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Drop lowest bidder awards and save £2bn, says NAO

INEFFICIENT GOVERNMENT departments delivered threequarters of their construction projects over budget in 1999, according to report from public spending watchdog the National Audit Office (NAO) out today.

Up to £2bn of the Government's annual £7.5bn construction spend could be saved if government departments stopped awarding contracts to the lowest bidder, says the report.

Lowest price tenders encourage contractors to claw back cash from the client through variations and claims, increasing the overall life cost of the project, says the report.

However, NAO found that this adversarial approach is often preferred by central government and that partnering is still rejected as an 'alien or threatening process'.

The report also urges the Government to tighten up criteria for choosing schemes as best practice demonstration projects.

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