HC Deb 10 April 2002 vol 383 c424W
Mr. Bercow

To ask the Secretary of State for Health what is the estimated average cost of preparing and submitting tenders for PFI projects in his Department; and how much he expects to spend reimbursing such costs under the PFI hospital building programme to be completed by 2010. [47791]

Mr. Hutton

Information on the costs to the private sector of preparing and submitting tenders is not collected. There has been no change in policy regarding the reimbursement of bid costs. At present, the winning contractor recovers their bid costs as part of the overall tender price. Losing bidders are not reimbursed.

Following a review of the PFI process, with the objective of speeding up and simplifying the PFI process, two changes were announced on 18 March. Firstly, if Trusts require further clarification after Best and Final Offers (BAFOs) have been submitted, and Trusts want these clarifications to be undertaken by both bidders in a competitive environment, then the additional bid costs of both bidders will have to be refunded. Trusts will need to agree how these additional costs will be calculated. The reimbursement only applies to the additional cost of the clarification work done in a competitive situation. The second change is that a budget for bid costs will be set at BAFO stage, within which the winning bidder will have to keep. If their costs to financial close are less, then they keep the difference. If they are greater, the cost must be met by them. The losing bidder will not be entitled to receive anything as by definition they cannot reach financial close.

These changes have been made to incentivise both Trusts and the private sector to reach financial close. As overall costs will be less as a result of these changes, no estimates of cost have been prepared.