1.17 The Department received four bids in response to the March 1995 invitation to tender. Two of these, from GPT and Nortel, were for traditional asset based implementation of the system. The other two, from BT and Racal, proposed privately financed solutions whereby they would implement the new system and then manage it. They proposed to charge for most telecommunications services on a tariff basis, so that the Department's payments would be more closely related to usage than under their previous arrangements where they leased lines from telecommunications companies.
1.18 The Department selected BT and Racal to submit further bids to examine privately financed options more thoroughly. There was no formal decision to procure the project through the Private Finance Initiative, although the invitation to tender did suggest that bidders consider such an approach. The Department decided during the competition that a privately financed solution was the most promising solution. The Treasury's Private Finance Panel designated the project as a Pathfinder project in late 1995, which means that it was a private finance project in a new area from which lessons could be learned. The Department subsequently reflected lessons from this project in guidance which they issued in 1998.