The procurement took longer than other ground-breaking Private Finance projects

2.20  When the Contributions Agency formally invited private-sector interest in January 1995 their objective was to award the contract within nine months, by the end of September. This timetable was not questioned by any of their advisers or members of the Project Board with wider Private Finance experience. They had set it with reference to the timetable for procuring the Contributions Agency's new National Insurance Recording System through the Private Finance Initiative. In May 1995, they recognised that they had not appreciated the full impact of the following key differences between that project and the Newcastle Estate Development. The estate project:

a)  potentially included a much wider range of services;

b)  would involve several executive agencies; and

c)  was likely to require the involvement of financial institutions to fund the projects, which adds significantly to the complexity of negotiation and is unusual in information technology projects.

2.21  The procurement took longer, however, than other ground-breaking Private Finance Projects, taking three years from the Agency inviting interest until signature of the deal. Because of acceleration in the programme of work, the impact of this slippage on the implementation of the project was limited to a 10-month estimated delay in completing the estate redevelopment.

2.22  The Department have engaged in another Private Finance accommodation project, called PRIME, on which we have also reported (The PRIME project: The transfer of the Department of Social Security estate to the private sector, HC 370). This project was similar in some ways to the Newcastle Estate project: both involved contracting for the delivery of office accommodation services. But there were also important differences between them. PRIME was much larger, involving over 700 buildings and numerous existing contracts. It covered a wider range of office services, including cleaning and security, but, unlike Newcastle, did not involve the design and construction of new buildings on existing or greenfield sites. PRIME also started later (in June 1996), and the PRIME consortium was, unlike NEP, led by financial institutions. The PRIME deal was signed in December 1997 (in the Newcastle case, the parties reached commercial agreement in August 1997 and signed the contract in January 1998) and the Department started receiving estate services under it from the private sector in April 1998 (immediately after contract signature in the Newcastle case).