2.9 In addition to its bid evaluation strategy and negotiation to ensure little net change in price during preferred bidder negotiation, the Home Office used a Public Sector Comparator to compare the costs in the PFI bid with estimates of costs under a conventional procurement. It also continued to use the previous Public Sector Comparator (which represented the cost of refurbishing the existing estate under conventional procurement) to compare the cost of the PFI deal with estimates of the cost of a public sector refurbishment option.
2.10 The Public Sector Comparator was based on an assessment of the likely costs of a hypothetical set of contracts to construct and operate 2 Marsham Street, including construction costs, lifecycle capital expenditure, operating costs and an assessment of the risks associated with these costs. In determining inputs and risk adjustments, the Home Office were advised by professionals with construction, accommodation services and property expertise.
2.11 The Home Office determined the net present cost of the Public Sector Comparator to be £494 million, £34 million greater than the cost of the PFI deal (£460 million including costs retained by the Home Office). The overall risk adjustment to the PSC was nine per cent. Further details about the Public Sector Comparator, including its inputs, its adjustment for risk, comparison with the PFI bid and its sensitivity to the assumptions used are provided at Appendix 2.