The PFI deal to provide new headquarters accommodation for the Home Office is a high profile, high value project. Over the life of the 29 year contract signed in March 2002, the Home Office will pay Annes Gate Property Plc1 (AGP) £311 million (net present cost) for accommodation and services. The new building, designed to hold 3450 staff, will be built on the site of the old Department of the Environment building in Marsham Street, Westminster. Demolition began in March 2002 and Home Office staff are due to move into their new accommodation in January 2005.
The Home Office began the procurement in 1996 after a review of its accommodation concluded there were deficiencies in the existing estate and that it needed to be refurbished. During the competition for the refurbishment contract, AGP, however, made a developed and costed variant bid to build new accommodation at Marsham Street. This option was attractive to the Home Office because it avoided the business risk associated with moving into and out of temporary accommodation and it offered the opportunity to bring the Prison Service and the Home Office together on one site. Further competition demonstrated that a new building offered better value for money than refurbishment.
On the basis of a Report by the Comptroller and Auditor General2 we took evidence from the Home Office and AGP on whether the new building will meet the Home Office's needs and on the negotiation of the deal.
1 A company owned by Byhome Ltd (which in turn is owned by Bouygues UK Ltd and Ecovert FM Ltd, both of which are owned by Bouygues Construction S.A., a major construction firm based in France) and HSBC Infrastructure Ltd.
2 C&AG's Report, PFI: The new headquarters for the Home Office (HC 954, Session 2002-03)