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Are track renewals next, Network Rail?
10:05 29 Oct 2003
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The seven rail infrastructure maintenance contractors dumped last
week by Network Rail have been left wondering whether they can ever
trust the client again.
The rail operator made its u-turn decision to take back all infrastructure maintenance contracts last Wednesday, just days after denying rumours that it would do just that (CJ 15 October). Amec, Amey, Balfour Beatty, Carillion, Jarvis, Peterhouse and Serco were informed on Thursday (23 October).
One contractor, who wished to remain anonymous, told CJ he was tired of Network Rail's contradictions. "How can we trust it that renewals won't go the same way?" he asked.
Network Rail's statement, issued last Friday, stated its commitment to the private sector delivering track renewals. When asked if contractors could trust the client to stick to that promise, Network Rail chief executive John Armitt replied: "I think they can."
Since the announcement, contractors' lawyers have been going through the contracts with what one contractor said was a very "fine tooth comb".
Armitt said the contracts are watertight and allow the client to terminate the agreement, resulting in the payment of compensation (as yet undetermined) to the contractors.
"Everything is above board," he said. "We wouldn't have made such a decision without engaging our legal team and making sure it was sound," he said.
However, Carillion and Peterhouse - the contractor with the most to lose, with 25% of its operating profit reliant on rail maintenance in Scotland and the North - did not share Armitt's views.
"It is still early days, but we want some urgent meetings with Network Rail over its decision. The possibility of a breach of contract is top in our list of inquiry," said one Carillion source. "We are shell-shocked, especially as Armitt had gone on record stating that no more contracts would go in-house."
A Peterhouse spokesman told CJ that the announcement was a blow. "We are waiting for the dust to settle, although a possible breach of contract is one issue to be discussed," he added.
Armitt hit back at contractors' claims that bringing the contracts in-house will cost more than the current system. "Well, contractors would say that, wouldn't they?" he said.
The rail operator made its u-turn decision to take back all infrastructure maintenance contracts last Wednesday, just days after denying rumours that it would do just that (CJ 15 October). Amec, Amey, Balfour Beatty, Carillion, Jarvis, Peterhouse and Serco were informed on Thursday (23 October).
One contractor, who wished to remain anonymous, told CJ he was tired of Network Rail's contradictions. "How can we trust it that renewals won't go the same way?" he asked.
Network Rail's statement, issued last Friday, stated its commitment to the private sector delivering track renewals. When asked if contractors could trust the client to stick to that promise, Network Rail chief executive John Armitt replied: "I think they can."
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Since the announcement, contractors' lawyers have been going through the contracts with what one contractor said was a very "fine tooth comb".
Armitt said the contracts are watertight and allow the client to terminate the agreement, resulting in the payment of compensation (as yet undetermined) to the contractors.
"Everything is above board," he said. "We wouldn't have made such a decision without engaging our legal team and making sure it was sound," he said.
However, Carillion and Peterhouse - the contractor with the most to lose, with 25% of its operating profit reliant on rail maintenance in Scotland and the North - did not share Armitt's views.
"It is still early days, but we want some urgent meetings with Network Rail over its decision. The possibility of a breach of contract is top in our list of inquiry," said one Carillion source. "We are shell-shocked, especially as Armitt had gone on record stating that no more contracts would go in-house."
A Peterhouse spokesman told CJ that the announcement was a blow. "We are waiting for the dust to settle, although a possible breach of contract is one issue to be discussed," he added.
Armitt hit back at contractors' claims that bringing the contracts in-house will cost more than the current system. "Well, contractors would say that, wouldn't they?" he said.
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