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.Jump to downloads
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
- ISBN: 9780102953152 [Buy a hard copy of this report]
- HC: 340 2007-2008