Deloittes LU report: main findings
The Deloitte & Touche report on PPP for the London Underground has finally gone public following a High Court Ruling. These are the key points to come out the report.
The D&T report says:
Neither the 30-year nor the seven and a half-year [value for money test] provides a satisfactory basis for establishing value for money (VFM).
- There is no evidence to suggest that there is a valid basis for establishing whether PPP will achieve VFM.
- The selecting of 30-year contracts are flawed because bidders were not required to submit prices for the whole period, but only for the first seven and a half years.
- The draft Public Sector Comparator shows the seven and half-year bids to be more expensive than the public sector alternative.
Highly material adjustments to the PSC are judgmental, volatile or statistically simplistic.
- Adjustments made to Base Costs add £2.5bn to the PSC.
- Concerns raised about the statistical analysis employed in the financial evaluation of the bids. D&T considers the analysis to be too simplistic and arbitrary.
Selection of preferred bidders has occured too early in the process and could have a materially adverse impact on VFM.
- Appointment of bidders should be delayed until negotiations on conditionality are complete.
Financial advantages of selecting [one of the] preferred bidder[s] depends upon judgmental adjustments.
- Assumptions for selecting preferred bidders are highly subjective.
Public sector bond financing has been largely dismissed.
- Bond financing as a basis for PSC has been largely dismissed despite an efficiency gain of £900m.
Links
PwC: D&T Tube report not ‘balanced’
NAO to study unedited Tube report