1 The strategic road network in England consists of 4,800 miles (7,700 km) of trunk roads and motorways. The Highways Agency (the Agency), an executive agency of the Department for Transport, is responsible for the network. In the past, the Agency's focus was on building and maintaining roads rather than managing their operation. In 1998, the Government announced that the role of the Agency was to change to that of a network operator with objectives to reduce traffic congestion through improved traffic monitoring and travel information.
2 The Agency considered that it needed improved motorway telecommunications systems to carry live data about traffic conditions. Most of the Agency's existing systems were the result of nearly 40 years of piecemeal development. Along the motorway network, the telecommunications systems used copper cable to carry voice and data signals, but transmission capacity was limited. By 1998, the Agency had installed fibre optic cable along half of the motorway network, principally to carry CCTV camera images. Parts of the network had been upgraded to digital technology, but most areas used obsolete analogue equipment which was no longer supported by the telecommunications industry. If left unaddressed, the continued use of analogue technology would have left the Agency with insufficient capacity to fulfil its role as a network operator.
3 The Agency decided to upgrade all its telecommunications systems to digital technology. The work would include laying 278 km of high transmission capacity, fibre optic cables to the existing 2,222 km fibre optic cable network (Figure 1 overleaf). After receiving first round bids, the Agency, on affordability grounds, reduced the amount of cable laying to 110 km. Some omitted lengths were not dropped from the project but transferred to a programme of future investment that the Agency can call off from a pre-priced schedule of additional works, when the work is needed and funding is available. By the time of the award of the contract, other lengths had been completed by the Agency (Figure 2 on page 7).
4 In September 2005, the Agency and GeneSYS Telecommunications Ltd, a special purpose company owned by Fluor Corporation and HSBC, signed a 10½-year Public Private Partnership (PPP) contract to upgrade, operate and maintain the telecommunications cables and transmission equipment located alongside the English motorway network. The Agency structured the contract so that:
■ Upgrading and operating the telecommunications systems were captured in a PFI type structure. As is common with this type of arrangement, GeneSYS agreed to finance the upgrade works and in return will receive a contractually set, monthly charge of £3.7 million (2004 prices) from the completion of the upgrade through to the end of the contract, provided the services meet the Agency's performance requirements.
■ The Agency can order changes to the telecommunications systems (including extensions to the coverage of the fibre optic cabling) from the pre-priced schedule of additional works. Under the related provisions, GeneSYS's prices cover the direct costs of all the work required to implement the ordered changes.
The eventual lifetime cost of the contract therefore depends on the number and value of additional services ordered from GeneSYS. At contract award, the Agency assumed that the 2004 present value of its payments under the contract would be £385 million, the mid-point of a range from £255 million to £515 million (2004 prices), depending on the value of the called-off additional works.
5 From October 2007, following a two-year upgrade of the cable network, roadside devices such as message signs and CCTV cameras may now be linked to traffic control centres through up to date digital telecommunications systems. This project is known as the National Roads Telecommunications Services (the NRTS).