The City of Birmingham has selected a preferred bidder for its £2.7 billion (€3.2 billion; $4.5 billion) highway maintenance PFI – the largest contract of its kind for a local UK government.
Amey, the UK-based provider of outsourced infrastructure management services to the public sector, won the 25-year contract, beating out a joint bid from Laing Roads and French contractor Vinci.
PFI, or private finance initiative, is a standardised procurement method in the UK in which private money is used to fund construction and maintenance projects in the public sector across the country.
The PFI contract will give Amey responsibility for improving and maintaining Birmingham’s highways infrastructure, which includes 2,500 kilometres of roads, nearly 100,000 street lights and more than 850 highway structures and bridges across the central UK city of one million.
The UK government has previously approved £588 million of PFI credits toward the Birmingham highways PFI, which will equate to a revenue grant of around £1.1 billion, or more than £47 million per annum, according to the Birmingham city website. The city has also budgeted £37 million per annum for the project, according to the website.
During the first five years of the contract, Amey will make a “significant investment” to remove the backlog of projects and increase performance standards for the city’s highway infrastructure, the firm said in a statement. It will then maintain and manage the highways for a further 20 years.
Amey said it plans to invite members of the public to give their views on highway maintenance priorities.
Birmingham aims to finalise contract details and sign with Amey in the coming months. Contract implementation is intended to begin in April 2010, city councillor Len Gregory said in a statement.
The contract has been in procurement since October 2003, when the city expressed its interest in securing a private sector partner for its highways infrastructure.
Over that time, it has faced numerous delays and fierce opposition from trade unions, including Unite, the merged organization of Britain's Transport and General Workers Union and Amicus union.
Amey said the Birmingham contract brings it in line to achieve £3.8 billion in new work contracts in the first 7 months of the year.
Earlier this year, the firm won the Area 9 Highways Management contract, where Amey will assume sole responsibility for the management and maintenance of motorways and trunk roads in the UK’s Midlands region. That contract is worth around £400 million, Amey said in a statement.