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Edition 6 |
SEPTEMBER/OCTOBER 1999 |
As indicated in ‘Project Update’, two PFI projects in the health sector have proceeded to financial close since the fifth edition. Namely:-
On 1 July a contract was signed by South Glasgow University Hospitals NHS Trusts for the provision of a new build 210 bed facility at the Southern General Hospital, Glasgow to provide a geriatric medicine and assessment facility with a capital value of £11 million. The project will provide 150 medicine for the elderly beds, 30 beds for the young physically disabled with a further 30 beds likely to be used for the assessment and rehabilitation of psychogeriatric patients.
The following details on the Southern General Hospital project were supplied by McGrigor Donald who acted as legal advisers to Tarmac plc.
"Tarmac plc and Glasgow University Hospitals NHS Trust have signed the first PFI project under the devolved administration in Scotland.
The biggest challenge, notwithstanding transfer of powers from the Secretary of State and other Ministers of the Crown to the Scottish Ministers on the day of financial close, was the tight timescale imposed by the circumstances of the deal. One of the conditions attached to the Scottish Office consent to the project was a deadline for signature of 9th July 1999. Additionally, the project had to be concluded before the recent Tarmac de-merger took effect and that was scheduled for early July also.
McGrigor Donald, Tarmac's legal adviser, was appointed in late April 1999 and the challenge was to get to grips with a complex health project and to bring it to financial close in ten weeks. You cannot reinvent the PFI wheel in that time and the chosen route, therefore, with the agreement of all parties, was to base the project documentation on a previous successful Tarmac project in the same sector using the same funder, NatWest Bank.
The skill was to identify and agree those areas of the documentation which should not be the subject of any negotiation and those which, as a result of being project specific or fundamentally unacceptable to either side, would require to be renegotiated for this venture. A degree of pragmatism was required from all concerned – the principals can always see ways in which their position can be bettered and the lawyers are always tempted to amend the drafting for the sake of clarity or to better their client's position also. Those temptations had to be resisted by all of the parties and that required a co-operative approach to the negotiation so frequently not seen in PFI deals. Credit is due to the NHS Central Legal Office in Edinburgh and to the South Glasgow University Hospitals NHS Trust who focused in on the "real" issues for this project and stuck forthrightly to getting them right while ignoring other disadvantages in the documentation which, if pursued, would undoubtedly have thrown the project off course and way over deadline.
Ultimately financial close was achieved on 1st July 1999 – the first PFI to be signed under the new devolved regime in Scotland – and construction has now started on site. The good relationship between the Trust and Tarmac has been preserved and enhanced through a difficult and pressured negotiation which cannot only bode well for the 30 or possibly 60 year life of an important health facility in the West of Scotland. Philip Myerscough, lead partner at McGrigor Donald, commented "It was the partnering approach adopted by all the parties to this project which ensured that the tight timescales were achieved."
On 29 July a contract was signed by Tayside Primary Care NHS Trust for the provision of a £10 million, new build, 84 bed acute psychiatric unit at Ninewells Hospital, Dundee which will replace existing outdated facilities in and around the Dundee area. The project will provide 12 intensive psychiatry care places, 24 psycho-elderly care places and 48 acute mental illness places along with the provision of research facilities associated with psychiatry.
The following details were supplied by Burness :-
"In July 1999 a contract was signed between Tayside Primary Care NHS Trust and Dundee Healthcare Services limited (a wholly owned subdidiary of Jarvis plc) for the provision of a 84 bed acute psychiatry care unit and ancillary support services at a site adjacent to Ninewells Hospital. Jarvis Construction (UK) Limited is to design and construct the facility. Jarvis Facilities Limited will provide non-clinical services to operate the facility for 25 years. The facility is expected to be available by April 2001. Funding is being provided by Barclays bank plc (advised by Dundas and Wilson). The special project vehicle and the Jarvis Group were advised by Burness and the Trust were advised by the Scottish Health Service CLO".
To date, 38 projects with a capital value of £485m have now been signed in the health sector. In addition there may be a number of other small projects which fall within Trust and Health Board delegated limits and for which information is not held centrally.
The following project is expected to reach financial close soon:-
Dumfries & Galloway Acute & Maternity Hospitals NHS Trust:
Provision of daycase facility and relocation of maternity services to Dumfries & Galloway Royal Infirmary (£10m)
The following appeared in the Official Journal of the European Communities (OJEC) in July-October
Further details of these and a full list of OJEC notices can be found by visiting the Treasury Taskforce Website at http://www.treasury-projects-taskforce.gov.uk/ojecs/index.htm.
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