1. In May 2000 the Treasury signed a Private Finance Initiative (PFI) deal with Exchequer Partnership, a consortium comprising Bovis Lend Lease Ltd, Stanhope Plc and Chestertons International, for the refurbishment of its headquarters building in Whitehall. The 37 year contract, consisting of a two year refurbishment period followed by a 35 year concession to maintain the building and provide facilities management services, will cost the Treasury some £170 million.
2. The history of the deal was complex, including a 15-month period during which negotiations with Exchequer Partnership as the preferred bidder were terminated. When negotiations were re-opened it was on the condition that funding for the project would be obtained through a separate competitive process. The competition, run by Exchequer Partnership with the close involvement of the Treasury, was an innovation which reduced the cost of the financing, saving the taxpayer £13 million.
3. On the basis of a Report by the Comptroller and Auditor General1 the Committee took evidence from the Treasury, the Office of Government Commerce, Exchequer Partnership and Partnerships UK. We examined whether funding competitions have a role to play in future PFI projects, the role of project management skills in the public sector and the additional costs to the public sector of using private finance. The merits of the underlying PFI deal itself will fall to be considered by the Committee in the light of a further report which the Comptroller and Auditor General has in hand.
4. Our key conclusions are:
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1 C&AG's Report Innovation in PFI Financing: The Treasury Building Project (HC 328, Session 2001-02)