Q71 Mr Curry: You have all emphasised that a very rigorous process of drawing up specifications went on and that the scientists were talking to the engineers who were talking to the contractors and one had the impression that there was no room left for doubt about to what was going to be delivered, so it is really quite surprising that clearly there is a doubt, that the contractor can be assured, "ffies, you have delivered", and the Department says, "No, you have not", and then there is an adjudication process. It is surprising, is it not?
Mr Dawes: The Certifier is in quite a difficult position. He has to interpret the contract himself.
Q72 Mr Curry: Who is it? Tell me about your Certifier. Is there a Chartered Institute of Certifiers?
Mr Dawes: No. It was a tender which Laser handled and we were party to the contract as well. It was competitively tendered and there are firms that specialise in this sort of activity.
Q73 Mr Curry: Who paid his fees?
Mr Dawes: We split the costs.
Q74 Mr Curry: The "we" being who?
Mr Dawes: Laser and ourselves.
Q75 Mr Curry: So you were confident this man would remain neutral, or it might have been a woman?
Mr Dawes: Yes. That is what he is paid to do. As I say, hehas a difficult task in interpreting the contract and the output specifications: have they been delivered or have they not? In this particular case, and we are talking about the category two issue here, I guess, he thought that it was not a contractual default by Laser. The adjudicator concluded that the Department did not have beneficial use of the space and therefore he was incorrect in having signed off completion. That was the basis on which the argument went.
Q76 Mr Curry: Moving on to your lawyers, you said, Sir Brian, I think, and we all accept that you were very worried early on but, if I read the document right, earlier termination was not decided upon because there might be a legal liability. You were concerned about the legal position. Had you been reassured that that was not a problem when do you think the Department would have pulled the plug?
Sir Brian Bender: Again, it is probably better if I ask Mr Dawes to answer that question, but at each of a series of points that I mentioned, I think, to the Chairman, when issues arose we took advice and if the advice had been the other way round I imagine we would at that point have pressed for contractor liability. We looked at it at three stages-June 2001 based on poor performance, November 2001 when the supplemental deed was signed, and then mid 2003 based on late delivery, at those three stages and, as I say, on each occasion the legal advice we had from experts in construction law was not to force termination because otherwise we might end up in a less well protected position.
Q77 Mr Curry: And at the end of the day you never did pull the plug because at the end of the day the company said, "We cannot cope with it"?
Sir Brian Bender: That is correct, although, again, as I said to the Chairman, the basis on which we finalised our negotiating position was as though there had been contractor default.
Q78 Mr Curry: Would you have had the option of saying, "No, we will not bail out. You will damn well get the job done". What would they have done? They would have done a bankruptcy deal, would they not, and you would have been left with an empty building?
Mr Dawes: We got to the point where Laser, as the Report I seem to recall reflects, came to us, so the options then were either to go for a negotiated termination or to adopt the formal contractual mechanisms for contractor default. Our view at the time was that we would probably get a better and quicker result through a negotiation rather than going through a formal process.
Q79 Mr Curry: So when they came you finally said, "Praise the Lord. At last we can do what we have wanted to do for several years", did you? In the silence of your bathroom and in front of your shaving mirror you said, "At last we are out of this"?
Mr Dawes: Not quite. It was always in our interests for the contractor to complete the facility. That is what we were striving to support all the way along through our advice, but there comes a point when it becomes quite clear, I think, to all the parties concerned that there is a fundamental difficulty in achieving that, and I think the sensible thing happened.
Sir Brian Bender: I would repeat the point I was trying to make earlier to the Chairman, which is that during this period between when we first thought of it in June 2001 and the actual termination, a lot was completed in the building, soit must have been much more questionable, had we actually pushed successfully for termination in 2001, whether we would have ended up with something of equivalent dimensions and the same value for money.
Q80 Mr Curry: Just continuing Mr Touhig's list of Labour heroes who have been Secretary of State for Trade and Industry, let us assume that a new one comes in and he says, "I have looked over this history. I do not want anything like that to happen on my beat. Tell me, o, Sir Brian (or Mr Dawes), what is the one key thing I must learn above all from this? What is, without hesitation, deviation or repetition, the one absolutely key piece of wisdom I have got to learn so that I do not land myself in this like poor old Mr Mandelson or Mr Byers?"
Sir Brian Bender: If I may say, I do not think it would be quite as simple as that. The first thing I would say would be to make sure, since this was a very early PFI, that all the lessons of subsequent PFIs had been learned and I would instruct the department to make sure that all that guidance was being followed. Secondly, and perhaps it is the moment I can give the 20/20 hindsight vision, it strikes me that if we had our time again, knowing what we now know, I think the first thing, coming back to what I think was Mr Touhig's question but maybe it was your own, Mr Curry, is the cultivation of the market; we thought it was okay but it would have been nicer to have more companies. Secondly, as I said earlier, at the time we thought it was right not to insist on the construction ofa pilot laboratory but I think if we had our time again, knowing what we now know-and then, thirdly, more due diligence about the technical engineering and other capabilities of the contractor and sub-contractors, and indeed the engineering resource we provided to help them. Those are the three or four points that perhaps are not a direct answer to your question but I have asked the team, "With 20/20 hindsight what might we do differently?", and those are the areas.