Two booked in for Tyneside library PFI

Only two groups now have any chance of being awarded a re-bid and scaled-down £40m PFI library scheme on Tyneside.

Japanese contractor Kajima and Information Resources (a group headed up by Kier) have gone head to head in the final run-in for Newcastle City Council’s deal.

The latest development in the long-running saga is that a pitch from a third contender – John Laing PFI subsidiary Equion – has now bitten the dust.

A project insider said: “Two bids are left on the table, but this isn’t what you might call a best and final offer stage. The council is now evaluating these two bids and it’s expected that a preferred bidder will be named this summer.”

Work on site is expected to start towards the end of this year.

The original scheme, which first came up for grabs two years ago and was initally valued at around £21m, involved redeveloping and relocating four libraries.

But bids came in way above the value of the PFI credits the council had got for the scheme in 2003.

Credits were later increased to £27m, but according to the insider, when contractors sent in their proposals “it became clear there were insufficient PFI credits to provide the high-quality facilities required”.

The council then managed to squeeze another £13.2m out of the government, taking the credits total to £40.2m. But even so, the scheme still had to be scaled down. Under the new plans, only the City and High Heaton libraries will be rebuilt and are now due to reopen in 2009. The original deal also included redeveloping the Fenham Community and relocating the Fawdon libraries.

The latter schemes are now included in a separate project, along with three other community libraries. But following the government’s refusal to cough up for this separate scheme, the official line is that the council is “exploring other sources of funding work on these libraries”.