CONFIDENTIAL
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a
(a) All that the MTSG was seeking at this stage was an
undertaking from the British Group that they would
try to meet the requirements which the Government
had thought it necessary to lay down, rather than
commitment to meeting these requirements. If at
some point in the exercise, the British Group felt
unable to meet one or more of the critical require-
ments, it would be understood that this would
disqualify the British Group from entering into
negotiations for the contract.
(b) There seemed to have been some misgivings about the
Government's requirements, but there was nothing
mysterious about them. Put simply, the MTSG, having
sought and received advice from the world at large,
and having held protracted discussions with various proposers (particularly the four consortia), had now
decided on how it thought the project should be
handled. In other words, the requirements represented
a distillation of the advice which the MTSG had
received. Inasmuch as this had been their origin, the
requirements were not something to which the Government
felt absolutely committed, and the MTSG would be
prepared to consider further proposals for modifications
:
(c) As regards the $5,000 million ceiling, the figure did
not represent a best offer which had so far been put
forward. Basically, the figure had been derived from
the MTSG's assessment of the cash-flow implications
of the various proposals received. It had become clear to the MTSG that, even with a Government equity injec- tion of $800 million, and even assuming a revised fare structure (which was about 15% higher than that set out in the "Relevant Papers" booklet of July 1972,
CONFIDENTIAL
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