3.17 The proposed method of payment to Accenture under the contract extension differed from that advertised in the Official Journal of the European Communities for the original procurement. At that time, suppliers were invited to tender on the basis that they would be "paid, after the system goes live, by means of a transaction-based or similar charging method". The contract extension replaced this with stage payments for development work. The changes do, however, correspond closely to more recent Treasury advice on the principles to adopt in PFI contracts for information technology.11
3.18 The Inland Revenue sought legal advice on the implications of this discrepancy. The advice they obtained was that whereas all other aspects of the contract extension complied with the advertisement, the payment arrangements might not. Under European procurement rules this could make them vulnerable to claims for damages from any suppliers who could prove that they had suffered loss of profit as a consequence. Taking account of the substantial financial differential between the shortlisted bidders in the original NIRS 2 competition and the history of industry practice, legal advisers judged the likelihood of such a challenge being made or being successful to be extremely low. They decided that the costs of delaying the work programme and the advantages of the revised arrangements outweighed the risks associated with failing to comply with the procurement rules.
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11 The standardisation of PFI contracts, Treasury Private Finance Taskforce 1999