21 April 2000
In its report on the PFI contract, awarded in 1996 to Lex Vehicle Leasing, the PAC is critical of the ministry's failure to achieve a proper competitive process.
'The project was under way as an outsourcing exercise before it was designated as a Private Finance Initiative Pathfinder,' the report says. 'The ministry did not step back to consider the implications of changing to a private finance deal, but felt under pressure to deliver the contract in an unreasonably short timescale.
'The ministry rightly sought to follow a competitive procurement process and made the decision to award the contract to Lex on the basis of an assessment of overall value for money.
'However, the way in which the ministry handled the second-placed bidder could give the impression that the ministry had always intended to choose Lex, irrespective of merit.'
The second bid to meet the terms of the contract, from the Venson Group, was £2m less than Lex's, but was judged 'technically non-compliant' at a late stage, leaving Lex the sole runner.
David Davis, the committee chairman, said: 'The ministry created an impression, true or not, that [it was] looking for ways to exclude the second bidder.
'Failure to treat bidders fairly and to be seen to treat them fairly could… deter potential suppliers from bidding in future competitions and might therefore pose a very serious threat to achieving best value for money.'
PFapr2000
