25 May 2006 | Paul Snell

The National Audit Office has criticised the Department of Trade and Industry's (DTI) procurement process following the collapse of a private finance initiative (PFI) deal to provide new facilities for the National Physical Laboratory.

In a report issued this month, the public spending watchdog said problems with the design of the laboratories and a weak bidding process were partly to blame for the deal collapsing.

Responding to the report, Edward Leigh MP, Conservative chairman of the committee of public accounts, said the DTI had signed the PFI contract despite being concerned that the private sector could not deliver.

After the DTI shortlisted four of 10 firms, two pulled out. Neither of the remaining bids met requirements for temperature controls. The bid team suggested bidders design a single laboratory each to improve this, but this was rejected by the DTI.

The report said despite the designs from contract winner Laser not meeting the exacting specifications, the DTI did not raise concerns because it wanted responsibility to rest with the private sector. Because of this, the reported private-sector losses of at least £100 million were not passed to the DTI. But contract problems meant the DTI had to invest a further £18 million.

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