26 Running parallel to the preparation of the Comparators, and forming the second part of the overall financial analysis, London Underground has been undertaking a bid evaluation process.
27 London Underground prepared and is following a thorough and comprehensive bid evaluation strategy to identify which bidder has submitted the most economically advantageous bid. The competition for the two deep tube infrastructure contracts is further advanced than that for sub-surface lines. Six bidders submitted initial bids in March for two deep tube contracts5 on the basis of a fixed Infrastructure Service Charge and target performance levels. The initial evaluation resulted in two bidders being shortlisted in July for each infrastructure contract. The shortlisted bidders then submitted Best and Final Offers in November.
28 The initial evaluation sought specified qualities in the bidders. These were: ability to deliver the required performance; asset stewardship, including evidence of safety and environmental competence; stewardship of London Underground's staff; acceptance of the principles of partnership; and value for money compared to the Comparators. The Best and Final Offer instructions are designed to build upon the initial bid submissions.
29 During the evaluation of the Best and Final Offers, London Underground is considering bid deliverability, together with technical, financial, legal and commercial and risk management factors, including financial robustness. It is also considering organisational factors to judge whether the bidder would be a suitable long-term partner for London Underground. The financial evaluation calculates net present values of payment streams implied by each bid and estimates the ranges of highest and lowest values for each bid.
30 Financial adjustments are being made in four categories: financial, technical, impact on London Underground's costs, and legal and commercial. These will take account of areas where there are doubts about or qualifications to aspects of the bids. Bids will also be adjusted for the additional or reduced customer benefits flowing from the different levels of performance bid to the extent that these are judged to be credible.
31 The estimated ranges of each bid are being compared to the Comparators to inform the value for money decision. London Underground is comparing these costs over the whole 30 year contract period, and also over the first 7½ years. The purpose of the 7½ year comparison is to consider the reasonableness of bid profiles and to protect against bidders attempting to bid low to win the contract and then adjust prices upwards following the first periodic review after 7½ years.
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5 Three for each of the deep Tube contracts.