2.14 The Department acknowledges that it was unsatisfactory for it to have taken six years to reach a decision in 2005 to cancel the Armoured Vehicle Training Service project which it had commenced in 1999. The project was, however, cancelled prior to an investment decision and approval to proceed to contract award, in line with its process for ensuring only projects offering value for money proceed. The six years to reach a decision to terminate the procurement was despite substantial effort by the Department and the initial private sector bidders. The Department had also advanced the project to the appointment of a provisional preferred bidder. However the critical lack of project management and management information contributed to the length of time before the Department decided to cancel the project.
2.15 The Department subsequently proceeded with an alternative conventional procurement, the Enhanced Capability Armoured Training System (ECATS). Achievements so far under this project include the delivery of a new device for Challenger II gunnery training, which has been in service since June 2006 and an improved Warrior gunnery turret trainer which entered service in May 2007. Together the Department estimates these will produce savings of some £3 million per year in live ammunition.
2.16 The Department is not able to identify the total cost incurred on the abortive Armoured Vehicle Training Service procurement as relevant records were not retained. The Department spent £5 million on advisers in the bid evaluation assessment phase, but has not retained records showing spending on advisers for the early phase of the procurement prior to 2000. Furthermore, although the Department now expects internal costs such as staff time to be recorded, at the time this intended project was being developed, internal staff cost recording for each project was not a requirement.
2.17 Following the cancellation of this PFI procurement, the Department paid a total of £10.6 million to bidders. Of this, £7.7 million was paid to secure intellectual property rights for material produced during the procurement. The intellectual property rights have not been utilised to date, although the Department remains confident that it will use these in due course. The Department also paid an additional sum of £2.9 million to one of the bidders as an ex-gratia payment in full and final settlement of its involvement with the cancelled project.