1.8 The original Dome Sale Competition was designed taking into account the needs and preferences of numerous stakeholders, each of which had to be consulted and involved in decision-making, (See Figure 7 on page 12). English Partnerships recognised this difficulty from the outset, but sought to manage it as best they could. Though English Partnerships owned the freehold of the land, the New Millennium Experience Company as the occupier and operator of the Dome and as the owner of the contents had a major financial interest in the outcome of the sale process. This necessitated involvement by the Company's sponsors, the Department for Culture, Media and Sport and the Millennium Commission.
1.9 Decision-making was also complicated because some of the parties involved had divergent objectives. The most intensive phase of the initial Dome Sale Competition coincided with a deterioration in the finances of the New Millennium Experience Company, for reasons explained in our previous reports.3 The Directors of the New Millennium Experience Company, recognizing their prime responsibilities to act in the interests of the Company, influenced the sale process towards what they perceived as the New Millennium Experience Company's financial interests, aside from any consideration of the wider public interest. In December 1999 the New Millennium Experience Company lobbied successfully, against the advice of English Partnerships4 and the Competition team, for the inclusion of Legacy plc on the shortlist of bidders. Unlike other bidders Legacy plc had offered an advance payment for the Dome, in which the New Millennium Experience Company would expect to share. In November 2000 the New Millennium Experience Company supported preferred bidder status for Legacy plc as it was the most likely option to provide a share of proceeds against its potential contractual liabilities at that time. Again, the appointment of Legacy plc as preferred bidder, for a three month period, was against the advice of English Partnerships and the Competition team.
6 | Objectives and evaluative criteria for the two sale processes | ||
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The second sale process had fewer and more easily evaluated objectives and criteria than its precursor. | |||
First competition objectives | Second sale process objectives | ||
'To ensure a sustainable alternative use for the Dome which reflects its cultural significance and contributes fully to regeneration both of the Greenwich Peninsula as a whole and more widely'. | To secure a deal which provides: value for money; regeneration benefits for the area; deliverability and a proper use for the Dome.
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'The Government will wish to achieve good value for money from the disposal of the Dome and related land, and will have regard to whether the proposal would generate receipts which at least match those which could have been achieved if the site were clear and disposed of for ordinary commercial development'. | This objective was essentially continued.
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'The Government will also pay close attention to the regeneration and cultural outputs likely to be delivered by any proposed use, and its compatibility with proposals for developing the rest of the Peninsula and the wider Thames Gateway area'. |
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Evaluative criteria: | Evaluative criteria: | ||
■ Commercial and environmental sustainability | ■ Providing a worthwhile and sustainable future for the Dome | ||
■ Cultural significance, e.g. raise standards of education and training in any aspect of the creative and cultural sector |
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■ Innovation, e.g. imaginative and distinctive use of new technology |
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■ Regeneration, in terms of economic, physical and social benefits | ■ Regeneration | ||
■ Transport, minimise reliance on car access, maximise use of public transport | ■ Deliverability, (since obtaining planning permission would require minimised car use, this also included public transport criteria) | ||
■ Financial Offer. | ■ Value for money. | ||
Sources: Information Memorandum issued to potential bidders April 1999, and public consultation document April 2000. Ministerial Statement 29th May 2002 and announcements by English Partnerships | |||
1.10 The Competition team advised Ministers in November 2000, following the withdrawal of Dome Europe, that they could not recommend giving Legacy preferred bidder status, because they were not confident that, even with further negotiation, Legacy's proposals would lead to a deliverable deal. Concerns included doubts over the construction technology and the level of demand from tenants. The Government's legal and property advisers had been asked to confirm whether Legacy's proposals were clearly deliverable, and it was impossible, given the commercial uncertainties, for them to do so with confidence. However, the advisers did provide advice that Ministers could proceed to appoint Legacy as preferred bidders without breaching competition rules, and, if they did so, which issues needed to be addressed. With no other bid on the table that looked more deliverable within the same timescale, Ministers decided to persevere with Legacy, giving them only two months, later extended to three months, in which to satisfy the Government that they had a clearly deliverable deal. In the event, Legacy was unable to do so.
1.11 The sale of the Dome is an extremely high profile transaction involving the future of a nationally important asset, and so it was clearly stated that Ministers would decide the winner on the basis of advice from the Competition team, and taking into account representations from English Partnerships and the New Millennium Experience Company. The extent of ministerial involvement led to another difficulty in the decision-making process. Both preferred bidders perceived Ministers as a court of appeal that they could resort to if they failed to reach agreement with the Competition team. Although we found no evidence that such approaches led Ministers to overturn or undermine the negotiating position of the Competition team, handling periodic appeals to Ministers created an element of distraction from the main business of negotiation for the team and bidders alike.
1.12 A joint Dome Sale Unit5 was established in early 2001 to overcome the problems described above. It comprised officials from both English Partnerships and the Department working closely together and jointly led by senior representatives from each organisation. The aim was to enable rapid communication between the organisations, and ensure shared knowledge of both technical issues and Ministers' wishes. In July 2001, the decision-making process was greatly simplified when the New Millennium Experience Company's tenancy of the Dome came to an end and the site was handed over to English Partnerships, (See Figure 8 on page 13). English Partnerships took over the Company's remaining responsibilities for decommissioning and managing the Dome as part of an overall settlement for sharing eventual sale proceeds between them.6
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3 The Comptroller and Auditor General's reports on the Millennium Dome (HC 936, Session 1999-2000) published in November 2000, and on Winding up the New Millennium Experience Company (HC 749, Session 2001-2002) published in April 2002.
4 Letters, dated 8 November 2000 and 15 November 2000, from Sir Idris Pearce, as acting Chairman of the English Partnerships Board, to the Deputy Prime Minister.
5 See Glossary.
6 In June 2004 Ministers announced that in recognition of the leading role played by the Millennium Commission in helping to regenerate the Greenwich Peninsula, sale proceeds would be shared with the Lottery. English Partnerships will retain the first £30 million of development receipts, reflecting the costs that it will have incurred in decommissioning, managing and maintaining and disposing of the Dome since 2001 until its costs cease when the Arena is completed. Thereafter, English Partnerships will retain 87 per cent of receipts, and the remaining 13 per cent will be passed to the Lottery, through a legal agreement being agreed between English Partnerships and the liquidators of the New Millennium Experience Company. This will bind the parties to the respective shares of proceeds over the period covered by English Partnerships's contracts with Meridian Delta and Anschutz.