DBFO bidders hit out at risk of first private roads

Contractors bidding for the first wave of private finance roads have written to the Highways Agency to complain about the risks they are being asked to bear - but the complaints have been largely ignored.

As a result, conforming bids for the schemes are set to come in too high to be considered by the Highways Agency.

'If anyone bids low for these schemes then it will be commercial suicide,' said one of the major bidding contractors.

In all, 11 consortia are bidding for the first four design, build, finance and operate (DBFO) roads which vary from the œ190 million A1-M1 link to the œ10 million A69 management. They received the bid documents in January and bids are due to be returned in May.

The firms are spending huge sums of money bidding for the schemes and do not want to be identified because of the sensitive nature of the competition. But those contacted by CJ all had the same concerns about the standard bid which has to be completed by each bidder.

One firm has written to the Highways Agency to object to 15 fundamental 'points of principle' raised in the standard bid document. But the Agency has only accepted one of the 15 as a valid complaint.

'Some of the risks we are being asked to take in the standard bid are not even priceable,' said a source close to the bids. 'We have to price for the standard bid but they will be accompanied by heavy qualifications and may not even conform with the Highways Agency's original documents.'

The contractors say that the bidding process is following the same trend as that for the private prisons. Contractors found that clauses in the prisons' bids were totally unacceptable.

'For instance, if we finished building late the prison could be taken off us,' explained one bidder.

As a result, the bids went in too high and had to be re-bid but this time with the contractors' concerns taken into account.

'That is what we hope will happen with the DBFO roads,' said a bidder. 'Lawrie Haynes will see the high bids, take on-board our concerns and make the contracts more favourable.'

The contractors point out that even if they wanted to accept some of the DBFO clauses the banks, which hold the whip hand in private finance schemes, will have none of it.

'In the end the banks will say yes or no to these contract clauses, and at the moment they don't like them,' said a bidder.

'Only the lawyers are benefiting from these bids at the moment,' he added.

'Our lawyers, the banks' lawyers and the Agency's lawyers are making a fortune poring over the documents because they are so complex.'