CONFIDENTIAL AND PERSONAL
of the consortia, first to establish a fixed price;
second to show that it is less than 54% dearer than
a hypothetical multi-contract price; third to outbid
each other; and fourth to do so within four weeks
for a large contract which will take years to
complete and where the available information is
still scanty.
4. In this situation there is bound to be a
temptation to quote a low figure in order to shut
out the competition, knowing that once both sides
are committed, the detailed discussions will have
to begin. This would, however, as you know be
this contrary to British commercial practice, and, could
put the UK at some disadvantage.
5. I suppose the supporters of multi-contracts
would argue that all this is inevitable, and that
if the consortia cannot make the running, then they
must give way to more conventional methods of
tendering. This would be more convincing if the
conclusion of the paper did not appear to concen-
trate almost exclusively on the crude balance of
pric
eeets against credit terms. As you say the manage-
ment aspect, although mentioned, is thereafter
largely ignored, both as a strain on manpower and
as an additional cost. Moreover the suggestion
that a consortium would have to delay starting
work by up to twelve months is, as far as we know,
the reverse of the truth. The consortium are, we
believe, poised ready to go. It seems less credible
that a new management structure could be set up,
contracts called for and meaningful work begun
/under
NOTHING TO BE WRITTEN IN THIS MARGIN
$65