Whilst praising the likely savings to the Inland Revenue as a result of its controversial property leasing deal with Bermudian consortium Mapeley Steps, a National Audit Office report warned last week that the twenty year deal contains a number of risks that must be managed effectively.
The NAO observed that Mapeley’s winning bid for the management of Revenue and Customs property was some £500 million lower than the other bids for the contract, and its study predicts savings over the next twenty years of some £300 million.
However, the report noted that there were risks attached to such a “keenly priced” bid.
“Its (Mapeley’s) business model has a high degree of fixed costs and is therefore very sensitive to any future shortfalls in forecast income,” the NAO’s report found.
The degree of future risk to the contract additionally depends on the number of other property management contracts the firm wins, the audit office found. So far, Mapeley has won only one other contract, that of Abbey Bank.
The NAO also reserved criticism for the government for failing to have in place a contingency plan should the Mapeley deal fail at some point in the future.
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