Transport for London (TfL) is to award a contract worth up to £380m to maintain and upgrade a key communications system for the London Underground without competition after admitting that it has ‘no reasonable alternative’.
The body, which comes under the control of London mayor Sadiq Khan, has published a voluntary ex ante transparency notice for a contract award without prior publication.
The contract will be awarded to contractor Thales, the only shareholder in special purpose vehicle CTL that is active in the provision of services under a PFI contract dating back to 1999, which is due to expire next year.
Shashi Verma, chief technology officer at TfL, said: 'Having considered the current telecoms market, TfL intends to enter into an interim contract with Thales Transport and Security Limited (Thales) to continue providing the Connect radio system for four years, with an option to extend for a further three years.
'Doing so will allow us to get best value for money, ensure the continued operation and safety of the London Underground as well as deliver upgrades and extensions to the system.'
The notice claims that ‘for technical reasons and reasons connected with exclusive IP [intellectual property] rights, there is currently no reasonable alternative to LUL engaging Thales under the Interim Contract’.
The value of the contract over the full seven years is stated to be £380m, of which £110m is ‘likely to be subcontracted to third parties’.
The original PFI contract covers the Connect digital radio and transmission system, which provides voice radio between LUL control centres and train drivers, safety alarms for drivers and other staff, fixed cable voice and data connections between stations, and other links.
The notice explains that Thales is responsible for the operation and maintenance of the Connect system, which uses a TETRA (TErrestrial Trunked Radio) radio system supplied by Motorola as contractor to CTL, using its Dimetra product.
At the expiry of the PFI, the Connect system assets will transfer to LUL. However, the notice states that ‘Thales has the essential know how to build, integrate and commission the upgraded radio system without disrupting the railway operations. As Motorola owns the exclusive IP rights in the Dimetra product, the necessary upgrade to the radio system can only be delivered with Motorola’s involvement (as contractor to Thales).’
According to LUL, it came to the conclusion that there is ‘currently no reasonable alternative’ but to extend its use of the Connect system ‘having considered the current telecoms market, such as other TETRA solutions, 4G/LTE, 5G and FRMCS’.
The notice states: ‘Recognising the need to ensure the continued operation and safety of the LU railway, it is essential that some hardware and software in the Connect system is upgraded, such as the core radio system and the entire dispatcher control system.
‘This will require extensive intrusive work on the Connect system to design, install, test, commission and deploy these elements without interrupting the LU railway services, all of which work needs to start this year and is anticipated to take 2 — 3 years to complete (i.e. will start before the end of the PFI Contract and will not complete until after expiry of that contract).’
LUL says it will ‘at the earliest feasible opportunity either bring the services in-house or run a competitive procurement process for such services’.
However, it adds that it ‘needs to be able to do this at a time and in a manner which does not put LU railway operations at risk whilst undertaking upgrade works to the Connect System'.
The notice breaks down the potential £380m cost of the interim contract as follows:
Estimated fees until 21.11.23:
- asset management, support and maintenance fees of £120m,
- contemplated upgrade works of £40m, some of which are needed and some optional (at LUL's discretion),
- estimated additional variation works of £55m,
Estimated fees from 22.11.23 until 21.11.26:
- asset management, support and maintenance fees of £90m,
- contemplated upgrade works of £40m, all of which are optional,
- estimated additional variation works of £35m.