2.32 The FCO drew up a public sector comparator to test whether the PFI option represented value for money compared with the cost of a conventional public sector procurement over the duration of the agreement. The comparator was intended to show the cost, including an allowance for risk, of constructing the Embassy using a conventional construction contract and running the Embassy over 30 years. When the decision was taken to award the contract to Arteos in June 1998 the FCO's analysis showed that the PFI route had a small price advantage of £1.2 million (£51.0 million for the PFI bid compared with £52.2 million for the comparator). This would imply that the higher costs of using private finance in place of Government borrowing were just outweighed by the cost savings offered by Arteos's bid. The FCO proceeded with the PFI option on that basis.
2.33 The FCO concluded at the time the project was submitted to Ministers for approval in June 1998 that a decision to proceed would involve having to find an extra £4.3 million in the first year of operation. They considered that taking into account the overriding need to have a functioning Embassy in Berlin that the project should proceed and that they would have to ensure that the costs were accommodated within their existing budget.