126. Sir Kevin, I share with you a little of the frustration that you are getting a rough time when if you look at the contents page of this Report it says, "The deal gives MOD what it set out to procure" and "After an effective procurement the benefits of this deal will be similar in cost to the forecast cost of conventional procurement" and the "Contract management has been good". It is a reasonable project from what I can see, but there are one or two issues I should like to take up. One is Table 12 on page 27, which we talked a little bit about earlier. I am looking at the graph in the middle where at the time Modus were made the preferred bidder their estimated price was £25 million less than the public sector comparator. In the negotiations which followed that £25 million disappeared and in fact another £4 million disappeared because their price on the final day initially was £4 million above the public sector comparator. Can you explain where that £29 million went? Is not one of the lessons we can take from this that the public sector will underestimate initially in order to become the preferred bidder and win the business?
(Sir Kevin Tebbit) First, of course the contractor did not know what the comparator was. What we are referring to here is the extra cost of work on the building which became evident when various surveys were undertaken. They showed in more intensive examination, once we got a preferred bidder and he could do more work, just how bad things were. We did not just leave it to him to tell us that these extra costs were there, we had them independently verified. They were involving things like the water supply system, which we were told was going to give us health and safety problems in a big order, things like the amount of asbestos which was found in the building, the overall quality of the roof, basically the structure which could not have been established without intrusive surveys which could only be done once you had a preferred bidder. Those are the main categories. I could give you a much more detailed breakdown: we do have them category by category of where the extra cost came from.
127. You have just said again that at no time did the bidder know what the public sector comparator was and yet you told us earlier that on the final day you had to get them to come down £4 million. Did you then tell them on the day?
(Sir Kevin Tebbit) On that very final day I suspect somebody must have said you have to come down by £4 million otherwise you could be over it. I think that was right in the very, very final moments of the negotiation.