HC Deb 08 July 1996 vol 281 c68W
Mr. Keith Hill

To ask the Secretary of State for Transport (1) if he will place a copy of the main construction contract for the Newbury bypass in the Library; [35501]

(2) what assessment he has made of Costain Group plc's ability to meet its contractual obligations in the construction of the Newbury bypass; [35504]

(3) what action he is taking to ensure that Costain Group plc will meet its contractual obligations in the construction of the Newbury bypass; [35503]

(4) what estimate he has made of the costs to his Department's budget of a failure by Costain Group plc to meet its contractual obligations in the construction of the Newbury bypass. [35502]

Mr. John Watts

I have asked the chief executive of the Highways Agency to write to the hon. Member.

Letter from Lawrie Haynes to Mr. Keith Hill, dated 8 July 1996: The Secretary of State for Transport has asked me to reply to your recent questions about the award of the A34 Newbury By Pass contract to Costain Group plc. All contractors employed by the Highways Agency are assessed in terms of their financial stability and capacity to undertake the work for which they have applied to be considered. These assessments were applied to Costain Civil Engineering Limited, the construction company within the Costain Group plc which applied to be considered for this contract, and the company met the pre-qualification criteria. In this case, where the contract has been let on the basis of the ICE 5th Edition Conditions of Contract, the immediate responsibility for ensuring contractors meet their contractual obligations rests with the Engineer to the contract. In addition, the Agency is continuing to monitor the financial position of Costain Civil Engineering Ltd and the Costain Group plc generally but has no immediate concerns as to their ability to meet all their current contractual obligations to the Agency, including construction of the Newbury Bypass. We have made no assessment of the costs to the Agency should Costain fail to meet its contractual obligations as this depends on a range of factors, the effect of which will vary with time. The documents comprising the actual contract awarded to Costain Civil Engineering Limited include the detailed Bills of Quantities which contain price information which is commercially sensitive to the company. The total estimated value of the contract at the time of award has already been announced. I have now seen the details announced by the company of their proposed deal with a major Malaysian construction and investment group which, if agreed, would strengthen substantially their financial position. Although the deal is subject to the approval of shareholders, this is a positive development which the Agency will follow closely.