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New Contracts For Maintenance Of Trunk Roads
23/01/2001
Scottish Transport Minister Sarah Boyack today announced the intention to award four new contracts which will play a key part in the overhaul of the Scottish trunk road network over the next five years.
These contracts, worth over £350 million over 5 years, are part of a record level of increased funding for transport in Scotland. Competition for the contracts was run in accordance with UK and EC law.
The contracts will be awarded on completion of an urgent independent re-view of one aspect of the assessment process. The use of tender assessment quantities has featured prominently in the recent proceedings in the Court of Session. While the Minister is confident that the quantities issue is not relevant to the outcome of the competition, in the light of concerns expressed she has asked Halcrows, in association with PriceWaterhouseCoopers, for an urgent report.
In announcing the result of the tendering which, subject to this review, will mean that AMEY and BEAR Scotland Ltd win two contracts each, the Minister said:
"The Scottish Executive is committed to improving the condition of our trunk roads. We are investing heavily in Scotland's transport system to counter the effects of decades of underfunding. The roads maintenance contracts follow the recent announcement of record levels of Government support for local roads.
"The competitions for the four new maintenance contracts attracted very keen bidding. Although all tenderers offered the quality of services we require, the cost of the winning bids are in total some £250million lower than the cost of the poorest bids over the five year core of the contract.
"Government policy is to extract maximum value for every pound of taxpayers' money. Running a contract competition achieves this aim fairly and is in accordance with UK and EC law.
"We invited public and private sector operators to bid. We expected local authorities to draw on their economy of scale strengths to present highly competitive bids. Equally, the growing experience of the private sector was thought likely to bring stronger bids from that quarter than in the past.
"In the event, the private sector tenders offered very substantial savings over the prices submitted by the local authorities - a difference that the Executive, as guardians of taxpayers' money, cannot ignore.
"I fully understand that the competition result will be disappointing to local authorities. I would stress, however, that councils can still tender for repair contracts and sub-contract work which are expected to be substantial across the network. In addition we are investing heavily in local road maintenance - the capital allocations for local authorities which Angus MacKay announced in December include an additional £70 million for local roads over the next three years . Local road work is, of course, by far the major part of local authority road maintenance activity.
"The new arrangements involve a considerable reorganisation of the way maintenance services will be delivered across the trunk road network and the possibility of redundancies cannot be ruled out. However, I expect TUPE [Transfer of Undertaking (Protection of Employment)] regulations to apply.
"Both AMEY and BEAR have a good track record in looking after the interests of transferred staff. I would expect discussions between these companies and Councils and their staff about future employment opportunities. As the experience of contract changes in England proves, a large number of Council employees will be required to work for the new contractors. The Councils will retain key staff to maintain the local road network and also have the capability to sub-contract for trunk road work."
AMEY submitted the best bid in the competition to take over maintenance in the south east and south west areas and this will complement the maintenance activities they already perform on the 90km of the southern section of the M74/A74(M) in Scotland. They have also undertaken local road maintenance since December in a Public Private Partnership with North Lanark Council.
BEAR submitted the best bid in the competition for the North East and North West Units. The two AMEY contracts were assessed at being worth £176m over the five year period, a saving of £50m over the previous arrangements, and the BEAR contracts at £182m offered a £25m saving.
When the review is complete the contracts will be signed and the new companies will take over responsibility for the roads on 1 April 2001. They will spend the intervening period developing plans and systems and procuring the necessary plant depots and staff required to carry out the work.
Under the terms of the competition, the new companies will be responsible for obligations to staff arising under TUPE. Each of the companies is very experienced in delivering road maintenance, with an extensive range of contracts for the Highways Agency and local authorities in England. Each company has a well developed process for looking after the interests of transferred staff and has successfully transferred thousands of staff through previous contracts.
Background
- The competition followed a consultation exercise launched in spring 1999.
- The Minister announced in December 1999 that a competition will be held for four Operating Companies to maintain Scotland's trunk roads under five-seven year contracts.
- Tenders were issued in May 2000. The tender period involved intensive discussions between the bidders and the Scottish Executive with 48 individual tender consultation meetings and 150 tender bulletins. Because of the extent of the interchange and dialogue between the Scottish Executive and bidders, the tender submission date was extended from 27 September to 30 October.
- The contracts are for the provision of road services for the day to day maintenance of the trunk road network. This includes professional and managerial services as well as work such as sweeping, grass cutting, gully emptying etc, patching the road surface and undertaking repairs to the fabric of the network. The new operating companies will require to put to tender individual repair schemes valued at £150,000 or over, to ensure that a viable road repair industry is maintained outwith the contracts. The new operators will also be responsible for salting the roads and keeping them free of snow during the winter months.
5. This announcement of the outcome of the tendering process follows closely on the announcement, by the Minister for Finance and Local Government on 7 December, of record levels of Central Government grant support for local councils for the next three years, and a 40% increase in the allocations for local authority capital investment.
6. The independent audit being instructed will be undertaken by the Performance Audit Group, i.e. PriceWaterhouseCoopers/Halcrow, who previously audited other parts of the procurement process. It is expected to be complete within 7 days. The terms of reference are
"To undertake an audit to report on the methodology of the quantities aspects of the assessment process, and to test the outcome of the assessment substituting into the calculations local authority figures as quoted to the Court of Session."
News Release: SE0122/2001
23 Jan 2001