Our response to the White Fraiser Report

Commissioned by the Infrastructure and Projects Authority (IPA) the White Fraiser report published on 20 July 2023 looks at behaviours, relationships and disputes in PFI and sets out recommendations for bringing about improvements. It also considers industry proposals for a ‘Conduct Charter’ and ‘Expiry and Handback Resolution Council’.  

Authors Barry White and Andrew Fraiser have set out deliberately (and refreshingly) to garner a wide cross-section of views from both public and private sector stakeholders, ensuring a safe environment for consultees to share views and experiences. On this basis, we can reasonably hope that this will maximise chances that proposed recommendations will be acceptable to both private- and public-sector players across PFI. 

Key findings include: behaviours in PFI are generally reasonable and not the root cause of disputes, all parties need to invest more in contract management, and a clear contract management strategy (with clear strategic objectives) can minimise the risk of unintended and damaging outcomes. The report provides useful commentary on ‘thin’ SPVs and ‘financial’ versus ‘industrial’ assets, examines and critiques the familiar concepts of self-reporting v self-monitoring, and highlights the importance of the Nolan principles (do enough of us know about these?).

Among the more unsettling findings are the increased toll on the wellbeing of individuals involved in PFI and cases of aggressive and disrespectful conduct. The report also observes a worrying trend of consultants operating under fee arrangements contingent on delivering deductions against the unitary charge, an approach which is neither conducive to improving relations nor in the best public interest.  We welcome focus on wellbeing issues and more generally some honest (and yes sometimes uncomfortable) views from the private sector. Clearly all perspectives need to be understood and as far as possible legitimised (working within a framework of agreed objectives and behavioural standards) if we are to take positive steps towards relational improvements, in line with the report or otherwise.

The report finds formal disputes on the rise and sets out compelling reasons for the establishment of a ‘PFI Dispute Resolution Forum’. We believe that suitably organised, managed and resourced, such a forum could be extremely helpful, potentially introducing greater consistency and certainty into PFI dispute resolution and reducing time and cost in the process. The devil is in the detail however – how would this be organised, formalised and mandated? We’d also want to unpick how this would interact with existing provisions in PFI contracts and whether parties would still have recourse to the courts, for example.

The overarching recommendation is a mechanism referred to as ‘reset’. Intended to be used deliberately and proactively, this will typically involve the SPV in a systemic review of assets/services and rectification plan. Parties will agree a timeframe for completion of these activities and the authority will waive its right to levy deductions from the unitary charge to incentivise comprehensive action. Again, we welcome this concept which can rightly be regarded as innovative, but grounded on experience, research and a strong degree of pragmatism. The sector will no doubt be looking to advisers and government for guidance in a number of areas including defining further the process, approach to agreeing terms (deductions relief could well be sensitive) and establishing the ‘new normal’ through and following reset.

Clearly work to be done to build momentum on the back of the report!  We look forward to working with you to dissect the findings further and seeing what can be done to turn thinking into action.