15 The price of the 30-year deal as contracted with Modus is £746.1 million at 2000 price levels. In comparison, MOD estimated that the cost of a conventionally procured project would fall in the range £690 million to £807 million. Given the uncertainties inherent in comparing 30-year forecasts of project costs, the appropriate conclusion from these figures is that the deal will cost a similar amount to a conventional procurement.
16 MOD drew this conclusion but also took into account other factors which it considered favoured the PFI deal over conventional procurement. For negotiation and presentational purposes MOD placed emphasis, however, on the deal with Modus being priced slightly below £746.2 million, MOD's estimate of the average expected cost of a conventionally procured project. This emphasis enabled MOD to negotiate a price reduction of £4 million on the day the deal was closed as it insisted the final price should be below the £746.2 million benchmark.
17 The comparison with a public sector comparator shows that there was a decline in savings from the £25 million savings expected when Modus became preferred bidder. But in the late stages of procurement such a comparison with a public sector comparator may not be the soundest basis for the business decisions needed at that point. For example, it may no longer be practicable at that stage to start the procurement again as a conventional procurement. A comparison of the costs and benefits of the proposed PFI deal with the best alternative option available will best inform the decision as to whether to close a PFI deal. MOD recognised this and compared the option of proceeding with the deal with alternatives including: (i) aborting the deal and arranging a new conventionally procured deal at some future date or (ii) scaling down the project to one which would just involve essential building maintenance without a major redevelopment. MOD concluded that, compared with the alternatives, there were clear benefits from finalising the deal with Modus.