The Agency reduced the initial upgrade works to make the project affordable

2.36  In August 2003, the Agency became concerned about the affordability of the project and initiated an internal, eight-month review of the scope and justification for the NRTS. During the early stages of the review, the Agency reduced the amount of fibre optic cabling included in the initial upgrade works from 278 kilometres to 110 kilometres. The Agency focused on establishing a high capacity, resilient trunk telecommunications system to carry signals over those lengths of the motorway telecommunications network that together created a core "figure of 8" (Figures 16 on page 28 and 17 on page 29).

2.37  The affordability changes reduced the present value of the expected initial capital investment from about £140 million to £115 million (2004 prices). The consequential reduction in the contractor's debt requirements resulted in a lower unitary charge. The Agency transferred some of the omitted work (Figures 16 and 17) into its programme of uncommitted projects, which, at award of the contract, collectively had a present value of £260 million (2004 prices). While the transfer did not alter the present value of the NRTS project, it has the advantage of removing from the unitary charge, expenditure that in due course might not be needed. If the Agency decides, in the future, that it wants some or all of this wider coverage, it can order the changes through the pre-priced schedule of additional works.

2.38  During the preferred bidder stage, the procurement team examined GeneSYS's prices for both the base case and high demand scenarios by applying the same telecommunications and pricing knowledge used to prepare the public sector comparator. While the team concluded that GeneSYS's cost inputs for the unitary charge and future variations were reasonable, the Agency was not prepared to accept costs that GeneSYS wanted built into the unitary charge that related to future additional works. During the negotiations, GeneSYS agreed to re-assign the disputed costs to prices for future additional works.