Wednesday 26 Mar 2003

NETWORK RAIL EXTENDS CONTROL OF RAIL MAINTENANCE - WESSEX AND EAST MIDLANDS CONTRACTS TO BE TAKEN IN-HOUSE

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Network Rail today announced that it is to take direct control of all rail infrastructure maintenance in the Wessex and East Midlands areas. This development is part of a three-pronged approach to improve maintenance – ·        Wessex and East Midlands maintenance contracts to be taken in-house, join the  Reading area to create a core Network Rail maintenance operation. ·        Consolidation of three additional contracts into a single new area to be opened to competitive tender next year. ·        Implementation of New Maintenance Programme, a nationwide initiative to take greater responsibility for all rail maintenance activities. Wessex and East Midlands rail maintenance to be taken in-house Network Rail is to take direct control of all day-to-day maintenance and inspection activities in the Wessex and East Midlands areas.  This announcement builds on the recent agreement with Amey for Network Rail to take over responsibility for the maintenance of rail infrastructure in the Reading area. - more - Maintenance - 2 The existing maintenance contracts, which are held by Balfour Beatty and Serco, will not be re-tendered when they expire.  The pace of progress will be dictated by the need to ensure a smooth transition. Responsibility for the Wessex area, currently operated by Balfour Beatty, will be taken back within Network Rail at the end of March 2004, the natural expiry date of the existing contract.  The area includes busy commuter lines into Waterloo from Salisbury and Southampton, as well as quieter coastal lines along the south coast including Portsmouth and Weymouth. Serco’s contract for the East Midlands area will be allowed to run until March 2005 (when it is due to expire), at which point the contract will not be re-tendered.  The area includes lines out of London St Pancras north to Leicester, Nottingham and Derby as well as cross country lines to Crewe. Bringing these two additional contracts in-house will allow Network Rail to benchmark maintenance activities and undertake a detailed analysis of the entire maintenance delivery activity.  It will enable the company to become a well-informed buyer of maintenance services and ensure that it achieves the best value for money and an improved network performance. Network Rail remains committed to contracting for maintenance services, to achieve demonstrable value for money and quality of supply.  Infrastructure maintenance companies continue to fulfil a valuable role in providing competition, technological innovation and significant investment in plant and equipment.  In return, Network Rail provides long-term agreements at attractive margins with guaranteed minimum levels of work.  There are no plans to take further maintenance areas in-house unless there are compelling cost and performance benefits. Competition for new Bristol, Gloucester and Exeter area Three separate areas – Bristol, Gloucester and Exeter – are to be combined into one new maintenance area.  Currently contracted out to two infrastructure maintenance companies, Carillion and Amey, the new consolidated area will be subject to formal tender.  This competitive process will commence in the next few months.  The start date for this new maintenance arrangement will be April 2004. - more -    Maintenance - 3 New Maintenance Programme In addition to the changes announced today, all rail maintenance contracts are to be transferred to a fundamentally different contract structure. Network Rail’s New Maintenance Programme (NMP) will ensure in-house engineers make key maintenance decisions. NMP will replace the post-privatisation maintenance regime, which saw responsibility for asset stewardship transferred to infrastructure maintenance companies.  Network Rail will determine what work is to be done, when it is to be done and carry out inspections to ensure that it has been completed to a high standard. The New Maintenance Programme contracts will be introduced on a rolling basis, starting with Great Eastern and West Anglia this summer.  This nationwide change will be completed by April 2004. John Armitt, Network Rail Chief Executive said: “We are taking positive action to reduce costs and improve performance of the network. Bringing these contracts in-house will help us to understand the reasons why costs have risen and obtain a clear understanding of the maintenance delivery activity. Improving the efficiency of maintenance will help optimise our renewals expenditure; the two are inextricably linked. “I would stress that this development is no reflection on the performance of Balfour Beatty or Serco. We look forward to working with them in future.”

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