This article is from the source 'bbc' and was first published or seen on . It will not be checked again for changes.

You can find the current article at its original source at http://news.bbc.co.uk/go/rss/-/1/hi/uk_politics/6444031.stm

The article has changed 2 times. There is an RSS feed of changes available.

Version 0 Version 1
'Naivety' blamed for PFI failure 'Naivety' blamed for PFI fiasco
(about 4 hours later)
A private finance initiative contract to redevelop facilities for a scientific institution failed because of "naivety", MPs have said.A private finance initiative contract to redevelop facilities for a scientific institution failed because of "naivety", MPs have said.
The Department for Trade and Industry had worries about designs for the National Physical Laboratory but went ahead anyway, the MPs said.The Department for Trade and Industry had worries about designs for the National Physical Laboratory but went ahead anyway, the MPs said.
The contractor pulled out six years into the 25-year deal, with big losses.The contractor pulled out six years into the 25-year deal, with big losses.
The Public Accounts Committee said it was the first PFI deal to end because the contractor could not deliver.The Public Accounts Committee said it was the first PFI deal to end because the contractor could not deliver.
'Not up to the job''Not up to the job'
The contract to redevelop existing buildings and construct new ones at the NPL's site in Teddington, south-west London, was awarded in 1998 to Laser, a company jointly owned by Serco Group and John Laing.The contract to redevelop existing buildings and construct new ones at the NPL's site in Teddington, south-west London, was awarded in 1998 to Laser, a company jointly owned by Serco Group and John Laing.
The NPL works on the measurement of physical properties such as time, length and mass, and requires "exacting" environmental conditions.The NPL works on the measurement of physical properties such as time, length and mass, and requires "exacting" environmental conditions.
The committee's chairman, Edward Leigh MP, said the contract was awarded in 1998 even though there were concerns the company's designs were "not up to the job".The committee's chairman, Edward Leigh MP, said the contract was awarded in 1998 even though there were concerns the company's designs were "not up to the job".
"But the department placed the contract anyway, hoping against hope that the contractor would be capable of rising to the considerable technical challenges.""But the department placed the contract anyway, hoping against hope that the contractor would be capable of rising to the considerable technical challenges."
The committee's report said: "By July 2004, Laser recognised that it did not have the financial capacity to complete the project to the required specification and proposed either revision of its contract or termination.The committee's report said: "By July 2004, Laser recognised that it did not have the financial capacity to complete the project to the required specification and proposed either revision of its contract or termination.
"After negotiations, the PFI contract was terminated in December 2004 and the Department paid Laser £75 million for its interest in the new buildings." "After negotiations, the PFI contract was terminated in December 2004 and the department paid Laser £75m for its interest in the new buildings."
Risk 'transferred'Risk 'transferred'
Laser reported losses of £100m due to pulling out of the contract.Laser reported losses of £100m due to pulling out of the contract.
Mr Leigh said: "Where the taxpayer was fortunate was that the risk in the project had been largely transferred to the private sector which took a hit of over £100m.Mr Leigh said: "Where the taxpayer was fortunate was that the risk in the project had been largely transferred to the private sector which took a hit of over £100m.
"This project was undermined from the start by a flawed procurement process and naivety by both the department and the favoured private sector contractor over the technical challenges which had to be surmounted."This project was undermined from the start by a flawed procurement process and naivety by both the department and the favoured private sector contractor over the technical challenges which had to be surmounted.
"The result was a mess from which the DTI extracted itself with difficulty.""The result was a mess from which the DTI extracted itself with difficulty."
The project ran into extra costs of £10m - meaning a total cost to the department of £140m, the committee estimated - and delays of five years.The project ran into extra costs of £10m - meaning a total cost to the department of £140m, the committee estimated - and delays of five years.
DTI 'still committed'DTI 'still committed'
A spokeswoman for the DTI said: "We remain committed to providing the National Physical Laboratory with accommodation appropriate for a world-class measurement laboratory.A spokeswoman for the DTI said: "We remain committed to providing the National Physical Laboratory with accommodation appropriate for a world-class measurement laboratory.
"By retaining use of existing facilities, DTI has been able to ensure that the scientific work at NPL could continue despite the delays in construction and the department was not under pressure to compromise on quality requirements. The new building will be fully occupied by late summer."By retaining use of existing facilities, DTI has been able to ensure that the scientific work at NPL could continue despite the delays in construction and the department was not under pressure to compromise on quality requirements. The new building will be fully occupied by late summer.
"The Public Accounts Committee recognised that the DTI protected the taxpayer from bearing the majority of the costs of the project's problems.""The Public Accounts Committee recognised that the DTI protected the taxpayer from bearing the majority of the costs of the project's problems."