Controversial £190m PFI hospital in doubt

A consortium led by Balfour Beatty and Canmore Partnerships was named preferred bidder for the £190m Stobhill and Victoria hospital in Glasgow even though no rival bidders emerged.

This would set a precedent for the whole of the the healthcare market. Single-bid contracts contravene public sector competition rules, but the Scottish executive approved the outline plan provided value for money could be proved when the final business case was made.

This decision now looks to be in doubt. A senior Scottish executive source told Building that the executive’s health team was yet to be convinced to sign off the scheme. The source said: “Single tendering is not our preferred option. The Greater Glasgow NHS Health Board will have to show that this is the right way to progress.”

A spokesperson for the Scottish executive said: “Full approval of the procurement will only be given subject to the submission and approval of a full business case prior to financial close. That will be required to demonstrate value for money.”

This is the first instance of single tendering in healthcare in Scotland and, if accepted, would challenge traditional thinking in England. Hospitals in Plymouth and Whipps Cross in east London have been subject to costly delays after attracting only a single bidder. Each is likely to have its plans altered to attract extra interest.

Andrew Gordon, Canmore Partnerships’ chief executive, said that concerns over anti-competitiveness actually meant that the scheme would prove to be value for money.

He said: “We’ve been subjected to scrutiny by the board and their advisers to an extent that is in some ways tougher than a multi-bidder approach.”

In some ways the process is tougher than a multi-bidder approach

Andrew Gordon, Canmore Partnerships

The consortium’s proposal is also subject to a “shadow bid”, understood to be drawn up by professional services firm Ernst & Young. If Balfour’s price is deemed to be uneconomic the scheme would probably have to be retendered, pushing it well past its 2007 completion date.

Jean Turner, MSP for local constituency Strathkelvin and Bearsden, said she was not impressed. “I thought the whole point of PFI was competition. I’m very dubious that single-bid is value for money.”

The problem of single-tender bidding has arisen as a result of a lack of contractors willing to take on the bidding costs and financial risks associated with large PFI health schemes.

The £350m Whipps Cross hospital may be delayed by up to 18 months after a Balfour Beatty-led consortium withdrew, leaving Bouygues the only bidder.

One regular bidder for PFI schemes said the Department of Health would inevitably consider allowing single-tender bidding. The source said: “They must be getting a bit rattled by the slowdown in bids.” He added that single-bidder systems would be “a lot more” onerous than projects with multiple bidders.