Q21 Mr Touhig: Let us explore the work upfront. The tendering process doubled from two to four years?
Mr Bradbrook: Yes.
Q22 Mr Touhig: The cost of the tendering increased by 50% from £10 million to £15 million?
Mr Bradbrook: Yes.
Q23 Mr Touhig: We see from paragraph 2.4 that the bidders had concern about the validity of the data you gave them. You talk about all the work you did to get it right, but really what you said to the bidders was that they should come and invest in the project and gave them data that was not very reliable.
Mr Bradbrook: You are talking about one particular type of data which related to the existing assets. It was important for us to get as much of that together as possible because one of the key risks we were transferring was the asset condition.
Q24 Mr Touhig: But why were you unwilling to warrant the accuracy of the materials you were giving to the bidders?
Mr Bradbrook: Because it was a risk we were transferring. It would be inappropriate to warrant something for which they were taking the risk.
Q25 Mr Touhig: Is it any wonder then that you just ended up with two bidders? If I come along to bid for this project and you cannot guarantee the information you give me as the basis for my tender is it any wonder that you really do not have any competition at the end of it?
Mr Bradbrook: I think that for a contract of this size and complexity with very large bid costs to have two bidders is good. It compares favourably with the Airwave project which had a single bidder at a much earlier stage. We obtained really good competition right up to the point of announcing the preferred bidder.
Q26 Mr Touhig: So far I think we have established that you did not have a very robust case for going down the PPP line. The costs went out of control and you were giving those who were bidding for the contract information on which you said they could not rely. It sounds a bit absurd, does it not? Here is an agency that knows about road telecommunications; it has a wealth of expertise. It does not want to do the project itself and so it goes off to a PPP; it will not promise the bidders that the information it gives is accurate and so some drop out. Therefore, one does not really have competition at the end of the day for this work?
Mr Robertson: As Mr Bradbrook said, we definitely did have competition as far as that was concerned. We took two consortia beyond the preferred bidder stage and so we were able to leverage on one side of that contract against that competition and on the other side leverage against the public sector comparator. We knew for how much we could do it ourselves.
Q27 Mr Touhig: In June 2002 the agency realised that third-party revenues which would make the PPP better value for money would not materialise. Did that not provide any warnings for you? Were you then certain that you should be going along this route?
Mr Robertson: Absolutely, and that was one of the two principal reasons why the objective of the procurement at that point moved away from what it had been originally, namely something that was to be an infill of the telecommunications network accompanied by the opportunity to realise third-party revenues. In 2001 and 2002 the telecommunications sector went into a collapse for three particular reasons. First, telecommunication entities of government had been sold off and that was accompanied by deregulation. That raised all sorts of expectations about the telecommunications age. Second, the technology itself advanced significantly so that what people previously had thought was a restricted asset suddenly became something akin to a free good.
Q28 Mr Touhig: I noticed that you go through the KHHD consortium. Are you happy that they are value for money? You pay them £¼ million a month.
Mr Robertson: Yes.
Q29 Mr Touhig: I would not be too sure of that. There are only two men overseeing this project. How many people does KHHD have overseeing this project?
Mr Robertson: There are two, one of whom is here, known to us as the two Davids overseeing this project. One David was apparently enough to slay Goliath, so two might have been considered overkill in this case.
Q30 Mr Touhig: Paragraph 3.7 of the Report says: "The Agency's ability to manage effectively the cost of KHHD, which earned its fees on an hours worked basis, was limited by the size of the Agency's team. . ." They are running rings around you, are they not?
Mr Robertson: There were two people working through this project who I think have done a splendid job. In addition, at a later stage we boosted the size of the team in order to help them work. They always had the support and advice of our PFI advisers and Treasury advisers and have always been working with the accounts and finance team of the Highways Agency, so all of the invoices could be checked.