7 Under their respective PPP Contracts, Metronet and Tube Lines were obliged to comply with all of London Underground's 'Category 1' Standards. Clause 9.5 of the Service Contract detailed that for "any works of refurbishment, renewal or replacement to any Asset, [Companies] shall carry out such works in accordance with [London Underground] standards and, following any such works, the Asset shall, to the extent of such works, comply with [London Underground] standards".
8 In practice, Metronet and Tube Lines' interpretations of Standard E 1008 Category 1, differed from London Underground's, particularly when London Underground revised the wording of the standard after the PPP commercial agreements were substantially agreed in May 2002. While Metronet and Tube Lines agreed that standards must be followed in performing all their work, London Underground required they make all existing non-compliant items, that fell within the scope of their work, comply with the standard.
9 The compliance of assets with the standards was assessed in 'non-compliance reports'. Metronet's failure to produce non-compliance reports early enough to satisfy London Underground led to a significant amount of delay in the design phase of station projects. On several occasions, Metronet failed to comply with good industry practice by submitting non-compliance reports at the same time as producing detailed designs. As a result, London Underground would not sign off key documentation, and regularly made retrospective demands for various non-compliant assets to be included in the scope of stations works. This led to duplication of design work and the disruption of construction work, although London Underground told us that on occasion it allowed stations to go ahead without assets achieving compliance.
10 In a letter sent to London Underground in June 2004, Metronet explained that it had not prepared its original bid on the basis of London Underground's interpretation of the revised Standard E 1008 and that this would have significant cost implications across its SSL station programme. Metronet estimated that it would cost an extra £26 million to assess all station assets for compliance with London Underground standards.