The MOD PFU has overall responsibility for the Department's private finance programme. It provides a central focus for Private Finance Initiative (PFI) policy and support within the Department and offers corporate assurance about individual PFI projects to the Investment Approvals Board (IAB) and HM Treasury.
The scope of MOD PFU's mandate is to support all operational PFI projects and all acquisitions made under the PFI or using private finance.
The MOD PFU is part of the Commercial Assurance & Governance unit (CAG), which reports through the Director General Defence Commercial (DGDC) to 2nd PUS. The MOD PFU is located in Abbey Wood, Bristol.
Services
- We provide advice and assistance (known as project support) on PFI to the acquisition community to enhance UK military capability and operations to deliver best through life value for money for MOD and industry. Such advice and assistance includes best practice, lessons learned, policy and guidance implementation, procurement/acquisition strategies, commercial deal structure, and risk allocation.
- We act as the MOD's centre of excellence on PFI policy, guidance and best practice. This includes being the single point of contact with HM Treasury, National Audit Office and Other Government Departments on all matters relating to PFI.
- We support and sponsor PFI training and continuing professional development, through a mixture of skills transfer workshops, training courses and coaching/mentoring to enhance the acquisition skills base.
- We act as functional lead PFI subject matter assurors for acquisition team leaders, DGDC, IAB and HM Treasury to ensure that projects are properly managed, governed and are viable, desirable and achievable and comply with current policy and legislation.
- We provide clear, relevant, accurate, appropriate and timely communications and information/knowledge to internal and external stakeholders on defence PFI and MOD PFU activities.
Key Facts
- Over 50 signed PFI deals
- Private sector capital investment of almost £9 Billion
- NAO has found that the MOD has achieved a good service delivery on a broad and diverse portfolio of PFI projects
- MOD signed the largest ever PFI transaction for provision of the Future Strategic Tanker Aircraft to the UK's Royal Air Force, valued in excess of £10 billion over 27 years.
Public Private Partnerships
Public private partnerships (PPPs) are arrangements typified by joint working between the public and private sector. In the broadest sense, PPPs can cover all types of collaboration across the interface between the public and private sectors to deliver policies, services and infrastructure. Where delivery of public services involves private sector investment in infrastructure, the most common form of PPP is the PFI.
Private Finance Initiative
PFI is an arrangement whereby the public sector contracts to purchase services, usually derived from investment in assets, from the private sector on a long-term basis, often between 15 to 30 years. Under PFI, the private sector puts its own money on the line, and only gets paid if it actually delivers the contracted services to an acceptable standard. If costs overrun, or if the service is not provided, the private sector bears the financial consequences. Compared with more conventional forms of asset procurement, the PFI is structured to provide a real incentive on the contractor to deliver the underlying asset/s on time and to budget and provides clarity on the level of service expected throughout the contract term against a fixed price.
Links
Links to our standardised PFI contract and other guidance can be found under Related Pages. Links to HM Treasury policy and guidance can be found under External Links.
