Hunt for next roads contractor as Amey strike £300m exit deal
THE urgent search is on for a contractor to start fixing Birmingham’s roads and pavements after Amey struck a £300 million deal to end its relationship with the city council.
The deal will see Amey pay £215 million to cut short its 25-year, £2.7bn highways contract, with another £85million paid off in disputed fees and fines.
In a short joint statement, the city council and Amey said: “A consensual settlement agreement has been signed for Amey plc to exit the Birmingham Highways PFI contract.
“As part of the agreement, Amey will continue to provide services until a replacement contractor is found to deliver those services on an interim basis.
“That interim replacement will be sought as soon as possible, but will be in place no later than April 1 2020.
“The full re-tendering of the project to find a permanent replacement contractor will take place dur
ing 2020-21. All parties will be working closely in the coming months to ensure the smooth transition of services and staff.”
Amey has been desperate to pull out of the deal, which has been blighted by a five year legal battle and increasing acrimony.
City chiefs agreed last month they urgently needed to end the ‘failing’ deal with Amey amid mounting anger about the city’s potholed roads and poorly-maintained pavements.
In a damning report the city council accused the company of failing to meet professional standards of workmanship, not doing urgent repairs quickly, and being ‘unreasonable and argumentative’ when pulled up on its failings.
On its part, Amey accused the council of imposing unreasonable penalties – including a whopping £48.5m bill for failing to replace two pairs of bollards on a city street.
Amey’s parent company Ferrovial announced the agreement to the Spanish stock market on Saturday, June 29, which stated: “Amey, a subsidiary of Ferrovial, has reached an agreement with the rest of stakeholders to terminate the Birmingham Highways PFI contract. The agreement involves the payment of £215m, of which £160m will be paid in 2019 and the remaining £55m over the next six years.”
It adds: “Amey will continue to provide services on an interim basis until 30 September 2019, and this period may be extended until 31 March 2020.”
According to the Financial Times, the deal also averts the risk of a Carillion-style collapse for Amey, after Ferrovialwrote off EUR774m (£670m) on the company in February and refused to provide a guarantee for the business.
Amey is one of the biggest outsourcers in the UK. It employs about 19,000 people, providing services from maintenance for the Ministry of Defence, transport for prisoners for the Ministry of Justice, to road and water pipe maintenance and private finance initiative projects for schools. Around 400 people are directly employed on its roads contract in Birmingham.