Shake-up of design and engineering list comes amid increasing concerns over framework deals

Network Rail is to retender its five-year £700m consultants framework as it seeks to make swingeing efficiency cuts across its supply chain.

It currently has 100 companies on the framework, which covers technical design, specialist engineering, commercial and project management services across its whole business, and is worth £130m annually in fees. Those present include Balfour Beatty, Corus Rail, Jacobs, May Gurney, Scott Wilson and Mace.

It is understood that Network Rail will now seek to split this framework to identify tier-one and tier-two partners, running until 2014. Network Rail is set to issue an open tender in the Official Journal for those who want to take part in the framework, meaning it will not be restricted to the 100 firms.

Building understands Network Rail will then be able to appoint companies directly from tier one without further competition, which is not the case at present.

Tier-two consultants on the new framework will still have to compete for work.

A senior consultant said: “When you have tier-one status you have a ready-made relationships that you just pull off the top and crack on with something.”

The view in the industry is that they are after a BMW for the price of a Ford

Senior engineer

Another engineer said: “Network Rail is trying to ringfence resources by guaranteeing fees but at a reduced rate. The view in the industry is that they are after a BMW for the price of a Ford.” He estimated the new bidding process would cost at least £50k to handle.

The move comes after BAA admitted it was restructuring its £6.6bn framework last month, and at a time when many in the industry are questioning the ability of framework agreements agreed in the boom to last through the recession.

It also follows on from the news that Network Rail is expected to reduce its £4bn track renewal work by 24% under pressure from the rail regulator, the Office of Rail Regulation.

It is understood that Ian Ballantine, Network Rail’s head of procurement and contracts, has been seconded to a task group charged with making the efficiency and cost savings. He has subsequently approached a select group of consultants for feedback on the plans.

He has been replaced on a temporary basis by West Coast Mainline veteran, Stephen Blakey.

Network Rail confirmed that it was consulting on a new two tier system but that nothing had yet been decided.

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