Preferred Bidder Appointment Letter

Dear Sirs

[Name of Local Authority and Project]

Following our letter to you of [insert details] and our subsequent conversations/meetings, I am writing to you to set out the position that has now been agreed between us.

Subject to receiving confirmation from you and [insert name of funders] on the points addressed in this letter, the decision has been taken by the Local Authority to appoint [insert name of Bidder] as Preferred Bidder.

1.  The Unitary Charge set out within your [insert details of relevant Solution or Bid] is fixed by reference to your design and service proposals (subject, of course, to any significant Local Authority changes) and on the assumption that financial close occurs on or before [insert date] ("Expected Date of Financial Close").  If financial close occurs after that date, then the Unitary Charge will be increased only by movements in the [insert details] index from (but excluding) the Expected Date of Financial Close up to (but including) [insert details] and thereafter increased in accordance with your proposal included in your [insert details of Solution or Bid] submission of [insert date].  The Local Authority will take the risk of any movement in [insert LIBOR or applicable interest rates or relevant index] between [insert relevant date of Solution or Bid submission] and financial close.  The benefit of any reduction in [insert LIBOR or applicable interest rates or relevant index] (including the buffer) will be passed in full to the Local Authority.

2.  

(a)  Subject to paragraph (b) below, the Unitary Charge set out within your Solution as representing the price payable for taking out and maintaining the [Required Insurances] as that term is used in the draft contract terms ("Insurance Costs") is fixed up to and including the Expected Date of Financial Close.  From, but excluding the date of Expected Financial Close, Insurance Costs may be increased but only to the extent required as a consequence of any increases in the sum insured following any increase in the Unitary Charge allowed in accordance with paragraph 1 above.  Any adjustment will be at the following rate [Bidder to specify]

(b)  Insurance Costs may also be revised if (i) any risk to be insured under the Required Insurances becomes Uninsurable (as such terms are used in the draft Contract terms) or (ii) following any significant client changes by the Local Authority to the scope of the Project.

3.  As regards the PFI Contract terms, we are pleased that, subject to the points discussed below, you have confirmed your acceptance to these terms.  Again, we would ask for your confirmation by way of countersignature of this letter that, subject only to the points set out below, you have accepted the PFI Contract issued to you [refer to version or date of PFI Contract and other relevant project documents], so that the only issues which will require clarification between now and Contract signature are matters of detail which are Project-specific and which remain to be agreed.

4.  The issue(s) that remained to be agreed relate to [Insert details of issues that remain to be agreed]

5.  As regards the Payment Mechanism, we would ask you to confirm, again by countersignature of this letter, that you have accepted the Payment Mechanism in its entirety subject only to:

[Insert details of Payment Mechanism issues that remain to be agreed]

We would be grateful if you, and [insert name of funders] and [insert name of sub-contractor] would countersign this letter where indicated below to confirm your approval to the terms of this letter.