Leading civil engineers have attacked the way Transport Scotland procures major projects after US giant Fluor pulled out of the race for the £295M Borders railway design, build finance and maintain concession.
They have accused Transport Scotland of being over prescriptive and leaving little room for contractors to innovate.
The US engineering firm confirmed it had pulled out the New Borders Railway consortium on 9 November. The consortium now comprises Miller Construction and Uberior Infrastructure Investments, owned by Lloyds Banking Group.
Fluor’s decision comes just three months after global giant Vinci Construction pulled out of the bidding for the £1.2bn Forth Replacement Crossing in August.
Both of these projects are being procured by Transport Scotland. One senior industry source told NCE that the Scottish government agency is a “very prescriptive client” which can give contractors “a thrashing”.
Another added that the specification of the Borders railway provided by Transport Scotland had left little scope for design innovation. This meant that the tender was “a strict pricing exercise” for bidders, leaving no room for Fluor to use its expertise.
“It came in to add detailed design experience,” the source said.
Both sources said that the prescriptive specification was likely to push up the cost of the projects, as bidders made allowances for meeting the demands of such detailed plans.
“There’s a risk premium for working with Transport Scotland”
“There’s a risk premium for working with Transport Scotland – you have to build in the risk as you’re very exposed as the contractor”
Another source, close to a company that is bidding for work from Transport Scotland, agreed.
“You have to look at the terms of the contract very carefully before you commit yourself,” he said. “Many companies have said, ‘it’s not for us’.”
Transport Scotland defended its approach, saying it had defined its requirements in terms of high level outputs and performance standards for the Borders railway.
It added that it regularly holds market days for all its major contracts, including Borders Railway and the Forth Replacement Crossing to explain to potential bidders the key aspects of the tender competition and what will be required of them.
It said three rounds of market testing contributed to the shaping of the procurement strategy for Borders and that Fluor was involved in all three rounds.
“There is strong competition for both the Borders Railway and Forth Replacement contracts and more generally in Transport Scotland contracts where there has been keen interest from major UK and European contractors in bidding for a range of contracts,” said a spokesman.
Three consortiums are currently bidding to design, build, finance and maintain the Borders railway for 33 years. The two other bidders are a consortium made up of Sir Robert McAlpine, Spanish based Iridium Concesiones de Infraestructuras and Carillion, and a bid by Bam. It will be awarded at the end of next year.
Scottish budget due
The Scottish Government is set to prioritise capital spending on projects and will set aside £600M for the start of work on the Forth Replacement Crossing when it announces its budget this week.
Scottish Finance Secretary John Swinney was due to publish the Scottish Government’s draft budget on Wednesday. As NCE went to press it was expected that the Budget will herald cuts in day to day revenue spending.