1.5 In 1991, the Department identified that it needed to replace and upgrade the buildings that housed the NPL facilities, in order to provide a long-term working environment that would enable scientists to conduct world class research in support of UK competitiveness. The existing site comprised over fifty buildings, varying in age and quality spread over 28 hectares (Figure 4 overleaf). However, the Department postponed its plan to redevelop the NPL site while it conducted a review into the future of its research establishments, including the NPL. Acting on findings from the review, the Department contracted out the operation of scientific research services at the NPL to Serco Group plc in October 1995. In early 1996, the Department decided to proceed with the redevelopment of the NPL site. In August 1996, it advertised in the Official Journal of the European Communities that it sought a contractor to take responsibility for redevelopment, reorganisation and day to day management of the NPL site.
1.6 Nearly two years later, at the end of July 1998, the Department signed a PFI contract with Laser. The company was to construct 16 linked modules that would house over 400 laboratories, offices for scientists and administrators, workshops, and other administration spaces, such as the main computer room (Figure 4). Most of the existing buildings would become surplus to requirements when the new facilities were complete and so, as part of the deal, the Government sold two plots of surplus land to Laing Homes Ltd for a total of £8.8 million. To reduce Laser's debt requirement and so reduce Laser's unitary charge, the Department transferred the proceeds from the sale to Laser as a prepayment for future services. Under the contract, Laser's unitary charge, after taking into account the prepayment, was £11.5 million (1998 prices) per annum.
1.7 Serco Group plc and John Laing plc each owned 50 per cent of Laser, which they had established for the purpose of bidding for the contract. As is common with PFI deals, the shareholders divided the main contracts between them. Laser awarded John Laing plc's subsidiary, John Laing Construction Ltd (JLC Ltd), the contract to design and construct the new facilities. Serco Limited, a subsidiary of Serco Group plc, entered into a contract with Laser to manage the completed facilities.
1.8 Laser phased construction of the new facilities so that it could generate cash flow as early as possible. Laser therefore planned to complete the first construction phase, modules 1, 2, 11 and 12, in October 1999. The remaining 12 modules, comprising 12 construction phases, were to have been completed over the following 17 months (Figure 5 on page 13).
1.9 The parties agreed that Laser should engage an Independent Certifier to determine completion of each phase and, after a competition, Laser appointed Allott and Lomax, a firm of consulting engineers. The Department, Laser, JLC Ltd and the Independent Certifier together identified, for each construction phase, tests to assess whether JLC Ltd's completed works met the specified environmental conditions. If the Independent Certifier were satisfied with the test results, he would certify completion of the phase at which point the Department's obligation to pay the relevant portion of the unitary charge would arise.