Crunch time for Chelsea PFI

The troubled £150m Chelsea Barracks PFI scheme will be relet as a Prime Contract, if the Ministry of Defence (MoD) gives the thumbs down today (Wednesday) to the scheme going ahead with just one bidder.
The MoD Investment Approvals Board has been reviewing the feasibility of the project, following the withdrawal of the Amec/Berkeley Homes Consortium in September last year (CJ 10 September 2003). The consortium's decision to pull out left Regalian Properties/Bovis Lend Lease as sole bidder.
Norman Brown, PPP assistant director for Chelsea Barracks told CJ: "We have had no indication from the Board which way it will go. We would be very disappointed if it did rule against the scheme going ahead with one bidder. However, if it does then the scheme will go down the MoD Prime Contracting route, as we perceive there to be no appetite in the market for another PFI competition."
One source close to the scheme added: "MoD contracts have never been easy but this is particularly bad. There is a feeling that some parts of the MoD see Chelsea Barracks as sacrosanct and would not be sorry if it was delayed indefinitely."
This is the latest twist in a process which has seen the original scheme stalled because no suitable alternative site for the barracks could be found (CJ 25 July 2001). The MoD then decided to keep the barracks on site, leaving just 2ha of the 5ha of land for development by the preferred bidder. This resulted in £50m being cut off the original value of the contract. (CJ 24 April 2002).
Finally in September last year Amec/ Berkeley Homes threw in the towel. The MoD said the consortium had pulled out because it deemed the deal "commercially unattractive".
If Chelsea Barracks is let as a Prime Contract, it could be included in the £460m South East regional Prime Contract, currently being bid for by Babcock Prime Solutions; Serco; and PriDE (Southern Electric Contracting and Interserve Defence).