It will also simplify the forms of operating contract, and that will be a great improvement.  Indeed in my view, PFI methods should be deployed only where the public agency can produce a form of contract (specifically an "Invitation to Tender") which can be objectively and convincingly priced by a contending tenderer, and where the appointment can be convincingly made principally on price.  It is true that professional appointments are made differently, assessing the quality of service against a standard professional fee-scale, but they are different.  Such contracts can simply be terminated if the Client is dissatisfied with the service, upon payment of outstanding fees (as accountants, architects and surveyors know only too well).

But PFI contracts are quite different in character, usually involving long-term contract commitments (up to thirty years) and the creation of monopoly trading positions for the winner.  Yet the selection process is commonly so complex that the contract cannot be concluded without extensive one-to-one final-stage negotiation between the public agency and the tenderer - then euphemistically described as the "preferred bidder".  Those final-stage negotiations constitute a real threat to the public agencies concerned, and to the generalised "public interest".

1. Private tenderers commonly play the entire selection game in order to secure that privileged solus negotiating opportunity, in the knowledge that their positions can in practice be discreetly changed at that stage;
2. Public agency staff rarely possess the commercial skills needed to box the public corner in such hand-to-hand commercial fighting; in particular, it is easy for the parties to be unable to assess the full long-term financial implications of complex contractual formulae;
3. Public agency staff are exposed to high risks of personal corruption, because they are necessarily entrusted with very wide judgmental discretions which are inaccessible to scrutiny or audit;
4. Private firms commonly have better access to top-flight legal skills; faced with exceedingly complicated and tortuous forms of contract, private firms may simply decide to accept the risks of their own non-compliance, and "sign up anyway"...

These risks can be countered by the preparation of different forms of invitation-to-tender, reducing the scope for negotiation and requiring the tenderers to submit fully-priced proposals, leading to the rapid conclusion of a binding, verifiable, arms-length contract.   Indeed, my view is that if such a process is impossible, that is a clear indication that PFI out-sourcing is not an appropriate method in the first place.

• The function in question should remain firmly under public direct management.

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