Guidance on supporting vital service provision in PFI (and related) contracts during the COVID-19 emergency

As the priorities of NHS Trusts change to tackle the demands of the Covid-19 emergency, the need for flexibility in the delivery of services under PFI contracts has become more crucial than ever. 

In some areas this has created tension between NHS Trusts and their providers as to the correct contractual response to the current situation. 

The Infrastructure and Projects Authority has provided helpful direction on these issues in a Guidance Note (IPA 2 April 2020) which is to be read alongside the earlier Cabinet Office  Procurement Policy Note (PPN 02/20).  

The recent Guidance Note highlights that: 

• PFI contractors should consider themselves to be part of the public sector response to the current COVID-19 emergency.
• PFI contracting counterparties should co-operate to ensure the continued delivery of public services.
• The COVID-19 emergency is not, and is not to be, regarded as an event of force majeure.
• PFI contractors should ensure contingency plans are up to date and have been reviewed and discussed with contracting authorities to enable continuity of full services as far as possible to respond to the emergency and maintain vital public services, particularly across the NHS.
• Contracting authorities should work closely with PFI contractors to use all available options to maintain public services during the emergency period. This will include maintaining unitary charge payments (enabling PFI contractors to pay their workforce and suppliers), revising contract requirements/standards (including scope changes where necessary) and moderating payment and performance mechanism regimes where appropriate. 

Collectively, the guidance issued by central government raises a number of important considerations for NHS Trusts:

1. COVID-19 does not constitute an event of Force Majeure and therefore does not provide PFI contractors with a blanket Excusing Cause under the Payment Mechanisms;
   
2. To the extent that PFI contractors cannot achieve full performance under the PFI contract due to the on-going COVID-19 emergency, (including for indirect matters such as illness in the workforce and the need to introduce revised ways of working to protect health and safety), contract requirements should be moderated to support the stable delivery of vital services;
3. Under no circumstances should contract requirements or performance standards be relaxed to the point where health and safety is put at risk; and
   
4. PFI contractors must use their best efforts to deliver any new requirements / standards for NHS Trust as part of the response to COVID-19.

There are specific actions which NHS Trusts will need to take in order to comply with the guidance: 

• Payments to PFI contractors will need to be maintained at pre-COVID-19 levels (e.g. by adopting an average of the last 3 months’ deductions). 
  
• Records of all service variations and changes to requirements will be needed to enable these to be documented. Accuracy of records will be key to enabling NHS Trusts to ensure that retrospective assessments of costs are carried out on an open book basis. 
  
• Health and Safety implications of incomplete or deferred service delivery will need to be assessed and mitigated to ensure that mandatory requirements are not breached and critical services are maintained.
  

​These actions will place additional administrative burden on Trusts at a time of extreme pressure. Additional support is available to Trusts from DHSC and P2G. 

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