29 September 2000
In a letter to the government, EC officials have questioned its approach to awarding contracts.
Across the UK, with the approval of the government, prospective PFI deals have been pushed forward under the 'negotiated procedures' route, which allows organisations to consult with contractors of their choice and negotiate the terms of the contract with one or more of them. However, the EC believes this should be allowed only in specific circumstances.
Most UK deals invite three bidders but the EC wants to see at least six: 'The Public Procurement of Construction Works Directive established strict rules to ensure that public contracts are awarded only after an open and transparent tender process,' it says in the letter.
Summing up its 'reasoned opinion', the EC says: 'The commission believes that a negotiated procedure was not justified in this case, according to the rules on the public procurement of construction works. The commission therefore considers that the UK has infringed the terms of the Procurement of Construction Works Directive.'
The EC opinion is a further blow to the beleaguered project. Under orders from the government, the governing body, which does not want the scheme to go ahead, is commissioning an independent viability study.
A recent letter to Pimlico school governors from education minister Jacqui Smith granted a further extension to the allocation of PFI credits to September 30.
The allocation, which sets out and safeguards the cost involved in the proposed scheme, has already been extended since March 31. Once the credit has expired, the deal will collapse.
Increasingly exasperated by the four-year old saga, Smith is pressing the governors and Westminster City Council to settle the dispute.
Her letter states: 'If your statement does not clearly address the viability of the PFI project one way or the other, there is no prospect of the PFI credit allocation continuing.'
The council, which is determined to push ahead with the project, was due to discuss the issue as Public Finance went to press.
PFsep2000
