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Amey tabled three failed bids to exit troubled Birmingham roads contract

Amey

Birmingham City Council has confirmed that Amey tabled three failed offers to free itself from its £2.7bn, 25-year highways PFI contract.

Responding to New Civil Engineer’s Freedom of Information request, the council confirmed that three “formal offers” from Amey had been rejected.

Amey made the offers to the special purpose vehicle (SPV) company Amey Birmingham Highways Ltd, with whom the council holds its highways maintenance and management PFI contract. Amey Local Government (a division of Amey plc) acts as a subcontractor to the SPV and carries out the work under the PFI contract.

While the council would not disclose the value of the rejected offers, New Civil Engineer understands that the bids were in the region of £240M to £300M.

“Under normal circumstances, we would not provide information on commercial discussions conducted under without prejudice privilege. However, the existence of offers from Amey to exit the Highway Maintenance and Management PFI contract is already in the public domain. We can therefore confirm that Amey has made three offers,” Birmingham City Council’s Freedom of Information response said.

“Whilst we can acknowledge their existence as above, we are unable to provide any further details.”

The council and contractor have locked horns over the highways contract, with the council scrutiny committee raising concerns about Amey’s “questionable investment decisions; quality of workmanship; and performance”.

Last month, it was revealed that Amey was fined £50M for taking over a year to replace four damaged bollards.

A spokesperson at Birmingham City Council previously stated that Amey had given “unreasonably short deadlines for acceptance [of its offers]”.

“We understand that the offers Amey has made to the SPV have failed to reasonably recognise the works and liabilities that they propose to leave behind,” the spokesperson said. “Those offers to the SPV have also been made with unreasonably short deadlines for acceptance – in one case as short as two hours.”

The on-going row has damaged the contractor heavily, with parent company Ferrovial slashing Amey’s value to just £88M in a bid to sell the company earlier this year. In its previous financial update released in May 2018, Amey was valued at £748M

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Readers' comments (1)

  • Just because you have the contractual power to drive a contractor to bankruptcy does not mean it is a sensible course of action. Once Amey is gone a new contractor will insist on far more favourable terms which will end up costing Birmingham City Council rate payers dear. Neither side have acted sensibly and both will pay dearly for that.

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