11 The late change to the GoCo deal also placed greater risk on industry as the chosen consortium to operate the GoCo needed to earn its fee from savings generated from the Equipment Plan and DE&S operating costs. Before the change, the consortia expected to earn a base fee and incentive fee without delivering any cash savings. Consortia had limited opportunity to verify that the Equipment Plan costs that the Department had forecast were appropriate. This made it extremely challenging for any consortia to calculate its likely profit from operating DE&S as a GoCo.
12 The business information the Department had, which consortia were required to base their bids on, was poor. This was partly why one of the two remaining consortia withdrew from the bidding process in November 2013.43
13 Additionally, there were differences in views between the Department and the consortium that withdrew in November 2013 over whether their concerns regarding the deal were sufficiently escalated prior to their withdrawal.
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43 The third bidder had previously withdrawn from the GoCo competition as it was involved in another Departmental transformation programme and had insufficient resources to bid on both.