4 Since its establishment in 1902, the NPL has accumulated a disparate collection of buildings. By the early 1990s, the buildings at the NPL had deteriorated to the point where conditions risked reducing the quality and cost-effectiveness of the scientific work.
5 In 1993, the Department's plan to redevelop the NPL facilities was shelved pending the outcome of a review of all of the Department's laboratories. For the NPL, the conclusions of the review ruled out the option of privatisation but identified potential advantages from contracting out the management of the NPL's operations. Acting on the finding, the Department ran a competition and, in 1995, it contracted out the operation of the science work at the NPL for a 5 year period to NPL Management Ltd, a wholly owned subsidiary of Serco Group plc. Under the contract, NPL Management Ltd was also responsible for the provision of the facilities management services in support of the science delivery. The Department retained ownership of the buildings and NPL Management Ltd rented them for a fixed annual payment of £1.6 million.
6 In 1996, the Department recommenced its project to redevelop the NPL site. The Private Finance Initiative became the Department's preferred option for securing the redevelopment. Other options considered but rejected were:
■ Publicly funded redevelopment. This option was rejected on the grounds of affordability.
■ Privatisation. This option was rejected in 1993 because of lack of interest from potential buyers, and the need for perceived independence. Privatisation was informally considered again in 1996, but ruled out for a second time based on previous findings and also on consideration of the fact that operations had only recently been contracted out in October 1995 to NPL Management Ltd.
■ Inclusion of science provision in the PFI redevelopment deal. The science contract with Serco was due to end in 2000. This left open the option of letting the PFI contract to a consortium interested in taking responsibility for both the redevelopment plans and also management of the science programme from 2000 onwards. However, this plan was rejected on the grounds that it was not practical to specify science requirements over a 25 year period. The Department was unable to offer any long term guarantees about the level of work emanating from the National Measurement System. Consequently, the Department concluded that tendering a consecutive series of medium-term science service contracts and treating these as separate from the PFI contract made better commercial sense.
■ Deferment of the PFI deal. The Department recognised the potential problems in seeking approval for a 25 year contract when the National Measurement System itself was subject to periodic review. In-depth reviews of future funding are carried out every 5 to 15 years, and another review of this kind was expected around the time when the PFI deal was going ahead. The option of delaying the redevelopment plans until after the major review was rejected by Department, and so procurement went ahead in advance of the review. This decision was based on a number of smaller interim reviews, which supported the case for continued spending at present levels on the National Measurement System. In addition, the Department was already in advanced negotiations with Laser, the preferred bidder, when the review started and there was concern that the deal would be lost if the PFI project was delayed.