The Tube contractors are ready to face down a potential deal blocking appeal from London mayor Ken Livingstone.
Tubelines is expected to face down Ken Livingstone's threat of further legal action to block the public private partnership, when it signs its contract to upgrade the Jubilee, Northern and Piccadilly Lines.
Livingstone is believed to want to pursue a recent European Commission ruling that part of the payment to Tubelines and other Underground upgrade contractor Metronet amounted to state aid. The question is whether the increase in the price of the upgrade following selection of preferred bidders amounts to illegal state aid, or whether the increase is the natural result of detailed negotiations over such a complex project.
In October the Commission said it did not consider the difference in prices to be significant enough to constitute illegal state aid.
'Any shift in the value of the contracts for the infrastructure companies in the negotiations that took place after the selection of preferred bidders would be in the margin of change that can necessarily be expected in the negotiations of such complex and innovative contracts, ' says the Commission's statement on the matter.
Livingstone has expressed a strong intention to challenge the ruling, although it looks unlikely to happen before the Tubelines deal is signed. An appeal could take at least two years, but the view from the Tubelines camp is that Livingstone is unlikely to win an appeal, given his failure to challenge the project successfully in the domestic courts. As a result the contractor is keen to press on and sign.
But just to make sure, Tubelines is negotiating a way around this eventuality.
If Livingstone won, the difference between the final negotiated payment and that proposed when initial bids were submitted would have to be stripped out of monthly payments made to Tubelines and Metronet. Instead lawyers for the government and Tubelines are working on a way in which the contractor could be compensated for the removal of this element without replacing it with another subsidy.
Negotiations are complex, and were expected to delay the final signing of the Tubelines deal, previously expected on December 7, as NCE went to press.