National Audit Office endorses Land Securities Trillium's expanded property outsourcing contract with the DWP
1 January 2005
The National Audit Office (“NAO”) today announced its formal endorsement of the expansion to the PRIME property outsourcing contract between the Department for Work and Pensions (“DWP”) and Land Securities Trillium and its conclusion that the transaction has succeeded in achieving its goals.
Specifically, the NAO reported to Parliament that:
• DWP got the deal it set out to achieve, by expanding its contract with Land Securities Trillium to include the former Employment Service estate
• the deal is £220 million cheaper than a credible commercial alternative.
In addition, the NAO found that the DWP's decision to proceed via a non-competitive negotiation with Land Securities Trillium was justified.
Sir John Bourn, Comptroller and Auditor General and head of the NAO, said, "The Department got what it required at a good price. Where public bodies can show that a non-competitive negotiation is the best option, the approach used for the expansion of the PRIME contract provides a number of lessons on how to achieve good value for money - which should be applied in the future."
Jane Kennedy, Minister for Work, said, “This is a very positive report for the Department for Work and Pensions which fully supports our approach. The expanded agreement with Land Securities Trillium has been tailored to meet the current and future needs of this department and secures best value for money for the taxpayer.”
Ian Ellis, Chief Executive of Land Securities Trillium, commented, "We are delighted to have the NAO's independent seal of approval on this deal. The contract is all about working with government to support their business changes, whilst delivering better workplaces and value for money.
“In 1999, the NAO endorsed our original property outsourcing deal with the DWP and today it has approved the expansion of the contract. The NAO estimates combined savings of £780 million (Note: 1, 2) for the taxpayer over the life of the expanded contract and their report clearly demonstrates that we offer best value for money.
“This expanded contract is a fine example of how Land Securities Trillium’s long-term property solutions can meet clients' business needs both now and as they change over time.”
Peter Besley, Director of Estates at DWP, said, "We had two priorities in undertaking this deal: to make it a financial and operational success for government. I am delighted that the NAO has found that we have succeeded on both fronts.”
- Ends -
For further information, please contact:
Ian Ellis / Cat Ley
Tel: +44 (0)20 7796 5500
Tel: +44(0) 20 7831 3113
1 “The estimated present value saving to the taxpayer from the PRIME deal over its 20 year duration is some £560 million, or 22 per cent below the cost of continued public sector ownership and management.” Source: NAO report ‘The PRIME project: the transfer of the Department of Social Security estate to the private sector’ 20 April 1999.
2 “The decision to proceed via a non-competitive negotiation with Land Securities Trillium was the right one. DWP introduced competitive tension into the negotiations, and the outcome was £220 million cheaper than a credible commercial alternative.” Source: NAO press release ‘Accommodation services for the Department for Work and Pensions: Transfer of property to the private sector under the expansion of the PRIME Contract’ 26 January 2005.
NOTES TO EDITORS:
In 1998, the former Department of Social Security transferred its estate under a deal known as PRIME (Private sector Resource Initiative for the Management of the Estate) to a private sector consortium, now Land Securities Trillium. Following the 2001 election, and the creation of the Department for Work and Pensions, this contract was expanded by the Department to take in property of the Employment Service.
Under the PRIME expansion Land Securities Trillium paid DWP an appropriate amount for the estate. £100 million was paid up front with the balance taken as a reduction in the annual unitary charge payment. At the end of the contract DWP will retain the right to occupy the buildings it then wishes to continue to occupy with leases based on prevailing market terms.
Department for Work and Pensions
DWP, the Department for Work and Pensions was formed in June 2001 from the former Department of Social Security (DSS) and parts of the former Department for Education and Employment (DfEE) including the Employment Service (ES). DWP is responsible for the Government's welfare reform agenda and delivers support and advice through a modern network of services to people of working age, employers, pensioners, families and children and disabled people.
Land Securities Trillium
Land Securities Trillium, part of the Land Securities Group, is one of the UK’s leading providers of property outsourcing solutions. Capital, estate strategy, property management, facilities management and risk management services are combined to meet the particular needs of corporate and public sector organisations. Land Securities Trillium currently owns or manages over 8,400 properties throughout the UK. Clients include the Department for Work and Pensions, the BBC, BT, Norwich Union and Barclays Bank.
Land Securities Group PLC
Land Securities Group (“Land Securities” / “Group”) is a FTSE 100 company, quoted on the London Stock Exchange. It has been at the forefront of the UK’s commercial property industry for 60 years. Today, the Group maintains its market leading position as the UK’s largest quoted property company by providing commercial accommodation and property services to a wide range of occupiers. The Group’s objective is to create attractive and sustainable returns for its shareholders through its activities, which include property investment, development and property outsourcing.
Land Securities holds a market leading position in three areas of the UK commercial property market:
• Central London offices and
• Property outsourcing.
Its £8 billion investment portfolio includes more than 810,000 sq m of office space in Central London and substantial retail holdings in Oxford Street, Tottenham Court Road and Notting Hill Gate. In addition the Group owns 18 shopping centres and 25 retail parks located across the UK.