Q101 Mr Bacon: Mr Hopkins, Mr Steinberg said you went back and asked for £27 million. The government did not pay you this money, did they?
Mr Hopkins: No.
Q102 Mr Bacon: Why did you have to ask for £27 million in the first place?
Mr Hopkins: Initially, as Mr Varney has said, when the estate was brought together and had not been managed by a previous contractor, when we put this on the table and started operating it, we realised that there were some discrepancies.
Q103 Mr Bacon: You under-priced your bid, did you not? It says in The Times -I would just like to get this clear because I read this in the newspapers and, as you know, you can never believe what you read in the newspapers -that you under-priced your bid. That is why it was so cheap and therefore you had to go back to the government for money. You asked them for an extra one-off payment but it was not made. That is all correct, is it not?
Mr Hopkins: Correct.
Q104 Mr Bacon: Well done, Mr Varney, for not making the payment, but you were kept afloat by rising property values and an £8 million injection from your backers. That is correct as well?
Mr Hopkins: Yes, that is right.
Q105 Mr Bacon: Mr Varney, since the NAO Report was published, have you paid Mapeley any money in addition to the sums specified in the contract?
Mr Varney: No.
Q106 Mr Bacon: In paragraph 3.14 it says that negotiations began in December 2002 and that they are still ongoing and this has prevented senior management staff from focusing on core business, "… and the departments have not yet been able to focus as much on core services as was envisaged." Why, two years almost, after these negotiations started, are they still going on? What is taking so long?
Mr Varney: I think we have taken steps and it is a pity they have gone on so long, but I think we have been learning. Both parties have been learning. I think Siobhán's recruitment, my arrival and Helen's have brought a focus. We will move this forward as fast as we can consistent with getting the best value for the public purse.
Q107 Mr Bacon: When do you expect to conclude these negotiations?
Mr Varney: I would like to have it cleared by the time HM Revenue and Customs comes into existence, hopefully in April next year.
Q108 Mr Bacon: You have a performance measurement system for this contract. Is it working?
Mr Varney: Not completely. As Mr Trickett and Mr Sheridan said, there is a feedback from staff who do not feel it is working as well as it should do. Part of that is because I do not think we did a good enough job in dealing with expectations at the time of the contract and part of it is because there are real problems which we have to resolve. That is what we are working on together with Mr Hopkins to see if we can resolve those in a satisfactory way. It is incredibly difficult to get a performance management system up when you have no experience of being a customer. You can go to everybody else in the world and talk about being a customer but if your whole experience is being able to do it with people in-house it is a quite difficult challenge.
Q109 Mr Bacon: If Mapeley were to get into financial difficulty again, how would you become aware of it?
Mr Varney: I would expect them to tell us. I would expect our own models to indicate. I would not be surprised if their financiers also made us aware.
Q110 Mr Bacon: Directly?
Mr Varney: Usually, when there is trouble, bankers arrive pretty quickly.