Balfour Beatty to win £200m two-year extension to Tube deal

Balfour Beatty is to be awarded a £200m two-year extension on its London Underground track renewal contract after meeting stringent new performance targets set after the collapse of Metronet.

At the same time Transport for London (TfL) is preparing to advertise for a new track renewal contract which will kick in just before Balfour Beatty's current contract expires in 2011.

The new deal, expected to be worth around £200m, will go to OJEU later this year.

After Metronet went bust in 2007 Transport for London (TfL) renewed its track renewal contract with Balfour Beatty, a former Metronet shareholder.

However, the firm was warned that failure to meet much tougher cost performance and delivery targets would see the contract terminated after 15 months and relet.

This week TfL revealed that not only is Balfour Beatty's track renewal contract to be extended but the extension period will be doubled from 12 months to two years.

A spokesman said: "Following the collapse of Metronet, Tube upgrade and maintenance contracts have been re-negotiated on improved terms for London Underground saving fare and tax payers millions.

"Balfour Beatty are now one of a number of contractors supporting LU in the delivery of its projects, we are about to issue Balfour Beatty with a new contact to maintain and renew track on the former Metronet lines."

Explaining the two-year extension he said: "We have extended the contract by two years because we have to go out to OJEU for the next track renewal contract.

"We will begin that process this year and the two-year extension ensures continuity while we set up another alliance."