§ Mr. BercowTo ask the Secretary of State for Work and Pensions (1) what the difference was between the price offered in reaching preferred bidder stage and the final contract price for the five largest PFI contracts let by his Department in each of the last four years; and if he will make a statement; [45590]
(2) what the difference was between the price offered in reaching preferred bidder stage and the final contract price for PPP contracts let by his Department in each of the last four years; and if he will make a statement. [45605]
§ Malcolm Wicks[holding answer 25 March 2002]A preferred bidder stage was used to cover seven of the nine PPP deals managed by this Department and let in the last four years. Of these seven PPP deals, five are also PFIs. Details of the use of the preferred bidder stage in letting these deals are provided below.
Five PPP deals for IS/IT support, of which three are also PFIs, have been let to date under the ACCORD Project. For evaluation purposes, ACCORD used the preferred bidder stage for the initial selection of partners against a set of typical service package scenarios. Ultimate business allocations, such as Child Support Reform support, which make up the five deals, were always likely to be packaged differently and this proved to be the case. There is therefore no simple correlation between prices offered at preferred bidder stage and final prices for individual business allocations. The ACCORD framework provides for internal competition to select suppliers for individual business allocations and secure value for money. Further to such internal competition ongoing value for money is established by means of independent benchmarking of suppliers prices.
The procurement leading to the PRIME PPP/PFI deal covering ex-DSS estate ownership and management and let in April 1998 selected Partnership Property Management (now Land Securities Trillium) as preferred bidder. At the selection of preferred bidder stage the price offered was £1.93 billion. In subsequent negotiation it was agreed to re-measure the estate and as a result the scope of the deal increased, other service improvements were also secured. These changes resulted in the price increasing by £78 million. The PRIME procurement was examined by the NAO in 1999 and the resulting deal was considered to represent value for money.
The Employment Service procurement leading to the PPP/PFI contract for human resources services, including payroll and personnel administration, selected the joint proposal from Rebus Resources Services and Norwich Systems Accounting as the preferred bid. Subsequent 292W negotiations to final contract, awarded in February 1999, secured a reduction of £530,000 in price over the term of the contract.