7 The Department, after seeking variant bids, was paid an appropriate amount for the transferred estate, with a valuation of £140 million confirmed by advisers and the District Valuation Office. It received £100 million up front with the balance taken as a reduction in the annual Unitary Charge payment to Land Securities Trillium for accommodation services.
8 One of the Department's main needs is flexibility in the amount of accommodation it uses. The Department sought variant bids to determine the value for money impact of buying different levels of flexibility. It bought the right to vacate space in the contract price within specified time periods. It recognised the risk that too much flexibility might be bought up front through the Unitary Charge and then not used, as happened in the first years of the PRIME contract. The Department can buy and sell the right to vacate property, at the same price, which declines as the contract progresses, is not property specific and which reflects the impact on costs for Land Securities Trillium.
9 The Department succeeded in its aim of gaining significant improvements to the original PRIME contract: through providing Land Securities Trillium with an incentive to improve performance and a new approach to the management of the contract and relationship. The Department also gained new value for money mechanisms including a parent company guarantee, the right to voluntarily terminate the PRIME contract, and recognition in the price that the Department will occupy some of the estate beyond expiry of the contract.
10 Following the Mapeley STEPS deal, through which Inland Revenue and Customs and Excise properties were transferred to a company based outside the UK, the Government required a new clause for future PFI contracts limiting the ability of contractors to go offshore. In this deal, the Department determined that all the PRIME companies in Land Securities Trillium's corporate structure are registered in the UK, and the contract places restrictions on Land Securities Trillium's ability to transfer any property to an offshore entity.