Two on waiting list for £240m Northern PFI

Two firms are going head to head as the selection process in a troubled £240m PFI hospitals deal limps towards its closing stages.

The Department of Health has dropped a pitch from the Catalyst consortium, headed up by Bovis Lend Lease, for the first in a series of batched hospital projects. This means that only two firms are now in the waiting room for the Northern batched scheme –Balfour Beatty’s Consort group will battle it out with Laing Group subsidiary Equion.

It is understood that the preferred bidder is expected to emerge next month or in August – at least six months behind schedule.

Two hospitals are featured in the combined project, which is known as SHIFT. Financial close is now expected next March on the Salford hospitals part of the deal, valued at £170m-plus. Tameside hospital, the other prong in the combined deal, is expected to reach financial close in June 2006.

But the news of a two-horse race is at odds with the official line from SHIFT project director Simon Neville. He claimed: "We’re still talking to all three bidders about a variety of issues – we haven’t de-selected anyone."

The Northern batched hospitals PFI deal, intended to get a framework partner on board to develop new hospital facilities, has been plagued by problems since it first surfaced in 2003.

The deal originally included hospitals in Bradford, but last year the Bradford Teaching Hospitals NHS Trust pulled the scheme out of the project, after already having slashed its original £227m scheme to just £50m early in 2004.

The Trust argued that the improvements could be better delivered in tailor-made chunks, possibly using ProCure 21 as its delivery method.

Bradford’s withdrawal came on top of cuts that had already been made to the Salford and Tameside schemes after the Greater Manchester Strategic Health Authority reviewed the scheme two years ago.

Then the batched deal ran into yet more problems early this year following the introduction of the NHS’s controversial Payment by Results regime, which has been in part blamed for the client’s rejection of all the initial bids (including Catalyst’s) as "unaffordable".