As the Highways Agency rips up its MAC maintenance contract and calls for much more for much less, contractors are asking whether there is any scope at all for more for more.
Late last year the Highways Agency revealed a new form of contract for maintenance and improvements to motorways and trunk roads in England. The asset support contract (ASC) will replace the existing arrangements, known as the managing agent contractor (MAC) contract, which are used to manage 12 of the Agency’s 13 maintenance areas.
The Agency says ASCs are expected to deliver “substantial savings” over MAC contracts through allowing contractors more flexibility in how and when they do work, with maintenance standards “outcome based”.
“This is yet more screwing down of the supply chain”
Innovation and efficiencies will be incentivised by the Agency dangling the carrot of contract extensions. But there’s a lot of stick in there too – payment will be made through a schedule of rates that features a year-on-year cost-reduction mechanism.
Many contractors are sceptical. “When you consider that there is no new work coming on line for three years at least, this is yet more screwing down of the supply chain,” says one highways director.
“ASCs are a potentially retrograde step,” agrees another. “We see a lot of ‘make do and mend’ coming in, which is retrograde. A lot of our solutions are focused on delivering whole life cost savings, and they do not sit comfortably with short-termism.”
Others believe the dangled carrot of a short contract extension is too small a concession, if the Agency really wants to see best value. “You need more than a five year contract – 10 to 15 minimum – to get the benefit of investing in a new material or approach,” says another highways director.
Perhaps stung into action, at least one contractor – and maybe more – are taking the fight to the Agency, suggesting that instead of reducing their workloads as MACs or ASCs, the Agency could give them additional duties, specifically workload within the Managed Motorways programme.
Managed Motorways is, after all, largely an exercise in carriageway strengthening, modest upgrades, gantry erection and installation of IT systems – all jobs that could conceivably already be done within the remit of MAC contracts and the technical TechMAC equivalent.
“That would be a very interesting line to explore,” a senior contracting source tells NCE.
“It’s going to be a developing picture,” agrees Amey managing director of Inter-Urban business Steve Withers. Amey first mooted the idea of MACs taking on more Managed Motorway work almost two years ago, at the Agency’s 2009 annual supplier conference.
There, general manager of Amey’s Area 9 MAC Peter Bewley told the conference that MACs have a large part to play in the design, delivery and operation of Managed Motorways.
At the same conference Highways Agency programmes & procurement manager Nick Hopcraft admitted that MACs were key stakeholders in the design, safety and operational considerations for Managed Motorways and that there was the potential for a MAC to carry out advanced works such as hard shoulder strengthening.
He also stressed the need for Managed Motorways to be managed as an operation, not a one-off project, an approach that would fit well with the role of the MAC or ASC.
Such a move would certainly cut procurement costs, something the Agency desperately needs. The Comprehensive Spending Review saw the Agency’s budget slashed, with £240M to be saved from reforming procurement.
Its current £2.7bn annual budget has been cut to £4bn over four years and only a few token traditional road widening schemes remain. Schemes worth a total of £2.3bn have already been cancelled or mothballed as a direct result. Even the Managed Motorway programme suffered in the spending review with the government delaying a number of planned schemes.
All of which leaves many wondering what the point of its major projects division is. Take out Managed Motorways and there really is very little point to it at all.
The Agency will have to answer questions over its future structure sooner rather than later. It is facing an unprecedented level of scrutiny from a DfT review of its operation and structure. This work is already underway and will report in October next year.
Contractors will await news with interest.