Q81 Mr Mitchell: It is blackmail; they build the kitchen and they have got the catering contracts.
Mr Pocklington: There may be cases where it is a sensible thing to do from a value for money perspective. As an example it might be the case if there is an aspect of the soft services that is integral to the design of the overall PFI project, so quality of flooring for example may affect cleaning costs.
Q82 Mr Mitchell: That is feeble, frankly. Let me move on to a point the Chairman raised, the number of bidders has come down, has it not, and we are in a situation now where some contracts only have two bidders. Is there any evidence of collusion? Firms are complaining about the cost of preparing a bid, it is so difficult for them some of them are even getting compensation for the cost of preparing a failed bid, which seems a real a tribute to British capitalism that it can get this out of it, but is there any evidence of collusion, that they say, "You have this bid and I will put in something that is a bit pathetic but I will have that bid"?
Mr Kingman: No, and bid-rigging of that kind would be very serious, indeed it would be criminal.
Q83 Mr Mitchell: If that was going on would you detect it?
Mr Kingman: I very much hope we would detect it and all the competition authorities would detect it.
Q84 Mr Mitchell: There is no likelihood you would, is there?
Mr Kingman: There is no guarantee that we always know what is happening, I agree. I would say on this point about are we getting very few bidders, if you take the Building Schools for the Future programme, if you take 26 projects, 24 of them had at least three bidders and the only two that did not were the non-PFI projects out of the 26.
Q85 Mr Mitchell: Okay, let me come back to the other point about the preferred bidder status, this seems to be a restriction of competition. Why do you want preferred bidder status, why not just open competition?
Mr Stewart: The answer to your question is actually now the preferred bidder appointments are much later. Under the competitive dialogue you run with two bidders for much longer and there is a requirement under the European procedure to sort out all the contractual terms before the appointment of a single bidder. In the past it was always a judgment as to when you go to a single bidder, the advantage of going to a single bidder being that you can concentrate your resources on one person rather than two. There has been a lot of pressure, I think it is fair to say, from the private sector to go down to a single bidder.
Q86 Mr Mitchell: I'll bet!
Mr Stewart: It comes back to the point of bid costs. One of the issues with competitive dialogue which the private sector is grappling with is the second placed bidder will spend a lot more money.
Q87 Mr Mitchell: But is it your intention that there should not be any later negotiations and that the local authority does not change its mind after it has got a preferred bidder and start redesigning the whole thing?
Mr Stewart: It is both our intention and a function of the new competitive dialogue process that that period should be much shorter, and we think that is a very desirable thing.
Q88 Mr Mitchell: How do you stop them fiddling around with it later?
Mr Stewart: In the end local authorities, as we discussed earlier, control their own process but we very strongly discourage them.
Q89 Mr Mitchell: The organisations that are mentioned in the Report to co-ordinate this process-4ps (whatever 4ps might be) Partnerships for Schools and Partnerships UK-what are these bodies and how do they help in the process, are they trade associations or what?
Mr Kingman: I will ask James to give a more thorough answer but if you take something like Partnerships for Schools, one of the reasons that we set that up was precisely that we were seeing a situation where we were having a lot of procuring authorities all trying their hand at doing the same thing, replicating the same process, and it seemed to us, particularly if we wanted to get tendering costs down and generally to get better value for money, what we needed to do was draw this together and have a more standardised process.
Mr Stewart: The answer is all these three bodies are slightly different. There are some bodies that sit in the centre-the OGC, obviously the Treasury PFU, and Partnerships UK really support the central departments. There are private finance units which sit within each government department and the 4ps is funded by a top-level grant from DCLG and is
sponsored by the Local Government Association and it is really the private finance unit for local authorities. I could go on.
Mr Mitchell: I shall be censored if you go on so thank you.
Chairman: Your last questioner is Mr Bacon
Q90MrBacon:Mr Kingman, when we last met, you very kindly accept sent in a note which was taken from the PFI Signed Projects List which showed a total capital value of projects of something like £54.55 million, which we have reproduced in our 25th Report (HC 158) PFI Debt Refinancing and the PFI equity market update which was published a month or so ago, and in that note one of the things you said was: "Note, the PFI signed deals list records capital values not the debt amount likely to arise therefrom." What is your estimate of the debt amount likely to arise therefrom?
Mr Pocklington: I do not have that information to hand. We would have to get you a note on that.
Chairman: Within two weeks please.