3.1 Private finance projects usually define the outputs required allowing flexibility over the solution. The Agency, however, asked bidders to specifically price a road widening solution, but sought to encourage innovation through variant bids. The bidders told us that their impression, however, was that the Agency focused on the widening, and pursued only limited variants. In early 2007, one of the bidders, FLOW, asked if it could submit a variant bid offering extra capacity through use of the hard shoulder. The early results of the Agency's hard shoulder running trials on the M42 were positive. On average delays were reduced by 15 per cent and journey time variability reduced by 35 per cent.
3.2 The Agency initially considered asking the tenderers to prepare alternative bids for Active Traffic Management whilst it investigated the merits of the approach further. At the time, the Agency considered that Section One was unsuitable for hard shoulder running, due to high traffic flows and closely spaced junctions, but wanted to mandate a compulsory variant bid for the remaining sections. While the Agency estimated that Active Traffic Management would save £300-£440 million on the capital costs for the other sections due to reduced construction, it eventually recommended continuing with the widening procurement because:
• It received advice that it could be exposed to a legal challenge because the variant was a material change to the competition, as the procurement advertisement required bidders to increase M25 capacity by widening specified sections.
• Despite the encouraging early results, there was insufficient data from the M42 trial to reach a firm conclusion on the costs and benefits of Active Traffic Management. A formal report on the monitoring and evaluation of Active Traffic Management was not available to the Agency until October 2007.
• The M42 trial was running at 50 miles per hour on all lanes when the hard shoulder was in use. The Agency considered that, at the time and at this speed, Active Traffic Management would only offer around 35 per cent of the benefits of the widening and capital savings of 23-34 per cent. The Agency acknowledged that hard shoulder running at higher speeds would increase the benefits. At 60 miles per hour the benefits would increase to 80 per cent. Speed limits are needed to address safety issues.
3.3 The Agency recognised that this decision would leave it open to the challenge that there could have been a better value for money solution for the M25. In our view, the Agency did not allow sufficient flexibility in its initial procurement advertisement to pursue bidders' alternative technical solutions. The Agency considers it was unable to do so as it required robust trial data and appropriate engineering standards to specify the detailed requirements.