2.2 The Departments undertook a high level appraisal of the main options. These options were:
■ do nothing
■ a business improvement option that would introduce efficiencies and savings into the current system of estate management
■ a PFI asset transfer deal similar to PRIME.
2.3 The Departments rejected a "do nothing" option, as they wanted to make improvements to, and reduce the cost of, running the estate. The second option considered was based on running the estates as they currently stood but making incremental improvements to the estate management system. While this might achieve the Departments' requirements to improve value for money, they considered that it did not transfer the risk of running the estate to, nor utilise the skills of, the private sector. The third option, a PFI scheme, was likely to satisfy all of these criteria.
2.4 During the early stages of the project, the Departments examined the possibility of a joint procurement. They considered that a joint procurement would be more complex and require careful handling and co-ordination. It would however enable closer working, reduce procurement costs both for the Departments and for bidders, achieve better prices through increased buying power and eliminate any risk of competing for market interest and expertise. The Departments sounded out these ideas in the market and concluded that the project would be well received. Bidders have told us that two projects coming to market at the same time would almost certainly have driven up prices, but that individually the Departments' estates would have been of sufficient size to generate market interest.
2.5 A joint project board and a joint project team were established, supported by working groups on specific issues (see Figure 8). As the PRIME deal was close to financial close at this time, the STEPS team had regular meetings with the PRIME team to learn from their experiences. A timetable and budget encompassing all the procurement stages was developed, based on the experience of PRIME. The STEPS team also followed Treasury guidance available at the time, both from the "Green Book" and the active participation of the Treasury Taskforce (later Partnerships UK). The procurement costs for the Departments were £10 million against an original budget of around £12.5 million. Appendix 2 gives a chronology of the deal.