3. The pricing of Mapeley's bid was based on returns from rises in the value of the properties transferred rather than profits from managing the estate. Mapeley had assumed that commercial properties would increase in value over the next 20 years at about twice the rate of inflation, even though, in the last ten years, price increases had been somewhat less than the inflation rate. The bid also assumed that Mapeley would win other business, spreading overheads over a number of contracts. However, subsequent to winning the STEPS deal, Mapeley has only won one other major contract in the UK.4
4. In testing the financial robustness of Mapeley's bid, the Departments decided to accept the risks inherent in a deal structured in this way. The Departments insisted on a relatively high level of equity investment from Mapeley's shareholders and an up-front payment of £220 million for the estates. At the time that STEPS was being procured, the market for such deals was relatively new, with only one major deal and one private sector provider. Apart from a very competitive price, the Departments considered that the end result of the process had been the creation of another provider of property outsourcing services, offering the prospect of competition in the market.5
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4 Qq 157, 169 -170