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South Wales Metro bid 'should have been protected from Carillion collapse'

NCE stock rail

The Welsh Government should have done more to protect Abellio’s bid for the £5bn Wales and Borders franchise from exposure to bidding partner Carillion, an opposition assembly member said.

Plaid Cymru’s economy and infrastructure spokesman Adam Price AM told New Civil Engineer that measures should have been put in place to allow the bid to continue without Carillion, after the construction giant went into liquidation in January. 

Price said: “Certainly, there is this vulnerability that should have been seen, they should really have put in measures when the early profit warnings were there so that if Carillion fell over this bid wasn’t upended.”

Carillion was lined up to be Abellio’s infrastructure management partner for the construction of the South Wales Metro, with Aecom as the design partner on the Abelioe Rail Cymru (ARC) consortium.

But the consortium was forced to withdraw its bid after Amey – part of the rival KeolisAmey bidding team - took over most of Carillion’s rail business last week. Aecom had also bid for the Carillion rail work. The withdrawal leaves just two teams to fight it out for the work.

Price added: “It doesn’t seem as if they put in place a set of measures that would have allowed the main bid to continue if Carillion went under, and that’s a terrible shame.”

Welsh economy and infrastructure secretary Ken Skates said Transport for Wales had raised Carillion’s profit warning and share price drop with ARC in July 2017. ARC considered options but decided to stay with it’s consortium partner. Transport for Wales then required independent financial guarantees by a bank for Carillion’s performance.

Skates said: “When Carillion entered liquidation, Transport for Wales asked ARC to provide a proposal which demonstrated that ARC could still deliver the final tender without changing essential elements of it. The liquidator has since been in discussion with a number of parties to sell Carillion Rail and to secure jobs, and it was possible that through this process, ARC could have secured the relevant capability.”

The £5bn operator and development partner (ODP) contract will see the winning bidder take on the operation of the Wales and Borders rail franchise and the design and construction of a metro-style service on the Core Valleys Lines.

The package also includes subsequent infrastructure management of the Core Valleys Lines (the lines which will be used for the Metro), the operation of rail and related aspects of the South Wales Metro service, and the design and development of further rail schemes in Wales.

Price said: “There’s a real lesson in terms of how this franchise has been structured, it’s a very innovative, competitive approach, but the involvement of the infrastructure partner has clearly tipped this bid over.” 

A spokesman for the Welsh Government said: “We do not comment on ongoing procurement processes. Once the service provider has been appointed we will make further documents, including the full tender document, public.”

Only KeolisAmey and MTR Corporation (Cymru), which is working with Bam Nuttall, are left in the running for the lucrative contract after Arriva Trains Wales pulled out at the end of last year. The Welsh Government said it is on course to announce the winner in May. 

 

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