Setback for Jarvis after rival wins £200m Tube contract

Jarvis, the rail maintenance contractor at the centre of the Potters Bar crash investigation, suffered a fresh blow yesterday after it lost out in the fight for a £200m contract from Tube Lines - the privatised London Underground consortium in which it has a one-third stake.

Tube Lines said that it had awarded the track renewal contract to a joint venture known as GrantRail-Trackwork, one of two other bidders which were shortlisted alongside Jarvis.

The contract is the biggest so far awarded by Tube Lines since it took over the Jubilee, Piccadilly and Northern lines at the start of the year and will enable it to renew or refurbish half the track on the three lines over the next seven years.

Jarvis, which owns Tube Lines along with Amey and Bechtel, put a brave face on the outcome of the bidding. "We do not see this as a setback at all," said a spokesman. "We always said we would only undertake work which met our criterion of producing a 7 per cent margin." He added that, as a shareholder in Tube Lines, Jarvis would benefit from the savings the consortium would make from the contract with the successful bidder.

Terry Morgan, chief executive of Tube Lines, pledged that the track investment would deliver journeys that were "faster, smoother and more reliable".

A Tube Lines spokeswoman said the consortium had been under no pressure to award the contract to one of its own shareholders. "The bid process is independent and transparent. GrantRail-Trackwork was chosen because it was the best tender." The company is a joint venture between GrantRail, itself a partnership between the steel producer Corus and the Dutch company Volker Wessels Stevin, and Trackwork, a family-owned rail business based in Doncaster.

The track renewal order is one of several contracts worth almost £1bn which Tube Lines expects to award in its first year. It has already placed a £160m order for additional trains with Alstom, which it has now emerged will be built abroad rather than at its Washwood Heath plant in Birmingham which is to stop manufacturing rolling stock with the loss of thousands of jobs.

Further contracts for train control systems and communications systems, worth £400m and £150m-£200m respectively, are due to be awarded before the end of the year.

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