2.63 In addition to the ongoing PSC exercise, MOD correctly evaluated the alternatives available to it in February 2000 prior to closing the deal. Reviewing options is key to investment decisions as is recognised in the Treasury Green Book. MOD identified that its options in Spring 2000 were: to close the deal; to defer closure in the hope of negotiating some further concessions from Modus; or, to abort the deal. If the deal was aborted the alternatives were then arranging a new conventionally procured deal at some future date or scaling down the project to one which would just involve essential building maintenance without a major redevelopment.
2.64 MOD concluded that finalising the deal with Modus on the terms it had negotiated was the most favourable option taking account of both value-for-money considerations and the effect on the ongoing operations within Main Building. Delaying or cancelling the deal would have resulted in a reduction in building utilisation, a delay in realising benefits arising from the more efficient working practices and space management to be derived from the proposed PFI project, further delay in obtaining a fire certificate, and meeting standards required by health and safety requirements. MOD judged that this would have resulted in substantial increased costs.