Re Contracts

Balfour Beatty PLC 17 January 2002 BALFOUR BEATTY WINS ROAD MAINTENANCE CONTRACTS TO TOTAL POTENTIAL VALUE OF £470 MILLION Further Expansion of Support Services Business Balfour Beatty, the international engineering, construction and services group, is pleased to announce today that its subsidiary, RCS Ltd, has been awarded two major new road maintenance contracts to a total potential value of £470 million. The contracts are to undertake highways maintenance for North Yorkshire County Council, worth £27 million per year for a minimum of six years with possible extension to 10 years, and for Hampshire County Council, worth £25 million per year for a minimum five years, with possible extension to eight years. In both cases, the RCS submissions were successful on the basis of an evaluation system in which technical quality in addition to price was a substantial part of the decision process. Commenting on these contract awards, Balfour Beatty Chief Executive, Mike Welton, said: 'These contracts, which have been won under the government's new 'Best Value' regime, make us a leading player in the growing UK road maintenance market. We now have a road maintenance business through RCS with a projected annual turnover of over £140 million, a confirmed order book of over £500 million and a number of substantial further bids currently under adjudication. 'Balfour Beatty now has an order book of over £1.6 billion in long-term support service contracts with relationship customers, from which we can expect to earn predictable returns.' In North Yorkshire, the contract covers almost 8,000 kilometres of roads, including the North Yorkshire Moors and the Vale of York, and over 1,500 bridges including three swing bridges. It covers the entire highway and bridge network for maintenance work, including winter maintenance, street lighting, gully emptying, rural grass cutting and maintenance of the county council vehicle fleet. From April 2003, some Highways Agency trunk roads will be transferred into the contract. In Hampshire, RCS was the incumbent contractor. The new contract, which is of approximately twice the value of the previous contract, reflects the extension in both scope and coverage, specifically incorporating various district council operations. The contract includes highway and bridge maintenance, including emergency response, winter maintenance, surface dressing, gully emptying, arboriculture and rural grass cutting. Under the new procurement regime for road maintenance contracts, bids are evaluated on both price and technical quality. In North Yorkshire, the decision was based 50% on price and 50% on quality. In Hampshire, the split was 60% on price and 40% on quality. RCS, based in Hook, Hampshire, currently undertakes long-term road maintenance work for Buckinghamshire, Bedfordshire, Surrey and Worcestershire County Councils as well as for the Highways Agency areas 2 and 3. In addition, Balfour Beatty maintains its three PFI road concessions in Yorkshire, Derbyshire and the West Country. The new contracts for North Yorkshire and Hampshire are due to begin in spring 2002. Enquiries to: Tim Sharp Tel: 020 7216 6884 Notes to Editors 1. Balfour Beatty has long-term support service business in a number of areas, including road, rail, premises and utility system management and maintenance. - Balfour Beatty Rail maintains three Railtrack areas in long-term contracts worth approximately £160 million per annum. - John Kennedy maintains gas and water pipelines for Transco and several regional water companies on long-term contracts, to a value of approximately £ 100 million per annum. - RCS Ltd maintains roads for a number of local authorities and for Highways Agency trunk road maintenance areas on long-term contracts to a value of approximately £140 million per annum. - Haden Building Management manages and maintains premises and facilities for clients in the public and private sector on long-term contracts. Its customers include the Benefits Agency, Shell, KPMG, Royal Bank of Scotland, BT, Intel, AWE Aldermaston, Tesco and Sainsbury. Its current sales are approximately £180 million. 2. Balfour Beatty's other services businesses include project and programme management through Heery in the US and Europe, building management controls and security control systems through Andover Controls and Integral Technologies, principally in the US, and a share in the long-term management contract for Devonport Dockyard in Devon.
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