UK's largest hospital scheme may struggle to attract interest after only one contractor sets up consortium.
Concerns are growing that the UK's biggest PFI health scheme, a 拢600m redevelopment of the Royal London and St Bartholomew's hospitals, will fail to attract enough bidders to meet NHS rules.

Under the NHS regulations, three consortiums are required to bid for a scheme 鈥� but so far only one, led by Skanska and Innisfree, has formally set up a bidding team.

It is believed that other contractors have been put off by the size of the project and its associated bidding costs. Regular PFI bidders such as Balfour Beatty are thought to be considering their options.

A source close to the Department of Health said: "The scheme is so huge that the department has been under the impression that it'll be lucky to get three bidders."

Partnerships UK, the Treasury's public鈥損rivate partnership venture, is helping to run the project's procurement process. David Harrison, Partnerships UK's director of health, admitted that market testing of the scheme had produced mixed results. He said: "Some in the market have clearly been put off by the size 鈥� equally, some have been turned on by the size."

Harrison said the establishment of the Skanska/Innisfree consortium was a hopeful sign. He described Skanska's interest, ahead of an advertisement for the scheme in the European Union's Official Journal, as a positive sign.

But industry observers did not share his view. One said: "That lack of interest is unusual. There would normally be more enthusiasm." Another said Skanska's decision to set up a team was standard practice in preparing a bid, and little should be read into it. He said: "One puts a consortium together when a scheme is first thought about."

The department feels it will be lucky to get three bidders

Health department source

The scheme is due to be advertised in the Official Journal early next year.

A Department of Health source confirmed that concerns had been raised over bidding costs. He said the department had responded to these by setting up an internal review, with a remit to reduce the time from the publication of an Official Journal notice to financial completion. In the Bart's scheme, this is expected to be two years.

Stephen King, head of public affairs at CABE, welcomed the review. He said: "We'd like to see the process speeded up. We think there's too much financial risk in the bidding process."

In an associated move, the Major Contractors Group has been asked by the NHS private finance unit to second a PFI expert as part of the drive to speed up the process.

MCG director Bill Tallis said: "They are to provide a more skilled resource in the private finance unit."

n Contractors have prequalified for three hospital PFI projects 鈥� the 拢125m Newcastle hospitals scheme, the 拢96m Oxford Radcliffe project and a 拢75m hospital in Portsmouth.