
A comparison of the 2012/2013 and 2007 PPP Databases reveals:
The number of strategic partnerships increased 80% in a seven-year period.
The level of contract terminations and problems has remained at the same high level at over 22%.
The total value of contracts increased 87.7% and the number of staff involved increased by 88.9%.
Capita, BT and Mouchel retain their position as the three largest contractors by number of contracts, value and number of staff, but their share by value declined from 65.4% in 2007 to 58.9% by the end of 2013. Their share of the number of staff employed in operational strategic partnerships fell from 70.2% to 64.1% in the same period.
2011 edition of PPP Strategic Partnerships Database
• 48 strategic partnership contracts have been awarded since 1998 with a total value of £9.6bn and employing over 19,000 staff when the projects commenced.
• 44 contracts are currently operating, three were terminated (plus one pending termination) and one completed the contract term but was not renewed.
• A further 14 projects are in procurement – 6 ICT, corporate and technical services; 4 highway services and 4 waste contracts.
• The new Strategic Partnership Performance Ratio is 22.7% (combining contract terminations, major reductions in the scope of contracts, and significant problems in contracts).
• Three companies – Capita, BT and Mouchel dominate the rankings in all three categories with a 59.9% market share by contract value (63.7% in 2009). The same three companies, but in reverse order, have a 63.1% market share based on the percentage share of staff employed.
• 56.6% of staff were TUPE transferred with a further 3.8% transferred under TUPE Plus. 31.0% of staff were seconded to a joint venture company between the authority and contractor, and a further 6.2% are TUPE transferred to a joint venture company.
• 50% of the current operational contracts are in the North (North East, North West and Yorkshire and Humberside regions). The North West of England has the highest concentration of strategic partnerships by number, value and the number of staff employed.
• One local authority (Newcastle City Council) submitted an in-house bid, which was successful.
• Eleven other local authorities developed strategic partnership projects, in many cases reaching the procurement stage, but ultimately rejected this approach. One of these authorities later retendered and established a strategic partnership.
• A new trend has emerged with private companies offering inducements, usually publicly funded, to establish funds to train apprentices and/or fund community projects.
• 40 waste management contracts are in operation, virtually PFI projects valued at £23.3bn, of which 9 include collection of household waste and other local environmental services.
Five-year trends
A comparison of the 2011 and 2007 PPP Databases reveals:
• A 37.1% increase in the number of strategic partnerships in a five-year period.
• The total value of contracts increased 32.2% and the number of staff involved increased by 22.0%, indicating a decline in the average size of contract with lower number of staff.
• Capita, BT and Mouchel retain their position as the three largest contractors by number of contracts, value and number of staff, but their share by value has declined from 65.4% in 2007 to 59.9% in 2011. Their share of the number of staff employed in strategic partnerships has fallen from 70.2% to 63.1% in the same period.
• Ten projects were in procurement in 2011 compared to four in 2007.
Dexter Whitfield stated: “The 22.7% Strategic Partnership Performance Ratio is evidence of a large credibility gap between the claims of strategic partnerships in procurement and the reality of high-cost, high-risk, and low performance contracts.”
Tables
Table 1: PPP: Strategic Service-delivery Partnerships for local authority ICT, corporate and technical services in Britain (2000-11).
Table 2: length of contract.
Table 3: Strategic partnerships in procurement
Table 4: Regional distribution of strategic partnerships
Table 5: Employment model in operational strategic partnerships
Table 6: Contracts and market share of main contractors in operational strategic partnerships
Table 7: Summary of operational strategic partnerships market share
Table 8: Local authorities that rejected strategic partnerships
Table 9: Terminated and reduced contracts
Table 10: Community development trusts in strategic partnerships
Table 11: Strategic partnership performance ratio
Table 12: Contractor’s performance
Table 13: Highway Services contracts
Table 14: Waste and Environmental Services contracts
