A report into Government’s proposed airport development plans has identified several areas of the deal that could still be improved.

The public private partnership with Canadian Commercial Corporation (CCC) has been the subject of intense public and political debate, with the Opposition claiming underhand dealings and calling for the project to be put out to competitive tender.

The accusations have been rejected by those involved in the project to redevelop LF Wade International.

The 200-page Deloitte appraisal, which was tabled at the end of May by Finance Minister Bob Richards, breaks down the proposed redevelopment into five categories: the strategic, economic, commercial, financial and management case.

It says the strategic case for the project is the most “well-defined and comprehensive”, but suggests that the commercial case requires more work.

“We identified key gaps in evidencing that the sole-sourced procurement approach that was selected will offer the best value for money, and in the Government approach to delivering value for money (VFM) through commercial negotiations,” the report states.

“Closing the major gaps in this case before a concession agreement is negotiated, and indeed potentially to make sure that the development agreement itself is robust from both a commercial and overall VFM perspective, could add significant value and substantially reduce risk for the Government of Bermuda.

“This might include establishing the preferred procurement approach going forward from the present date, as well as providing a value driving framework to ground the rest of the procurement process.”

Previously, Mr Richards had told the House of Assembly that the findings in the report were “not surprising” and that Government still had the chance to close the gaps identified before entering into any contracts.

Mr Richards also noted that Green Book prescriptions assume a competitive bid process and Bermuda Government is not obliged to follow these HM Treasury standards.

The report states that “key, integral steps” are not present in the economic case, which looks at whether the project represents best public value.

“These include an economic assessment of a defined list of options to identify the most economically advantageous solution for Bermuda, and some specific Green Book and wider best practice considerations, such as use of a Public Sector Comparator, and optimism bias assessment,” the report states.

“Under Green Book guidance, this analysis is expected to be performed by Government prior to engaging with potential suppliers such that the most economically advantageous solution for the Government is identified in isolation from private sector influence.

“The detailed methodology review and assessment also highlighted several key gaps, including: most notably, there has been no longlist of options identified, shortlisted and assessed for NPV [net present value], the wider economic impact, risks, and non-monetary benefits.

“The economic case does not yet appear complete, based on the documents we have received from the Government of Bermuda.”

The report also suggests that Government should develop its own assessment of the VFM of CCC’s proposal.

It states: “In a sole-source procurement approach, the lack of competitive tension and pressure on supplier pricing can make it more difficult to achieve VFM.

“The documentation we have viewed does not set out how CCC selected Aecon, how their process follows best practices, or how competitive tension in the supply chain between Aecon and their competed subcontractors would benefit the Government.

“Overall, the commercial case is the area where we believe the Government of Bermuda could add most value to the process and substantially reduce risk by developing the case further.”

• For the final Deloitte report, click on the PDF link under “Related Media”.