TheHighways Agencyspent £10m too much on
professional advisers when it procured a new telecoms network for
England's motorway network, says the National Audit
Office.
The procurement process lasted five years, more than twice as
long as the agency had originally expected. Two well-qualified
potential bidders dropped out during a 17-month shortlisting
process, leaving just two in the running to be preferred
bidder.
In September 2005, the Highways Agency awarded GeneSYS
Telecommunications a 10.5 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 roadside devices, the agency will pay GeneSYS
£3.9m per month, subject to deductions if service levels fall
short.
But the agency spent more than £15.5m on professional advice -
more than £10m above its initial budget, said the National Audit
Office.
Against a comparable figure of £385m for the PPP, the agency
estimated that the cost of a conventional procurement would be
£415m, after including an allowance of £85m 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, "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," said Burr.