Europe to address PFI rule threat

4 July 2001
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05 July 2001 | Liam O'Brien

Fears that private finance initiative (PFI) bidding costs could soar under proposed revisions to European Union procurement regulations are being addressed by European Commission officials.

A Construction Confederation delegation to Brussels last week was told by EC officials that their concerns would be taken into account in the final drafting of the consolidated procurement directive. The current proposals, which could become law within two years, prevent a client selecting a preferred bidder and hammering out final details of a scheme on an exclusive basis. The EC says this arrangement allows the preferred bidder and the government to, in effect, change the contract between themselves. Instead, it wants negotiation to stop when a contract is awarded.

The confederation and the three largest companies involved in PFI projects - Carillion, MJ Gleeson and John Mowlem - claim the planned directive would involve every bidder in the expense of submitting highly detailed offers.

Jan Middleton, procurement specialist at City law firm Denton Wilde Sapte, said the effect of the directive as it is could be very damaging to the PFI process.

"The costs of putting together a PFI bid on a major project are already substantial," she said.

"If the directive results in a situation where fully worked-up bids have to be made before selection of preferred bidder stage, then I think at the worst pfi players may decide the risk margin is not worth it."

SMjul2001

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