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Company pulled out of marking contract as it was 'too risky'

A potential bidder for the doomed ETS test contract last year pulled out at the last minute, warning the commercial risk was too high, The TES has learnt.

Logica CMG wrote to the National Assessment Agency (NAA) on the day before the final tender was due to warn that it had decided it would not be in the interests of its shareholders to take on the job.

The company - which has provided IT services for Ofsted, the Department for Children, Schools and Families and the National College for School Leadership - said it was writing the letter in a spirit of "openness and honesty".

The Qualifications and Curriculum Authority, which oversees the NAA, is searching for a new contractor after its Pounds 156 million five-year contract with ETS Europe was terminated after one year.

ETS Europe, the for-profit subsidiary of ETS, a not-for-profit American organisation, said it had lost Pounds 50 million from its involvement in the 2008 Sats, which were beset by widespread problems. Papers went missing, league tables were delayed, examiners unpaid and schools frustrated.

The contract was terminated in August after ETS Europe failed to deliver the test results on time.

The process of appointing ETS begun in March 2006 when David Gee, managing director of the National Assessment Agency, outlined what the contract would involve. He said: "There is no margin for failure, safe delivery is the only option". The two final bidders were Edexcel and ETS Europe.

On November 9, 2006, the day before the deadline, Logica CMG, pulled out of the bid, saying the "commercial risks of the contracts are disproportionate to the financial benefits". Janita Taliadouros, Logica's managing director, public sector, wrote to David Gee, saying the amount of damages that could be claimed if the project failed were "out of the ordinary for the public sector and unreasonable in the context of the project".

The company, she said, also had reservations about the proposed ability of the contract to be terminated due to regulatory changes with no compensation, that inflation on marker fees had to be carried in the five-year contract, but was outside the influence of the contractor, and the rights to "claw back" money that was paid.

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