Almost half of the time taken to tender a PFI deal is taken up by negotiations with a single preferred bidder

3.4  Because of the complexity of PFI deals, and because the backing of lenders has to be fully secured, bidders are usually unable to make final bids which are unconditional. As a result, it has been common practice for there to be a period of exclusive negotiations following selection of a single, preferred bidder before the deal is signed. Unless the procuring authority can keep careful control of this part of the process there is a high risk that the terms of the deal will become less favourable.

3.5  Prior to 2004, around half of PFI projects involved preferred bidder negotiations of a year or more. Between 2004 and 2006, two-thirds of PFI projects had preferred bidder negotiations lasting a year or more, and the average length of preferred bidder negotiations for all projects that closed during that period was 15 months (see Figure 9). This is twice as long as Authorities expected when they selected a preferred bidder. On average, negotiations with a preferred bidder took almost as long as the competitive phase that preceded it.