A NEED FOR FLEXIBILITY

This week's revelations about bidding irregularities on the Channel Tunnel Rail Link have disastrous implications for the Government's much trumpeted Private Finance Initiative. If this scheme, the flagship of the whole PFI exercise, is seen by bankers and contractors to be riddled with inconsistency and possible bias, the game is up almost before it gets going. And that, as Contract Journal has argued from 1986 onwards, would be a tragedy for an entrepreneurial industry such as Construction - let alone for the nation as a whole.

It needs to be firmly stated that there are, at this stage, no substantiated grounds for suggesting the Government has been covertly engaged in favouring EuroRail (the Trafalgar House-BICC, plus others consortium which was awarded the scheme the first time round). All that has come to light is that the Department of Transport's selection committee got itself into a terrible twist when trying to deal with a non-compliant bid.

But what this all too clearly reveals - and the reason it is so potentially damaging - is that contractors' day-one qualms about the lack of clear PFI guidelines have been entirely justified. If the tender adjudication process involves arbitary decisions made by civil servants unused to these new ways of awarding contracts, and whose competence is thus called into question, why should any contractors and their partners risk substantial time and money to take part?

The Channel Rail Link is by no means the only example of a floundering PFI scheme. The pigeons are coming home to roost across the entire spectrum of privately-financed work. The first private prison tenders had to be thrown away. Private hospitals are struggling. And the most embarrassing scenario is ready to unfold on DBFO roads. Four sets of bids are due next week: the indications are they will far exceed Government cost estimates. Heavy horse-trading will be essential for these schemes to proceed - and lengthy delay is inevitable.

Yet the Government is so out of touch with the grass-roots realities of PFI that it has blithely announced the second tranche of DBFO scheme. Political pressure to deliver some form of roads programme is obviously driving this latest DBFO announcement (it is also pushing the Rail Link decision-makers faster than is prudent). But political and idealogical needs are unlikely to triumph over the bottom-line demands of hard-nosed contractors and their bankers.

If PFI is not be derailed, and this is looking dangerously likely, Government would do well to consider the point raised by Wimpey's David Anderson last week , who suggested European Union rules on competition are more flexible than Whitehall supposes. Selective negotiation is sanctionable by Brussels. Why not use it?