There were additional advantages in expanding PRIME
1.16 In addition to its other benefits, the Department was quick to see that the prize of an expanded PRIME contract with Land Securities Trillium could be used in negotiations as a lever to gain improvements to the original contract. Moreover, all else being equal, there were advantages in having a single provider of accommodation. A second contractor would have provided no aggregation benefits, and the Department would have found it much harder to gain improvements to the PRIME contract with Land Securities Trillium. Two suppliers would also have risked integration problems and day to day confusions for the Department's staff, for instance in getting accommodation problems rectified.
3 | The evaluation scores for the short-listed options shows that a non-competitive negotiation was the best option | |
| Indicative NPV savings £m
Source: Department for Work and Pensions | NOTES 2 Expand PRIME with LST excluding soft facilities managment services for Jobcentre Plus. 3 Second PFI contract for PRIME expansion estate. 4 LST wins second PFI contract for PRIME expansion estate. 5 Separate assets and services contracts for PRIME expansion estate. 6 Single contract without asset transfer for PRIME expansion estate. 7 Separate projects and services contracts for PRIME expansion estate. |
1.17 The Department's forward planning also showed that a non-competitive negotiation with Land Securities Trillium would lead to far earlier transfer of the estate to the private sector than a full competition. Early completion was seen as a strong factor, enabling the implementation of the new Jobcentre Plus initiative to be achieved with least delay. The Department estimated that the competitive option was likely to take two years before a supplier was appointed, a typical timescale for the procurement of large accommodation projects. In the event, negotiations with Land Securities Trillium from the issue of the Invitation to Negotiate to the signing of the contract expansion took twelve months.
1.18 Before it could pursue a non-competitive negotiation, the Department obtained legal advice to assure itself that it was legal to do so. The Public Services contract regulations 1993 allow the non-competed expansion of an existing services contract only under certain limited conditions: circumstances have changed in unforeseen ways, or additional services are required and procurement of which from a new supplier would represent great technical or economic inconvenience - but provided the aggregate value of the consideration to be given under contracts for the additional services does not exceed 50 per cent of the value of the consideration payable under the original contract.
1.19 The proposed contract expansion met these criteria. Land Securities Trillium's eventual price for the contract expansion at April 1998 prices, £938 million in net present value terms, is 46.7 per cent of the £2 billion value of the PRIME contract.