Government plans to increase competition by breaking 25-year contracts into five-year subcontracts
The government is planning to beef up the role of the private sector in the delivery of its £60bn secondary school refurbishment and rebuilding programme.

The idea is to let the PFI to a private company as a 25-year contract. The company would then have the job of breaking this down into five-year subcontracts, organising competitions and supervising the winner.

The Department for Education and Skills and PFI advisory body Partnerships UK believe that this will increase competition and therefore cut project costs. One Whitehall source said: "The government would now be buying the delivery of PFI, not the end product. This makes it more like a real business – real businesses don't let 25-year contracts. The idea is to compete the hell out of every part of the project, cutting costs."

The move comes despite a warning by former cabinet minister Stephen Byers this week that there should be a limit to the private sector's involvement in public services.

Under the normal PFI process, a school is let as a single 25-year contract. This is carried out by a private sector consortium, comprising a contractor, a design team, a facilities manager and an education services group.

If the new scheme goes ahead, the private company hired to run the 25-year PFI contract would hold competitions every five years to appoint individual contractors, architects and facilities managers on shorter-term contracts.

The idea is to compete the hell out of every part of the project, cutting costs

Whitehall source

A large building company, such as Bovis Lend Lease or Jarvis, could run the process, but it would not be guaranteed a contracting role.

The DfES believes that running smaller, more regular competitions might encourage regional contractors to bid for the projects. The government wants to encourage the involvement of regional firms in the programme to tap into local workforces.

Partnerships UK would not confirm the plans but finance director David Goldstone said: "We are still working on the approach and are still out to consultation."

Tim Stone, PFI consultant at management consultant KPMG, praised the move. He said: "This could be a powerful technique in speeding delivery and broadening and deepening the market."

As part of its Building Schools for the Future consultation document, which outlines the secondary schools programme, the government has advocated setting up a joint venture between the DfES and PFI advisory body Partnerships UK. This would be expected to appoint the company running the PFI contract.