Page 4: Measurable standards
Since the PFI contract for HMP Parc was one of the first two in the sector and neither party had experience of this sort of project, there were lengthy contract negotiations. There were some strict clauses within the contract. For example, it could be terminated without notice if any contractor offered a corrupt gift to any government official whether either was involved with the project or not.
The contract also required Securicor to perform to high and measurable standards throughout the length of the contract, with the Home Office appointing a team of controllers at the prison. They are responsible for measuring performance against contract as well as for making decisions about disciplinary action against prisoners.
The interpretation of some contract clauses was also problematic since several of them became subject to different interpretations by Securicor and the government and required subsequent clarification.
A steep learning curve
The benefit to an operating company in entering PFI contracts is that, provided performance standards are maintained, income is guaranteed over 25 years and returns from such contracts are from a reliable and stable source – the government. They can also be higher than those traditionally earned in some service operations. The PFI project at HMP Parc was invaluable in providing Securicor with the experience necessary to approach not just criminal justice contracts but also those that combine specialist security with other integrated support services. Securicor selects possible PFI contracts against the following criteria:
- the project fits within the broad strategy of the company
- the project is attractive, providing a good balance of integrated services and that the risk/reward ratio is favourable
- the project fits with the Securicor brand, other businesses and competencies of the organisation.
Bidding for a PFI can be an expensive exercise, often costing between one hundred and two hundred thousand pounds. When investing this money it is crucial to identify whether the company stands a good chance of winning the bid. There is little point in being good at bidding and poor at winning! The critical element is in selecting projects matched against specific criteria, such as:
- favourable margin
- high level of service vs. construction
- long contracts
- new market potential
- political sensitivity
- low risk to reputation.