This item was published during the term of a previous administration that ended in April 2007
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Boyack Confirms Award Of Trunk Roads Maintenance Contracts
03/02/2001
Transport Minister Sarah Boyack today confirmed the award of new contracts which will play a key part in the overhaul of the Scottish trunk roads network over the next five years.
These contracts, to AMEY and BEAR Scotland Ltd, are worth over £350 million over five years and are part of a record level of increased funding for transport in Scotland.
The bids for AMEY and BEAR represented best value for money. The contracts will result in total savings of £75 million over 5 years, reinforcing Scottish Ministers' commitment to providing maximum value for every pound of taxpayers' money
Announcing the award of the contracts, the Minister said:
"The Scottish Executive's objective is to ensure high standards in maintaining our trunk roads. The award of these contracts reinforces that objective."
The contracts have been awarded following the report of an independent review, by Halcrow in association with PriceWaterhouseCoopers, of the use of quantities in the tender assessment process. The report published today demonstrates that the use of substitute quantities from the local authority consortia which submitted bids does not alter the identification of the winning bidder.
The Minister said:
"We consulted widely before inviting tenders and explained fully in advance how the tender process would work. It was conducted equitably, transparently and fairly and that has been confirmed by three Court judgements and the independent audit.
"We have not made savings at the expense of quality. Those selected to tender all had a proven record in trunk road management and maintenance. In careful scrutiny, all tenders met quality standards and only then were cash bids assessed. Stringent quality requirements in the contracts should lead to standards being above those in existing contracts.
"In the case of all four contracts, the winning bid was substantially below the comparable cost of the current contract for the equivalent work even though qualifying standards had been set higher in the new contracts.
"I fully understand that this outcome will be disappointing to local authorities. But for all four contracts the local authority bid was above both the winning bid and the comparable cost of the current arrangements for the equivalent work.
"In view of the wide public concern expressed on this point, I invited each of the bidders for the four contracts to allow the figures for their bids to be published. Each of the bidders for the North West contract has agreed to the making public of this information for their competition. For the other areas, not all bidders authorised publication. The figures which I can publish demonstrate very starkly the scale of the differences in the bids received."
The following table gives the information which the Executive is able to release.
£m Comparable Comparable Comparable
Bid Values cost at historic costs from costs from
rates and prices best bids LA Consortium
Bid
South East 68.7 52.4 See note 1
South West 119.5 93.3 See note 1
North East 76.0 65.7 See note 2
North West 99.8 89.4 152.0
Total 364.0 300.7 461.8
Total including 17.5% VAT 427.7 353.3 542.6
One year cost 85.5 70.7 108.5
(ie previous row divided by 5)
Savings accruing per annum (£m) 14.9 -23.0
Note 1: The local consortia bidding in these areas did not agree to the publication of figures.
Note 2: One of the private sector bidders in this area did not agree to the publcation of figures.
The tabulation shows the estimated cost for the work anticipated in each unit using:
(a) derived rates and prices from existing contracts
(b) best tenders and
(c) the local authority consortium bids
Thus while the bids from the best (lowest) tenderers offer savings
of £15 million per annum over present costs, those from the local
authority consortia would have cost an additional £23 million.
The difference between the local authority bids and those from the
winning bidders was therefore approximately £38 million per annum,
or £190 million over the 5 year contract period.
The Minister added:
"The new arrangements will involve a considerable reorganisation of the way maintenance servces will be delivered across the trunk roads network. How this will impact on imployment will depend on how new contractors operate. However, I expect the TUPE [Transfer of Undertakings (Protection of Employment)] Regulations to apply.
"The Executive has every confidence in the integrity and fairness of the tendering and assessment process. I recognise, however, that deeply held concerns have been expressed and that there is a desire for further reassurance that the matter has been properly handled. I am therefore suggesting that the Auditor General might be invited to undertake a complete review of the whole exercise from publication of the consultative document through to the award of the contracts. That should provide the totally independent assessment of the process to which Parliament is entitled.
"Now that the contracts have been signed, I look to the successful tenderers to fulfil their obligations and press ahead with all speed to achieve a smooth transition from 1 April"
BACKGROUND
1. The competition followed a consultation exercise launched in Spring 1999.The Minister announced in December 1999 that a competition would be held for four Operating Companies to maintain Scotland's trunk roads under five to seven year contracts.
2. 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.
3. AMEY will operate the contracts for the South West and South East and BEAR Scotland Ltd will operate the contracts for the North West anad North East. The contracts are for the provision of road services for the day to day maintenance of the trunk roads 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.
4. Today's award follows the recent announcement by the Minister for Finance and Local Government on 7 December of record levels of Central Government support for local councils in the next few years and a 40% increase in the allocations for local authority capital investment.
5. The independent audit carried out by PriceWaterhouseCoopers/ Halcrow who had previously audited other parts of the procurement process, had the following terms of reference:
"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 of substituting into the calculations local authority figures as quoted to the Court of Session."
6. The conclusions of the consultants' report published today are as follows:
- None of the tests taken have resulted in a change in the lowest Tenderer in any of the Units.
- The tests have, in a few instances, varied the rankings of the second, third and fourth Tenderers but the lowest in all of the Units have have consistebntly maintained a clear lead.
- With the exception of the North East Unit, the audit of the Scottish Executive evaluation models resulted in changes of less than 1% of the Comparative Cost of Tenders. In the North East Unit, the changes were of the order of 3% and were relatively consistent across the Tenderers.
- The quantities discussed at Court of Session and later provided by some of the local authority consrtia for these tests generally reduced the comparative Cost of Tender for all Tenderes and did not materially affect the outcome of the assessment.
Further details of the report can be obtained by contacting Anita Squires 0131-244 2953
News Release: SE0235/2001
3 Feb 2001