Press Release - The Procurement of the National Roads
Telecommunications Services
4 April 2008
The Highways Agency successfully transferred to the private
sector the risks associated with procuring a digital information
system for England’s motorway network. The procurement lasted five
years, however, over twice as long as the Agency originally
expected, and two well qualified potential bidders dropped out
during a 17 month short listing process, leaving just two in the
running to be preferred bidder.
In September 2005, the Highways Agency awarded GeneSYS
Telecommunications Ltd a 10½-year PPP contract to provide
telecommunications services across the English motorway network.
These services, known as the National Roads Telecommunications
Services, are designed to handle data and CCTV images providing the
Agency, and ultimately road users, with moment-by-moment
information on traffic congestion and delays.
GeneSYS agreed to replace, over the first two years of the
contract, the Agency’s obsolete analogue services with up to date
digital, high bandwidth systems. The contractor delivered the new
services broadly on time and without making any claims against the
Agency for additional payments. In return for the continued
successful delivery of the new services to 14,000 road side
devices, the Agency will pay GeneSYS £3.9 million per month,
subject to deductions if service levels fall short.
The Agency’s careful preparation of the contract documents and the
continuity of its staffing contributed to a successful procurement.
But the Agency spent over £15.5 million on professional advice –
more than £10 million above its initial budget.
Against a comparable figure of £385 million for the Public Private
Partnership, the Agency estimated that the cost of a conventional
procurement would be £415 million, after including an allowance of
£85 million for risk. The National Audit Office reviewed the
figures and concluded that it could not judge whether the PPP cost
less than a conventional procurement would have done.
Tim Burr, head of the National Audit Office, said
today:
“The Highways Agency’s procurement identified the risks to the
National Roads Telecommunications Services project and successfully
transferred them to the private sector, conducting negotiations
with the preferred bidder well. It did however take a lot longer
than planned and only two bidders remained through to the end of
the competition. There are good practice lessons both for the
Agency and for other major public procurements”
Notes for Editors:
- The National Roads Telecommunications Services is a project by
the Highways Agency to convert all of its motorway communications
network to digital, fibre optic systems that would carry data as
well as CCTV. It replaced a system that had developed over the last
40 years in piecemeal fashion and was introduced in line with the
Highways Agency’s target to reduce congestion on its network.
- Press notices and reports are available from the date of
publication on the NAO website, which is at www.nao.org.uk. Hard
copies can be obtained from The Stationery Office on 0845 702
3474.
- The Comptroller and Auditor General, Tim Burr, is the head of
the National Audit Office which employs some 850 staff. He and the
NAO are totally independent of Government. He certifies the
accounts of all Government departments and a wide range of other
public sector bodies; and he has statutory authority to report to
Parliament on the economy, efficiency and effectiveness with which
departments and other bodies have used their resources.
Press Notice 21/08
All enquiries to Barry Lester, NAO Press Office: Tel: 020 7798
7937
Mobile: 07748 181 692