1.10 In running separate operational service and accommodation projects, National Savings faced the complexity of managing two interrelated deals where the eventual partner running the operational services would dictate the nature and scale of accommodation needed. National Savings recognised this and discussed the inclusion of accommodation in the operational services project. However, bidders either rejected or showed little enthusiasm for the inclusion of accommodation at the Information Memorandum stage of the project. National Savings considered that to insist on its inclusion would have risked bidders withdrawing from the competition, especially as only one of the four bidders had a property arm. On the other hand, bidders for a separate accommodation deal may have provided an acceptable solution as they were specialist property companies, so National Savings allowed both projects to progress in parallel.
1.11 In the event, National Savings received only one bid for the accommodation deal. At a price of £136 million, this was inferior to the expected costs of £63 million involved in managing the three sites under existing arrangements. Accommodation proposals were therefore requested as part of the Invitation to Negotiate which was the next stage of the operational services project. National Savings judged that it was likely that SBS and EDS, the two final bidders at that stage, would see accommodation as a relatively small part of a much larger operational services deal and would therefore be prepared to include it in their proposals. To provide bidders with a degree of flexibility, National Savings gave SBS and EDS the choice of either purchasing or leasing some or all of the sites for the duration of the contract. Both bidders proposed to purchase or lease the sites. To ameliorate the impact on local communities in Blackpool, Durham and Glasgow, SBS offered to keep a presence at each of the three locations for at least five years. National Savings has also retained a right of veto over the relocation of all or any part of the operational service outside the UK. In the event, SBS has leased the properties for the duration of the contract.