2.1 Sixty three architects responded to the design competition for the Embassy following which Michael Wilford and Partners were appointed in February 1995. When bidders were invited to tender for the PFI contract, the draft contract stipulated the quality of the building and services required so that it would be consistent with the design and fit for purpose. The Embassy will therefore have the full range of political, defence, registry, communications, commercial, economic, science and technology, information, consular and management and security functions contained in one purpose-built building.
2.2 The contract also provides for basic services such as electrical supply, furniture, heating, lighting, security, telephone systems and water. A key aspect of the building being fit for purpose is that the Embassy should be secure. The FCO's security experts have therefore been involved in the planning and the execution of the project and are satisfied that the building will be secure but will nevertheless present a welcoming appearance.
2.3 Under the contract, the operator is required to maintain a contingency fund of £307,000 for up to two years after the agreed occupation date. This fund may be used to finance changes requested by the FCO. The FCO changes agreed so far have all been funded from the contingency fund. Examples of these changes are:
■ a revised layout in the Embassy secure zones;
■ plumbing/wiring in secure zones;
■ the supply of cupboards to office recesses; and
■ provision of five pay telephones in public areas.
2.4 Initially only 12 per cent of the construction cost in the bid was allocated to finishes and fittings, somewhat below the average for a high-quality United Kingdom office building. However, between the bid and the contract signing, Arteos agreed to spend more money on the fit out and finishes in response to changes asked for by the FCO. In particular, more was spent in fitting out the secure zones in the Embassy and in improving the appearance of the ambassador's suite. The FCO told us the extra expenditure on the ambassador's suite was to ensure it was fit for the intended purpose of underpinning the FCO's activities in Germany, and for increasing the impact, and respect for, British foreign policy and values, by projecting an up-to-date image of modern Britain. The supplier told us that the building was designed to a high specification and fits in with the original requirement of the FCO for a landmark design. Both the supplier and our advisors King Sturge & Co agree that the building, as ultimately designed and finished, was designed to a high specification and achieved the requirement of the FCO for a landmark design.
2.5 As noted above, because of the sensitivities involved in Embassy security matters, bidders were not given details of the FCO's requirements for works in the secure zones in the Embassy. Instead, the FCO and Arteos discussed the security requests before Arteos was appointed as preferred bidder, and an estimate of £1.5 million was agreed for work required to fit out and furnish these areas. A further £1.1 million was later required to enable Arteos to comply fully with additional FCO security requirements. The FCO cross-checked these additional costs against their experience elsewhere of the cost of ensuring that buildings met security requirements.
2.6 Given that under local planning law the site was zoned for diplomatic purposes only, the Embassy was not designed with the opportunities for future flexibility of use as a key consideration. The FCO have obtained the right to share occupation and will also be able to generate income by granting a licence to third parties. The FCO's sponsorship advisors estimate that the FCO could generate up to £1.3 million in sponsorship revenue in the first two years of operation of the Embassy.
2.7 At the end of the 30-year operating concession, the FCO will be able to continue to occupy the Embassy. The FCO can carry out a market test at that time to decide which operator should be allowed to operate the concession for a further 30 years. The FCO can either negotiate continued occupation with Arteos or terminate the agreement prior to its expiry which would oblige Arteos to transfer the building rights back to the FCO or to a new operator. Arteos's position is protected in that if Arteos ceases to operate the concession to provide services to the FCO at the end of 30 years the FCO will pay an open market valuation of the building as compensation. This arrangement is intended to give an incentive to Arteos to maintain the building to a good standard in order to maximise the open market value.