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Londoners will pay price for contract 'disaster'

22 March 2016

The impact of a failed signalling contract costing millions of pounds is still being felt on Londons underground network, according to a report.

The London Assembly Budget and Performance Committee’s report, TfLs Signal Failure, examined Transport for Londons Sub-Surface Upgrade Programme (SSUP) and the appointment of Bombardier Transport to upgrade signalling on the District, Circle, Metropolitan and Hammersmith & City lines.

According to the report, Transport for London (TfL) paid £85 million to cancel the contract in 2013, two years after Bombardier Transport was appointed. The SSUP is now five years behind schedule and is forecast to cost nearly £900 million more than originally expected, it said.

The committees report concluded that poor commercial expertise and a lack of IT procurement skills meant that TfL was not properly prepared to appoint a suitable contractor for the project.

The work is now not expected to be completed until 2023 and TfL has increased the budget for the Automatic Train Control (ATC) element of the programme by £886 million.

TfL has estimated that there will be 11 million fewer journeys annually, costing £271 million in lost income, the report said. TfL will also have £886 million less to spend on other projects.

The committee, which scrutinises the Mayor of Londons budget spending, also concluded that TfL management was in denial about the progress of the project, allowing it to continue much longer that it should have.

The report said: TfLs strategy for delivering the ATC signalling programme was fundamentally wrong. TfL relied on Bombardier to provide an end-to-end solution. The market is not mature enough to take this approach now and it certainly was not five years ago.

The committee acknowledged that there were few people with the necessary skills. Nevertheless, the lack of suitably skilled people in the wider labour market should have been another indication of the high risk nature of the programme and therefore the importance of getting a good team in place to deliver the SSUP from day one, and of subjecting the programme to greater scrutiny,the report said.

The report recognised TfL had been proactive and implemented procedural changes following a review. However, the broader question about the quality of judgement shown by the senior management team remains,the report said. The next Mayor will have to ensure that TfLs management team is equal to the task of managing TfL.

Assembly member John Biggs, chairman of the Budget and Performance Committee, said the failed contract was a disasterfor London.

Neither TfL nor Bombardiers management teams were up to the task of managing the programme, but it is Londoners that will ultimately pay the price in travel delays and inefficiencies, he said.

What is most remarkable about this affair is that no-one at TfL has been held to account, and the Mayor, who chairs its board, serenely and indifferently acts as if a £900 million increase to the budget isnt an issue.  In government, heads political or official would roll after such financial mismanagement.  At TfL the key players have been promoted and nobody was to blame. It is a scandal.

TfL said that work was well underway to upgrade the Circle, District, Hammersmith & City and Metropolitan lines.

The modernisation of these lines, which make up 40 per cent of the Tube network, is vital to our city's future,” said a spokesperson. It was essential that decisive action was taken to end the old Bombardier contract as soon as it became clear that it would not deliver for London. As the Assembly acknowledges, we have implemented the central recommendations from KPMG's independent review of the Bombardier contract which we published in July 2014.

TfL said it was had also reduced its costs by 15 per cent as part of a £16 billion savings programme.

We also have plans to generate £3.4 billion in commercial revenue from property and other assets for reinvestment in improving transport,the spokesperson said.

Bombarider did not respond to SM's request for comment.

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