UK: Taking The Soft FM Out Of PFI – A Clean Solution?

Many reviews and strategies as to how to improve the efficiencies and affordability of PFI projects have pointed to the possibility of removing soft services from such projects.  For example, the Treasury's call for evidence for the reform of PFI issued last December directly asked respondents whether soft services should continue to be included within the contractual model, as well as other related questions as to the alternative approaches and potential impacts of contracting these services separately.  Additionally, the review of soft services specification and its value for money in operational projects was one of the main recommendations set out within the Treasury's draft guidance published last July.

More recently, the Secretary of State for Education's statement at the end of May (in relation to the much awaited announcement on the Priority School Building Programme (PSBP)) indicated "I have previously expressed my strong support for the Government's agenda on reforming the PFI model and we are working closely with the Treasury to ensure the PSBP is aligned with this model in providing cost effective and more transparent delivery of services.  Schools will have greater flexibility - with soft facilities management, such as cleaning, catering, security and some grounds maintenance being managed and controlled by schools themselves."  This is perhaps the strongest indication that the market has had to date that this may be part of the reform of PFI.  Whilst it is not clear if this is going to be mandatory, the industry should consider now the possible implications of removing soft services from future PFI projects.

It is worth noting that this concept is not new.  Indeed, SoPC4, which was published over 5 years ago in 2007, states (at section 3.8) that "Authorities should consider carefully, at an early stage in their procurement planning, the range of services which need to be provided through the Contract.  In particular they should consider whether or not it offers value for money to include soft services as part of the range of services to be provided."  And yet the majority of PFI projects to date (other than BSF projects where the provision of soft services as part of the PFI was often optional) have included soft services within Project Co's remit.

In the event that soft services in future projects are to be provided by a third party, rather than by Project Co / their relevant subcontractor, then a number of amendments will need to be made to the contractual documentation and standard forms in place and we can only assume that this will be included in the updated suite of documents which may follow any announcement from the Government in relation to the reform of PFI.

However, having a third party provide a number of elements of the services does create a disjoint contractually and this will be greater still if the public authority contracts with a number of separate entities to carry out a range of soft services (for example, different entities for cleaning, catering, gardening, security etc). 

Firstly, how and when will separate soft services be procured by the Local Authority / Trust?  Will this, in effect, result in two procurement streams needing to be managed in tandem by the Local Authority / Trust?  If so, then this would, on first glance, appear to be contrary to the Government's aim (and the wider PFI industry's undoubted desire) to speed up the procurement of new projects.  Will such entities be involved in the procurement of the PFI project itself, for example in relation to design development (so that the soft services entities can price their services more accurately) and, if so, will the public authority take responsibility for their input on any such design – presumably so?

Moreover, it is not clear at present as to how the contractual disjoint will work in relation to the interface between hard services provider, soft services provider and building contractor.   Whilst there has been no standard form of interface agreement in place to date, the over arching principles within interface agreements are generally mirrored across projects.  Therefore, the parties of future PFI projects where soft services are not part of the PFI remit will need to consider how the interface practicalities and responsibility for deductions, service failure points etc arising from another parties' default, breach, action or omission, are to be dealt with across the various contractual streams. 

For example, if the Local Authority / Trust's soft services provider cleans floor coverings within the PFI asset with an unsuitable cleaning substance which leads to a fault in the flooring which consequentially leads to unavailability – then how will this be addressed contractually?  Will the third party soft services provider be expected to enter into interface provisions directly with the hard services provider and building contractor?  This seems unlikely and would complicate the contractual documentation further still.  It is more probable that the risk of unavailability arising from the soft services will be included within an expansion of excusing causes within the project agreement.  Such new excusing causes would possibly be akin to those in existence relating to damage by Authority Related Parties and undoubtedly will raise questions as to how causation would be determined. 

Given the size of the assets in question (hospitals, schools etc) will the contractors providing such third party soft services actually be any different from those currently engaged within the PFI market?  It's unlikely that funders will accept soft services being provided by a sole trader / small local company or, indeed, that such small companies would be capable of providing such services for a big hospital / school to the necessary standards, including health and safety standards.  By taking out soft services from a PFI, however, the relevant Local Authority / Trust should be in a position to procure the necessary soft services without the associated "PFI premium" (and without impacting to a significant extent on the whole life design / cost benefit that is one of the key rationales for PFI procurement in the first place), although the extent of the saving to be made by adopting this model is yet to be fully tested.

Soft services are possibly the most visible element of the asset to the majority of the asset's users - e.g. cleaning and catering – and subjective in nature in terms of measuring end users' satisfaction with such services.  Given the current negative view of PFI projects, in the event that the soft services provision by the Local Authority / Trust's provider is substandard, is this going to assist the private sector in demonstrating the benefits of PFI - or will the bad press continue to fall on the private sector?

Finally, one of points reflected in a number of the recent reports on PFI has pointed to the apparent lack of personnel within the public sector who have the requisite skills which are needed to manage and oversee complex major projects.  By complicating the contractual structure further still, it is not certain as to how such projects will be managed by the public sector and how adequate management will be determined.

The removal of soft services undoubtedly raises a number of questions and those within the industry are hoping that there will be more clarity as to how provision of soft services by another party will work in the much anticipated report on PFI Reform due out this year.  It was hoped that the review's findings would be published before the summer recess (in July) but at the time of writing it would seem that they will not be published until after recess (which takes place in September) which may well match with the first of the PSBP schools being put out for procurement.  Query, however, how the PSBP model will be aligned with any revised PFI model if there is any further delay in publication of the PFI reform's review.  It may well be that the exclusion of soft services from future PFI projects will not be mandatory but will be assessed on a project by project basis in terms of value for money (perhaps with more scrutiny than has been in place to date), in which case is the situation really going to change to that in place currently?

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.