Keeping Procurements on Track

THE PROJECT: HS2's £1.3 billion procurement for a Construction Partner for the design and delivery of Old Oak Common (OOC) Station, a transport super-hub and one of the biggest brownfield regeneration projects in Europe.  OOC Station is one of two London stations to be constructed as part of phase one of the HS2 line (a new high speed railway network). 

OUR ROLE: Acting for HS2 in a claim brought by Bechtel, an unsuccessful bidder who claimed that HS2 had breached its obligations under the Utilities Contracts Regulations 2016. Proceedings were issued in February 2019 and concluded with a 3 week trial in October 2020 before Mr Justice Fraser in the Technology and Construction Court (QBD), with judgment finding in HS2's favour handed down in March 2021.

Early on in the proceedings, we made an Application to Lift the Automatic Suspension allowing HS2 to award the contract to its winning bidder (BBVS), given the impact that the delay of being unable to award would have on the HS2 project overall, including the timeline and costs for the building of the entire project, and the public interest. The sensitivity surrounding the details of this project, both the project timeline and the detail contained within the bids of all bidders, meant it was necessary for complex confidentiality rings to be set up. The majority of work in preparing this case for trial was undertaken during the Covid-19 pandemic, resulting in interim hearings being held remotely and the trial then proceeded on a hybrid basis across three courtrooms in the Rolls Building.

Aside from the main procurement claim, significant commercial issues also arose in connection with the proceedings, including the importance of the project to the UK transport system, the relationship between HS2 (as an arms-length non-departmental public body) and the Department for Transport, the impact of the Oakervee review upon the project and the 2019 General Election.

MAKING A DIFFERENCE: This matter required quick thinking, both contentious and non-contentious procurement expertise, and a lot of preparation (not least because of the wide scale of Bechtel's challenges HS2 had to call 15 witnesses). The determination of both the legal team and the HS2 team saw a successful judgment for HS2, with the 152 page judgment providing helpful analysis for authorities, utilities and bidders on a number of aspects of public procurement processes.

Pioneers in complex finance leasing

THE PROJECT: In order to reduce the acquisition cost for the financing of rolling stock, the German authorities (Aufgabenträger) in 2012 started to include the possibility to support the acquisition of rolling stock by offering either public guarantees or warranties procuring continued use of the trains upon the termination of the relevant concession. 

OUR ROLE: We were representing Netinera Deutschland GmbH as the first provider of transport services in Germany to accept the offer to financially support the acquisition of the trains. The investment volume exceeded EUR 500 million.

MAKING A DIFFERENCE: This project is seen as the first project in Germany in which state guarantees were embedded in highly complex lease structures. We entered new legal territory and created a true piece of pioneer work that served and still serves as blue print for many other transactions that followed this project. 

Working with MerseyTravel

THE PROJECT: The Addleshaw Goddard Bus Services Team are currently advising Merseytravel on its appraisal of how bus services are offered within the Liverpool City region through the development of a franchising assessment in accordance with HM Treasury and DfT guidance. This project has consisted of an in depth analysis of the options now available under the Bus Services Act and a drill down into the risks, benefits and savings of each option, being franchising, enhanced partnership and a reference case of the current voluntary partnership arrangement with Arriva and Stagecoach which we also helped to develop. 

OUR ROLE: In developing the franchising assessment, we have worked with technical and financial consultants to support Merseytravel to further develop its vision for bus and set out a number of bus interventions that support the delivery of the bus vision. We have also undertaken an assessment of the ability of the three main options shortlisted at Strategic Outline Case stage (continuation of the bus alliance, development of an Enhanced Partnership, and development of a franchising scheme) to successfully deliver the bus interventions and wider bus vision. This has involved developing what each of the Enhanced Partnership and franchising scheme delivery options will comprise and a detailed assessment of the financial, commercial and management implications of the different options (including the use data obtained under the Bus Services Act) to support the selection of a preferred option for the Liverpool City Region Combined Authority.

As part of our analysis, we have assessed whether the improvements Merseytravel desires to bus services can be delivered under the different options and we are determining how the different options can act as enablers to the Liverpool City Region's Combined Authority integrated strategy.

From a Financial Case perspective, following the Bus Services Act and related Guidance, we have developed a long-term affordability analysis, including developing a financial model to determine the year-by-year cost (capital and revenue) and affordability of delivering the services, network, fleet and ticketing improvements desired by Merseytravel. For example, this has involved developing outputs for scenarios in which Merseytravel hold the revenue risk, and stress testing the sensitivity of Merseytravel’s net income/expenditure under different operating cost/ farebox revenue scenarios.

We have also developed the commercial model for the shortlisted options, and assessed the contracting and procurement implications of undertaking any given option. In particular, this has involved a detailed assessment of the commercial arrangements surrounding fleet, depots, pensions and other key issues, as well as potential implications of different approaches for levels of competition in the bus market. 

We are currently assessing the impact of covid-19 on the assessment.

MAKING A DIFFERENCE: We have supported Merseytravel and the Combined Authority by giving briefings on the process and emerging options and producing presentation slides for a number of different audiences including the Metro Mayor. We have also provided advice on how best to mitigate challenge risk, supported the development of a clearly documented process, advised on how to protect legal privilege and reviewed public statements for consistency with the business case work and Merseytravel policy.