18. When the procurement went down to a single bidder, 02 had recognised that there was a need to change its approach and proposed the concept of a "should-cost" model. In effect, the model would describe the components that make up the system, 02 would make its own estimate of what it would cost and PITO could check whether it felt the estimates were appropriate. However, completion of the model took longer than expected, mainly because the design of the system had taken time to develop to a level where 02 could provide all the detail required.16
19. PITO had taken advice from technical and financial experts in reviewing the model and considered that the level of risk transferred to 02 justified a 17% return on the project. It was argued that there was no precedent for such a large system in previous procurements, the technology was new and a large number of stakeholders were involved. The acquisition of sites by 02 for new masts for Airwave transmissions was also subject to considerable uncertainty.17
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16 Q 202