Supplementary memorandum submitted by the Inland Revenue

Question 37 (Jon Trickett): Are you able to provide us with a note telling us what your latest estimate of the annual costs is likely to be and what the aggregated costs at the end of the contract will have been?

There are two broad categories of payment under the contract. The Facility Price for serviced accommodation is calculated per property and is fixed for 20 years (subject to RPI). It may only be increased as a result of agreed changes in the amount of space or the scope of services required by the departments.

The contract also creates an overarching framework for the departments to obtain other services as required. These include utilities, major and minor works, childcare, etc. These pass through costs are paid for separately from the Facility Price, using a mechanism contained in the contract.

BREAKDOWN OF PAYMENTS TO MAPELEY STEPS CONTRACTOR LTD
(FIGURES SHOWN -CASH BASIS INCLUSIVE OF VAT):

* Payment on account figures include full VAT.

** Includes: Utilities, Major works, Minor works, Confidential Waste, Childcare subsidy, Catering variations, Churn, Furniture, Ad hoc security, Bottled Water.

*** Totals are rounded.

Predicting future payments -The total payments in either category are difficult to predict over a 20-year period due to the pace of change the departments are managing.

The pass -through costs are on a demand and volume led basis. Again this is difficult to project across a 20-year contract. As can be seen years two and three show greater expenditure on these costs -this is reflective of the contract bedding in but also a difference in take up rates by the departments. Given the degree of changes envisaged the average payment of the first three contract years would not reflect the future shape and operation of HMRC.

The average NAO Facility Price is currently estimated at £170m per contract year. This figure has been misinterpreted as a total yearly contract cost estimate. In actual fact it is an indicative average of the most likely Facilities Price over 20 years as qualified by the NAO themselves in the STEPS report.

Question 42 (Jon Trickett): I have had three separate organisations drawn to my attention who Mapeley refused permission. They all seem to have legitimate reasons to be in the building. It would be helpful if you could provide us with a note and I will compare it with the information which I have received, which I will provide to the Chair

The departments have the right to use the premises for their operational purposes and to invite third parties onto site. There is a responsibility on Departments' staff to ensure any legal, Health and Safety and security considerations are dealt with appropriately. If any damage were sustained to the Premises as a result of such services Mapeley would have recourse against the Departments in line with the contract.

The STEPS contract does permit the Departments to use the premises for a sports or social club which is intended for the benefit primarily of the employees of the Departments. This can encompass activities such as book and chess clubs, and also allow for visits to the premises of organisations such as the Civil Service Sanatorium Society. (This would include The Benenden Healthcare Society and other civil service related organisations). The Departments are not permitted to grant leases of premises or part premises to these clubs or organisations without consultation.

Under the terms of the STEPS Contract the Departments have a right to grant access to, and use of, the premises for its own contractors eg its PFI IT providers.

We have received feedback relating to an issue with access concerning The Benenden Healthcare Society. We are currently talking to Mapeley to ensure the practical application of the arrangement under the contract is absolutely clear.

Question 60 (Jim Sheridan): How many consultants have you used?

We have procured advice from 18 organisations in conjunction with the STEPS agreement. (April 1999 to September 2004.)

Two Parliamentary Questions were asked on this subject in June 2004. The answers given inadvertently included general departmental consultancy not related to the STEPS Contract. The financial element of these enquiries has subsequently been corrected by way of a pursuant answer.

Question 121 (Mr Bacon): Could you give us a detailed breakdown of all the advice from wherever it came, and whether it was under the heading of procurement or whatever other heading you want to put it under? If you could make it comprehensive, that would be very helpful.