The Highways Agency spent £10m too much on professional advisers when it procured a new telecoms network for England's motorway network, says the National Audit Office.
The procurement process lasted five years, more than twice as long as the agency had originally expected. Two well-qualified potential bidders dropped out during a 17-month shortlisting process, leaving just two in the running to be preferred bidder.
In September 2005, the Highways Agency awarded GeneSYS Telecommunications a 10.5 year PPP contract to provide telecommunications services across the English motorway network.
These services, known as the National Roads Telecommunications Services, are designed to handle data and CCTV images providing the agency, and ultimately road users, with moment-by-moment information on traffic congestion and delays.
GeneSYS agreed to replace, over the first two years of the contract, the agency's obsolete analogue services with up-to-date digital, high-bandwidth systems.
The contractor delivered the new services broadly on time and without making any claims against the agency for additional payments.
In return for the continued successful delivery of the new services to 14,000 roadside devices, the agency will pay GeneSYS £3.9m per month, subject to deductions if service levels fall short.
But the agency spent more than £15.5m on professional advice - more than £10m above its initial budget, said the National Audit Office.
Against a comparable figure of £385m for the PPP, the agency estimated that the cost of a conventional procurement would be £415m, after including an allowance of £85m for risk.
The National Audit Office reviewed the figures and concluded that it could not judge whether the PPP cost less than a conventional procurement would have done.
Tim Burr, head of the National Audit Office, said, "The Highways Agency's procurement identified the risks to the National Roads Telecommunications Services project and successfully transferred them to the private sector, conducting negotiations with the preferred bidder well.
"It did, however, take a lot longer than planned, and only two bidders remained through to the end of the competition. There are good practice lessons both for the agency and for other major public procurements," said Burr.