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What is the role of Partnerships for Health in the LIFT programme?

Tim Challis, Partnerships for Health

Partnerships for Health is a 50/50 joint venture between the Department of Health and Partnerships UK. Partnerships UK was set up as the Treasury task force to standardise PFI documentation. It then moved into to looking for ways to lever private finance into the public sector - Local Improvement Finance Trust is its first 'outcome'.

LIFT is a national structure to establish a common framework and approach, but it supports local projects by providing resources, planning and procurement advice and standardised documentation. It aims to spread learning across all projects and helps select the private sector partner for local schemes. It also retains a financial stake (20 per cent) in local Liftcos, with a director on each Liftco.

A Liftco is the local LIFT company, a partnership between local stakeholders, Partnerships for Health and the chosen private sector business partner (rather than a contractor). The private sector partner has a 60 per cent stake in the company. The aim of the Liftco is to find a way of delivering the appropriate accommodation to meet local health needs.

Strategic partnering agreements stretch forward into the future. The LIFT company comes up with ideas and proposals to deliver answers to local problems and needs. The local participants identify need for accommodation and it is for Liftco to find a way of delivering that.

Each particular scheme is delivered under a contractual arrangement known as a 'lease plus' agreement. This is meant to be more than a lease - not a PFI arrangement. Tenants only pay for buildings when they are available after they have been built. Until then Liftco is providing its services at risk.

The agreement is a long term arrangement whereby Liftco is contracted to the local NHS and local authority participants to deliver answers to property problems over the next 20 years. The project is governed by a strategic partnering board.

It is an exclusive agreement with one partner and the benefits of exclusivity are said to be:

• meets EU procurement rules
• stimulates involvement and investment
• flexibility of leases
• private sector commitment to the vision
• economies of scale
• efficiency gains from repeat business
• to spread bid costs and avoid future bid costs
• to incentivise Liftco to deliver quality
• commitment to the partnership

Long term value for money is brought about by allowing the contractor new ways of supply chain management, the ability to benchmark effectively and market testing for each new project and periodically (with the first testing taking place after five years).

Selecting a private sector partner is a 12 month process:
3 months - issue ITN to shortlist
6 months - ITN response
9 months - preferred bidder
12 months - establish Liftco

Problems so far

• public sector has not been able to secure land
• inability to secure planning consent
• funders resistant to new concept
• hard to get banks engaged early in the process and to bring the relevant bank departments together

Issues from the discussion

In taking the procurement regulations into account, Partnerships for Health has been unable to give any certainty that the supply chain can be fixed for more than five years. But assuming the right long term agreement is in place with the supply chain, performance can be taken into account in evaluation as part of the later market test. It is expected, but not guaranteed, that the supply chain will be able to get future business. This includes the design team.

There are four sub-groups on the evaluation team: technical, including design; partnering services; financial; legal and commercial. Teams are required to us the NHS Estates Evaluation Toolkit which directs on how to evaluate design. Evaluation also involves users.

Design features highly in the evaluation of projects, suggests Tim Challis, but LIFT is about "looking for a business partner".

The Lift process raises tensions between time, cost and quality. The process is simplified in the interests of speed, but Lift is designed to deliver improved facilities over a long time to higher standards.

Tim Challis is a Chartered Quantity Surveyor. He spent twenty-two years working for contractors, mainly on infrastructure projects such as road and rail. Joined Partnerships for Health in 2002 as the transactor on East London (PQQ to ITN Response), Sandwell (OJEC to ITN), Leicester (SSDP), Redbridge (Shortlist - PB) SW London (conception to ITN), Oxford (conception to bid evaluation - continuing) and EHH (conception to PB - continuing). He also drafted much of the procurement documentation (Interview Stage/ITN Volume 1 etc.), and was involved in many contract document revisions (version 2 and 3). He is currently overseeing all standard documentation, negotiation and amendment (local authorities, PBs etc.), and the delivery of certain elements of the LIFT vision - e.g. supply chain management, effective Partnering Services, etc.

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