With the MoD under criticism in September for its handling of a £10b aircraft programme, Partner Nick Maltby gives an insight into the challenges they faced, and lessons that can be learned.
Handling of the project was condemned in a scathing report by a Commons committee but Nick said: "What seems to have been lost in this review is that the MoD has been at the cutting edge of PFI for a long time and they're usually trying to do things for which there is no precedent, carrying out projects which are completely novel.
"In my experience, the MoD has one of the most efficient PFI teams in government."
He added: "There have been questions about whether this was the right procurement method for this project but PFI has for a long time been the government's only game in town , so there was no real alternative.
"However, the existing process is a flawed one - the system isn't attuned to projects such as this, which spend years parked at preferred bidder, with too little in place to check when a project has gone off programme. Too many projects are allowed to drift as there are insufficient controls."
PFI is most typically used to fund major projects such as new hospitals and schools. But private firms are risk averse, which presents huge negotiating difficulties when funded equipment is likely to be used in battlefield conditions. The process also lacks flexibility to allow for changing circumstances.
"The world has moved on since the MoD began this procurement - we've had at least one full defence review, we've been involved in two major conflicts, and there's been a huge global recession," explained Nick.
"But once you've started down the PFI route, it's a bit like a treadmill that you can't get off. On top of that, it's a very brave individual on the project team who will fall on their own sword and stop a project of this size - that would push delivery even further back as the procurement process would need to begin all over again.
"The process is such an intense one, with project teams working so incredibly closely together that it's very difficult to step back and admit the project is not working as to do so might mean the requirement is never delivered and there may be significant costs to reimburse. All of that makes it so important to have an external resource outside the Department involved responsible for monitoring and checking progress and, if necessary, taking responsibility for putting the brakes on."
Nick believes a better model for projects such as this is one where competition is sustained until the point of contract signature, with the winning bidder paying the loser.
He said: "With a new Government in office we have a once in a generation opportunity to learn the lessons of the last 15 years and implement processes that work. Key elements of this have to be proper external scrutiny and swift action where projects stray off programme. This should include a move away from the narrow prescription of PFI and a reluctance to consider new models".