Kier has been named as the preferred bidder for a restructured 11-year PFI contract to maintain Birmingham’s roads – but the move still requires government approval.
The firm has maintained the city’s road network on an interim basis since 2020, after a previous deal with Amey collapsed.
Amey was appointed to a £2.7bn 25-year contract in 2010, but it struck an agreement in 2019 to exit the arrangement following a legal dispute with the council.
Since then, Birmingham Highways Ltd, the council’s special purpose vehicle, has been working with Birmingham City Council and the Department for Transport to restructure the highways PFI contract.
Kier and Canadian firm SNC-Lavalin, the parent company of AtkinsRéalis, were last year invited to tender for the revised deal, which covers capital works and maintenance along more than 2,500km of road and 5,000km of footway.
Kier’s services under the new contract would begin on 1 February 2024 and continue until June 2035. Birmingham Highways said that “transitional activity” in preparation for this had already begun after the standstill period expired on 23 October.
But Kier’s appointment to the revised contract is subject to the government’s approval. The city council and Birmingham Highways are currently in discussions with the Department for Transport and the Treasury, who are considering the business case for the revised deal.
Before today’s announcement, the council’s political leadership had claimed the government was set to “pull the plug” on £600m of funding for the highways contract by “letting the clock run down on the appointment of a new subcontractor” before the February deadline.
Natasha Rouse, chief executive of Birmingham Highways Ltd, thanked Atkins for its “engagement and professionalism throughout the tender process”.
She added: “This announcement is a major milestone for Birmingham Highways Ltd, Birmingham City Council and all our stakeholders, who have been working diligently with us to restructure this contract and provide long-term value and investment for Birmingham.
“We are excited to move forward with Kier and begin delivering the full scope of investment into Birmingham’s road network from February 2024.”
James Birch, managing director of operations and maintenance at Kier Transportation, said: “We’re pleased to be appointed as preferred bidder for the Birmingham Highways Ltd contract. We have been delivering maintenance and repair services across the city’s extensive road network since April 2020.
“Appointment to the contract will allow us to continue to deliver a safe and sustainable transport network in Birmingham.”
The government appointed commissioners to oversee Birmingham last month after the council announced in September that it was unable to balance its budget. The local authority is facing a liability for unresolved equal pay claims that could reach £760m.