8 The project began as a conventional procurement in 1994. In the light of a reduction by a third in the FCO capital budget in 1995 the FCO faced having to complete a more difficult project through the choice of a PFI route.
9 The competitive process was generally handled very effectively. The FCO obtained an impressive amount of interest in the project and sustained this up to the selection of the preferred bidder. There were bids from quality consortia, and the FCO chose the best of the three final bidders in terms of both price and quality criteria.
10 There were delays in the negotiation of the deal. In particular, it took 11 months to move from the appointment of the preferred bidder to financial close in June 1998 against a planned timetable of three months. The difficulties of incorporating an existing design into the PFI process accounted for some of the delay. The FCO recognises in retrospect that the original timetable was overoptimistic. But the overall estimated cost of the deal did not change significantly between appointment of preferred bidder and financial close.
11 The German subsidiary of Johnson Controls, a facilities management provider, was involved as a subcontractor to the winning bidder and as the facilities management provider to a rival bidding consortium. Although the FCO took steps to ask bidders about the make-up of their consortia, this process did not identify that the same facilities management provider was involved in both bids. The FCO did not know of Johnson Controls' involvement in the Arteos bid until well after the appointment of the preferred bidder and Johnson Controls told us that they were similarly unsighted. We have found no evidence that the competition had been weakened as a result of these circumstances.