A senior figure in one of the three shortlisted consortia said: "We are considering pulling out. Our bid costs are well in excess of £1m and the new rules mean we will have to start from scratch on the legals." New bid documents were issued following negotiations between the Home Office and Land Securities about quitting the lease on the department's Queen Anne's Gate headquarters. This was necessary because the department has decided to build a new headquarters at Marsham Street rather than redevelop its existing offices. But as the bid documents were issued only last week, they had to comply with new Treasury guidelines on PFI procurement. These require bidders to supply much more detailed submissions than was the case previously.
The source at the bidder complained that the new requirements meant that it had to supply detailed design, construction and operating contracts and include a due diligence report. He said that the risks on the project were becoming too high. "It's like taking three bidders to financial close," he said.
The consortium wants to meet the Home Office to clarify its position next week.
A spokesman for the Home Office admitted that the department had placed a new obligation on the consortia, but said the department would pay two-thirds of the additional bid costs.
It is understood that Land Securities, the owner of the Queen Anne's Gate office, is asking the Home Office for more than £100m to quit its lease and that this cost is included in the new PFI contract. The inclusion of the lease payment takes the overall PFI bid to nearly £300m, said one bidder. He said that the cost of redeveloping Marsham Street alone would be £140m-150m.
Firms have been working on the project since August 1996, when it was envisaged that a £60m refurbishment of the Queen Anne's Gate building was needed. The latest change to the brief is the second by the Home Office since the launch of the competition. It has already agreed to pay bidders £2m in compensation for extra work.
Consortia headed by Bovis, Jarvis and developer Godfrey Bradman have been invited to re-bid by mid-February.