Q91 Mr Steinberg: If you do come back, you are on the record so you will not want that money.
Mr Hopkins: As I said, apart from where things are changing and we are owed money for variations, that is absolutely the case.
Q92 Mr Steinberg: You have no proven record, have you, as a company in property management?
Mr Hopkins: Prior to this transaction, no.
Q93 Mr Steinberg: Why did you go to them? Purely financially?
Mr Varney: £500 million to reinforce -
Q94 Mr Steinberg: You were prepared to gamble the whole of the Inland Revenue estate on the basis of £500 million which they may at the end of the day cock up?
Mr Varney: The NAO Report makes very clear we followed all the lessons from DWP. We tried to look at how we minimised the risk in this contract. The public purse is better off to the extent of £500 million, plus it has competition and flexibility. That is not a gamble. That is a sensible decision.
Q95 Mr Steinberg: I would have been very suspicious when a company comes along and they can undercut everybody by half a billion pounds. Are you not suspicious at all about that? They do not have a record in property management and they can come along and undercut everybody by half a billion pounds and you think you are on a safe deal, do you?
Mr Varney: I think you do the due diligence which is described in the NAO Report but I do not see my job as trying to maximise the revenue of service providers.
Mr Hopkins: I think it is also fair to say, when you are asked a question of experience, you are talking about -
Chairman: I did not quite hear what he said.
Q96 Mr Steinberg: I heard what he said.
Mr Varney: I do not think it is my job to maximise the revenue of private sector service providers.
Q97 Mr Steinberg: What you are saying is you take the cheapest one, regardless?
Mr Varney: No, not regardless. The Report is absolutely clear that we tried to learn all the lessons of the DWP procurement and apply them, look at the risks and see if they were reasonable. That is why we used some of the consultants.
Mr Hopkins: You asked a question about the experience of Mapeley. The PFI out-sourcing property market is a new market in the UK. The first transaction which took place was the PRIME transaction. There has not been anything since in the public sector. Whilst Mapeley have not had experience, the shareholders of Mapeley are vastly experienced in property management service delivery in various guises throughout other platforms throughout the world.
Q98 Mr Steinberg: I bet you do an Oliver Twist. I will give you three years and you will be doing an Oliver Twist, coming back with the begging bowl.
Mr Hopkins: We have been three and a half years into this contract already.
Q99 Mr Steinberg: You are confident that you gave them the exact price, the correct price? You did not undercut deliberately, did you, to make sure you got the contract?
Mr Hopkins: We made it very clear, as it says in here, that we bid at very, very low operational margins. One of the things it is worth pointing out to the Committee is that -
Q100 Mr Steinberg: I read the Report and I think it was in paragraph 2.83 where it said the data that had been given by the Inland Revenue was not sufficient to make any decision on. Yet you, as a new company, did not have the data that you were able to make that decision on, a valid decision. Yet you were still able to undercut by £500 million. Perhaps it was a good thing because if you had had the data maybe you would not have gone for the £500 million cut.
Mr Hopkins: Data on a portfolio of this size changes throughout the process because constantly departments were moving in and out of properties and service delivery levels were changing. There were some inaccuracies in the data and that was made clear from both sides. I think both parties went into the transaction with that in mind, with a view to levelling off those through variations. As we have seen so far, there have not been any pass across of payments for those variations.