Q191 Mr Bacon: That is an interesting way of putting it: four times the size of any PFI contract that we-we, the Highways Agency-had done. It wasn't four times the size of any PFI contract that was out there. We have, for years on this Committee, looked at really big PFI contracts. The cash value of MOD building alone is £2.5 billion. There was lots of experience to draw on right across the PFI sector in government to get it right.
Ginny Clarke: And presumably you have the OGC involved.
Graham Dalton: I absolutely accept that the need to word an initial OJEU notice as widely as it can be to avoid this technicality later on. That doesn't change the question. We would still have a decision. Was active traffic management sufficient to develop? Had we entered into a contract then, we would have been buying significantly lower benefits and had less throughput on a busy piece of motorway. Even now, while we are thinking that it's probably going to work for the later upgraded sections, for one of the two being widened down we don't think it would have been suitable.
Chair: David Finlay, then Stephen.
David Finlay: I have two points, if I may. First, just on a point of information, within the sheets that were circulated yesterday, it says, under the legal advisers, that they gave advice on procurement strategy. So, that was certainly within the legal advice. Secondly, the evidence that Mr Dalton gave at the beginning of this section was that part of the reason for the high advisers' cost was that the advice dealt with not only the two sections that are being widened, but the prospect that other sections would be widened. It is worth noting, of course, that those other sections are now liable to be used for hard shoulder running. That may bring you on to the point that you wanted to explore about whether the agency could have come to a decision quicker on hard shoulder running.
Chair: We'll come back to that. Stephen.
Q192 Stephen Barclay: I just wanted to clarify who was actually managing the legal relationship with Denton Wilde Sapte and how often their bills were challenged. In paragraph 20, it says that "The Agency's reliance on advisers...reflects insufficient commercial and technical skills within the Agency", and "The Agency risks advisers controlling projects". That is one of the findings of paragraph 20. What I am interested in is this: if it was a commercial client and they were putting in fees of £13.8 million over six years, someone would be going back to the lawyers and saying, "Let's challenge that, let's question that". How robust was the challenge? How frequently were those bills challenged?
Graham Dalton: Each of the streams of work was led by a member of the Highways Agency staff, so it wasn't consultants managing consultants in that respect, but it was a high proportion in there.
Stephen Barclay: I was not suggesting it was.
Graham Dalton: We have very rigorous and audited systems and internal control, so I would hope that there is no suggestion that any bill was just sent in and not checked and validated for work that had been done.
Q193 Stephen Barclay: People may have checked it and signed the cheque. What I am trying to understand is that there must have been some negotiation done. I cannot believe that Denton Wilde Sapte putting in a bill for £13.8 million was its actual submission. Presumably, it put in fees and someone went back to them saying, "No, we don't accept that bill" and had some sort of discussion.
Ginny Clarke: I was just going to explain the process. They, like our other advisers, had to produce invoices every month, and they produced a detailed breakdown against that invoice. The project teams, those are the people who sat-
Q194 Stephen Barclay: When you say detailed invoice-I say this because I have produced legal bills for firms-are you talking about something that is one sheet or two sheets of paper?
Ginny Clarke: It would probably be more than that, because they would be contracted on the basis of levels of fees, so who was active in that month and against what rate they were being charged against. That is the level of detail that I was explaining.
Q195 Stephen Barclay: That is the bit that is worrying me, because it sounds to me that it is just sending a bill once a month saying, "Associate x has worked 20 hours, partner y has worked 15 hours." I still come back to the question: how often were those bills challenged?
Ginny Clarke: They were reviewed every month. They have to be signed off by somebody in the Highways Agency who says, "I agree this time was spent and these are the appropriate rates". That is what the role of our project staff is about, and it was done on a monthly basis.
Q196 Mrs McGuire: Were any sent back?
Ginny Clarke: I can't answer that question. It isn't-
Q197 Mr Bacon: Do you know what? I have met PFI lawyers at parties and I have said, "What do you do?". "I'm a PFI lawyer", they say. Now, people never used to answer that question with "I'm a PFI lawyer", but they do now. They have talked to me about putting in bills to the public sector and they say, "It's great, you just send in the bill and they pay it. It's incredible. I'd never get the sort of ease of payment with my private sector clients. They go over it with a bloody tooth comb and put me through the mill, but the civil service just pay. It's marvellous!"
Ginny Clarke: Perhaps they haven't billed the Highways Agency then, because I suggest that we do in fact check these things. What I cannot answer is how many times did we throw it back.
Q198 Chair: Are you confident that you got value for money for the £80 million you spent?
Ginny Clarke: I am confident that we got value for money. I did not see everything that was spent against that, but to the best of my knowledge-as I have said, I was here throughout the project-we have had good advice. We have tried to get it at market rate. I take the point on how much that was challenged, but it was against frameworks and we have detailed how those services were procured. They were in a competitive environment. That is the basis against which we checked those monthly invoices.
Q199 Chair: There is one final issue which we need to quickly go through, which is the hard shoulder running principle. It has been used in Europe since 1996, yet you spent 80% of your money simply on constructing roads, probably because you like doing it. You started the trial in 2003 on the M42 and you had evidence, so why on earth did you not save the taxpayer between £400 million and £1.1 billion by changing your mind and going for hard shoulder running?
Graham Dalton: Running on the hard shoulder, as you would expect me to say, is not quite as easy as it looks.
Q200 Chair: But you are doing it now on the rest of the M25.
Graham Dalton: We are coming out of trials on the M42. The NAO talked about an earlier report in 2004, and one of the recommendations was to be more innovative and hard shoulder running is about that. We have tested and trialled it in a controlled manner. We have done it very carefully, so that we can demonstrate as we have gone through the phases how that changes performance and how it changes risk.