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Last BSF deals could be revised

Education secretary Michael Gove will decide next week whether to place “restrictions” on the contracts to build the sample schools salvaged from the wreckage of Building Schools for the Future.

An internal memo to staff at BSF delivery body Partnerships for Schools said councils should be advised to put off drawing up contracts until the position was clear.

It is thought the government may water down the contracts, which usually give BSF contractors exclusive rights to build all schools in the region for up to 10 years.

The memo, seen by CN’s sister title Infrastructure Journal, said: “There is no certainty as to what structure may or may not be permitted, and it is possible [Mr Gove] may conclude that no form of exclusivity is acceptable.”

Mr Gove earlier this month approved all 33 sample schemes that has been under review since the £55 billion BSF programme was axed.

The schemes cover 14 local authorities, 11 of which had appointed preferred bidders for their wider BSF schemes.

These preferred bidders were in line to form Local Education Partnerships with the councils and other parties to deliver multi-million pound secondary school works over several years.

But the schemes were scrapped as they had not reached financial close when the government abandoned the programme in July.

The decision to rescue the small number of sample projects - those lined up to be built first, and which already had detailed designs in place - came after a series of tough negotiations with contractors.

It is understood that firms made it clear they were willing to pursue compensation through the courts for bid costs on scrapped schemes.

There is speculation that the contractors hoped to use the sample schemes to secure exclusivity rights on whatever schools work came up over the next decade in their winning areas.

One source told Construction News this week: “Contractors will obviously be worried that some of the work that was there is now less certain.

“But then those not building sample schools will think that removing exclusivity will provide more opportunities for them in the future.”

Another source said that a watering down of the LEP contracts seemed inevitable since the scrapping of BSF.

“Removing exclusivity would reflect the need to keep things a bit more open-ended. There has been a lot of criticism of the LEP model, and it was tied to the broader BSF picture.”

Balfour Beatty benefited the most from the sample schools rescue with nine salvaged across the Derby City, Ealing, Hartlepool and Oldham schemes.

At a rough average of £10-20 million per school, this would be worth up to £180m to the firm.

The contractor is also in with a chance of building three more samples for Hertfordshire, where it was shortlisted against Sir Robert McAlpine.

Bam Construct saw six schools rescued, at Camden and Somerset, thought to be worth about £120m to the contractor.

Bournemouth Borough Council last week said it was unclear whether it would be able to award its salvaged sample school to one of the bidders shortlisted for the original scheme.

The Dorset council had shortlisted Kier and Balfour Beatty for its wider scheme, but a source told Construction News: “We hope we can continue with the two bidders we have, but we have to look at all the options - we don’t want to fall foul of any procurement laws.”