Essex PFI bidders demand bid costs

Amec and Innisfree are demanding the return of £10m in bid costs following the Department of Health’s (DH) decision to scrap the £167m Colchester Hospital PFI scheme after five years in development.

Essex Rivers Healthcare NHS Trust said the government’s decision to shift healthcare provision from the acute to the primary level, combined with the introduction of the payment by results regime and competition from the Independent Sector Treatment Centre (ISTC) were the key reasons for pulling out.

The Trust had estimated that it would lose 20% of its key income to ISTCs, resulting in a loss of £7.8m in 2008/09. It is now working on an alternative proposal.

Preferred bidder Senate Health (Amec/Innisfree) said it was "extremely disappointed" that the Trust had decided to cancel the scheme at such an advanced stage.

A spokesman said Senate had been working closely with the Trust on the project for two years. He added: "The fact that the project has been cancelled so far into the preferred bidder period is concerning. We will be discussing this matter with both the Trust and NHS."

An Amec spokesman, who said the company was "confident it was in the right", told CJ: "We are looking to get compensation but we do expect this to take some time."

An Essex Rivers Healthcare NHS Trust spokesman commented: "There is an agreement between the Trust and Senate Health covering a number of issues which, as you would expect, is subject to commercial confidentiality."

However, Richard Bourne, Essex Rivers chairman, raised doubts that compensation would have to be paid.

"I can only comment from a Trust point of view – we never got to the point in the procurement process where we signed off."

A Trust source warned that other Trusts could follow suite –even on live PFIs. "This was a brave decision because the Trust had the nerve to take it now and not further down the road.

"I would not be surprised if more trusts took the same route. Essex Rivers would have had no extra capital whatsoever had it gone down this route."