The Procurement of the National Roads Telecommunications Services
4 April 2008
Full report: The Procurement of the National Roads Telecommunications Services
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.
“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”
Tim Burr, head of the National Audit Office, 4 April 2008
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.