It remains the case that “suppliers cannot expect to be bailed out”.

Suppliers enter into contracts rationally, in the expectation of making profits and enhancing shareholder value.

For the 23 reasons stated [1], that expectation is low in the case of the NIS and it is surprising that any supplier would invest all the time and money required, and risk their reputation. Even if IPS can deliver some compensation – and they don’t have a good record on delivery – that isn’t a rational argument for entering into the contract.

Remember that David Davis is on the warpath. He wrote to the Cabinet Secretary over a year ago to tell him so, and to some of the more likely suppliers [2]. He even got into an argument with Intellect about pork barrels [3].

He, and indeed any right-minded public servant, will be checking to make sure that the public do not lose out on these contracts. There is a risk that claiming on IPS’s compensation clauses could take years and could be subject to determination by the courts.

The whole idea of PPP and PFI is that the private sector take the risks. If they turn out to be cushioned from reality at public expense, that defeats the purpose, as Richard Granger understood with NPfIT and Ken Livingstone understood with Metronet and Private Eye remind us every issue.

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1. http://dematerialisedid.com/BCSL/Risk.html
2. http://www.independent.co.uk/news/uk/politics/tories-warn-firms-bidding-for-id-card-scheme-we-will-scrap-the-whole-idea-435236.html
3. http://www.no2id.net/newsblog/?p=532

Wrong. I was at a meeting less than one month ago where the IPS representative clearly said that the contracts to be awarded this year would include compensation in the event of the scheme being cancelled.