London boroughs ‘wait and see’ over highways service collaboration

Half of the eight London boroughs whose term highway maintenance contracts are up for renewal next year remain undecided on whether to use new pan-London contracts.

Camden, Islington, Lewisham and Southwark are adopting what the latter referred to as a “wait and see approach” to the London Highway Alliance (LoHAC) collaborative contracts due to launch in April 2013. A number of other authorities whose contracts are due to expire in 2014 or later are also not yet committing.

Southwark last week decided to go out to tender on its own and to then compare the competitive tenders that it receives with the returned LoHAC tenders, “in order to identify the most economically advantageous option”.

The authority will seek savings on its current two separate contracts for term maintenance and transport planning held by FM Conway and Mouchel by tendering for one integrated contract.

Officers advised the cabinet  that the 5-15% savings projected savings for the pan-London contracts would not be as high for Southwark because “Southwark currently receives the cheapest highways, footways and carriageway maintenance rates in inner London, and these savings are based on the highest and average inner London costs”.

Southwark has twice extended its maintenance contract, most recently by nine months whilst it goes through procurement.

Lambeth and Lewisham are also sourcing a supplier from the market while retaining the option of using the pan-London contracts. A spokesman for Lewisham said: “We are considering using the pan-London contracts. We will consider other options should they not suit Lewisham.”

Similarly, Islington is reserving the right to ‘go it alone’. A spokesman said: “Our strategy isn’t finalised but if the LoHAC rates are unacceptable we will extend our existing arrangements [beyond 2013] and then embark on a new procurement, using the LoHAC rates as a benchmark.”

Camden has also deferred a decision on using the joint contracts; the borough has decided to extend its maintenance contracts from 2013 to 2016.

Chris Tunstall, consultant for the Transforming London’s Highways Management project that has embarked upon the collaborative procurement, commented: “Collaborative maintenance contracts have never before been done on this scale, so we appreciate that it’s a leap of faith. But once the tenders are back, people will see how attractive the rates are and will want to use the contracts.

“With the pathfinder collaborative maintenance contract for Barking & Dagenham and Havering we made savings of 27% on street lighting and 28% on highways maintenance.”

Tunstall was “very pleased” that a dozen boroughs, including  Barnet, Bexley, Brent, Bromley and Kingston, were taking part in the project and planned to use the contracts at least as a top-up to other contracts.

Ten providers have been shortlisted for the four sub-regional pan-London framework contracts  for delivering the full range of highway services and will be invited to bid at the end of this month.

Discuss this and more at LTT's Future of Highways Delivery Event on the 21 March 2012