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Bidders to get £9M compensation if Tube privatisation axed

BIDDERS FOR London's £12bn Tube upgrade will share £57M in compensation if the Government scraps the project 'for political reasons', the Department of the Environment Transport and the Regions (DETR) said this week.

DETR said that if PPP is cancelled before preferred bidders are chosen, each of the six groups bidding for the Tube contracts will receive £9.5M.

If the PPP is cancelled after preferred bidders are chosen they will receive more than second placed groups.

News of the compensation package came as London transport commissioner Bob Kiley resumed talks with DETR over the proposed changes to the PPP contract terms (News last week).

DETR also announced that after contracts are signed, winning consortia will have to pay second placed bidders £7M compensation.

This sum was originally £5M and the increase will be funded through higher payments from the Government to the winning consortia during the 30 year contracts.

Bidders described the extra cash this week as a 'sweetener' to help them cover ongoing costs arising from delays in the announcement of the contract winners.

However, bidders were warned that the increase will only take effect if they have to rebid for the contracts as a result of modifications made to the original contracts by transport commissioner Kiley.

Deputy prime minister John Prescott announced earlier this month that he was allowing Kiley to change contract terms to satisfy safety concerns.

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