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Highways Agency under fire for poor cost controls

The Highways Agency’s cost controls came under fire this week after MPs criticised its procurement of a privately-financed contract for a motorway communications system.

The Public Accounts Committee (PAC) criticised the Agency for spending five times more than expected on procurement of a 10.5 year £415M contract to provide National Road Telecommunications Services (NRTS). Main criticisms aimed at the Agency included allowing the procurement to drag on for five years and cost £15.5M before GeneSys was appointed in September 2005.

During this time bidders dropped out leaving just two. This meant that the final bids were not as competitive as they could have been, said PAC chairman Edward Leigh. "The Agency never had a clear idea about the time and cost needed to complete the procurement," he said. "In updated forecasts, the Agency’s revised budget and timetable were optimistic often by considerable margins."

Among other recommendations were that the agency should exert closer control over advisors. "Public bodies taking forward projects as large and complex as this should learn lessons from the lack of effective control which the Highways Agency exercised over its external advisers," said Leigh. "Agency staff had no time to check what the advisers were doing to earn their money."

The report is the latest to criticise the Agency’s cost control. It follows the scathing Nichols Review in March 2007 which said the Agency
had substantially underestimating the cost of its major schemes (NCE 22 March 2007).

The Agency defended its procurement of the NRTS citing changes in the scope of the works as the reason for the longer development phase and increased procurement costs. The fact that construction finished in October 2007 on time and budget was cited as justification of the time taken and procurement costs incurred. "As with any project of this type and scale, there will be lessons to be learned and we will study the report from the PAC accordingly,” said an Agency spokesman.

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