Contact: Steve Nicholson (Project Director), tel: 02392 841795

1. Summary

1.1 SHRT-1 is the first phase of the South Hampshire Rapid Transit strategy, designed to provide a light rail service connecting Fareham, Gosport and Portsmouth. The project has the highest priority within the County Council's Local Transport Plan. It has regional and national significance, being part of the Government's ten year plan for transport and a key initiative in the draft transport strategy published by the South East England Regional Assembly.

1.2 The County Council and Portsmouth City Council (The Promoters) are promoting the project jointly, under a partnership agreement based on the funding package agreed with Transport Ministers in March 2001.

1.3 Procurement procedures commenced in January 2002 and commercial bids were received from two consortia competing for the contract in December that year. The costs of the project will exceed those allowed for in the current funding agreement. These bids have been improved on through initial contract negotiations and a procurement review undertaken. The Council needs to decide whether to proceed to the next stage of the procurement leading to Best and Final Offers from bidders.

1.4 The following decisions are sought:

(i) That the County Council pursues Option 5, to increase the funding package in agreement with the Department for Transport and Portsmouth City Council, and, subject to confirmation of funding shares (and any cap), proceed to Best and Final Offer.

(ii) That authority be given to the South Hampshire Rapid Transit Joint Procurement Board also to explore Option 3, to reduce the scope of the project and/or revise the allocation of principal risks, as a means of reducing the overall cost of the project.

(iii) That, in order to encourage continued competition, the Promoters offer to underwrite costs of bid preparation for the unsuccessful bidder, subject to the bid meeting the target price, as set out in paragraph 7.15 of the confidential report.

2. Reason

2.1 Clarification bids have now been received from the two Bidders and there is a funding shortfall which needs to be addressed.

2.2 To sustain the commitment of the bidding consortia it is important for the County Council to move expeditiously in reaching a decision over the way forward and any additional funding proposed. Negotiations with the Department for Transport, leading to ministerial decisions, are likely to extend into July, when their final proposals are expected. The County Council and Portsmouth City Council need to be ready to respond to any ministerial proposition in July without incurring further delay, which could impact on commercial assessment of risk and market opportunity.

3. Other Options Considered and Rejected

3.1 Not to pursue the project.

3.2 Delaying consideration of the funding requirement and way forward.

4. Conflicts of Interest Declared by the Decision Maker or a Member or Officer consulted - None.

5. Dispensation granted by the Standards Committee - Not applicable.

6. Reason for the Matter being dealt with if Urgent - Not applicable.

Approved by:...................................... Date: ...................................

Councillor T K Thornber

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