HomeBusinessORR sets out recommendations to boost competition for railway signalling contracts

ORR sets out recommendations to boost competition for railway signalling contracts

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ORR Signalling Market Report.

The Office of Rail and Road (ORR) has said there needs to be more competition when it comes to railway signalling.

Having conducted a survey of the signalling market in the UK, the rail regulator concluded: “There are essentially two main players in the GB market for major signalling projects, namely Siemens and Alstom. In recent years these two companies have accounted for an increasing share of Network Rail’s major signalling spend.” It added: “Almost all (97%) of the (post-1990) current installed base of interlockings was manufactured by Siemens, Alstom or one of their predecessor companies.”

As a result, it has asked Network Rail to provide a plan to action ORR’s ideas within three months.

Issuing the advice, it said the recommendations would boost competition between suppliers on cost, quality and innovation, and drive greater efficiency and performance across the network. It said they would also take advantage of Network Rail’s buying power.

In a statement, the ORR drew attention to the market currently being valued between £800-900 million. It suggests this will increase as digitisation drives the network’s modernisation and made several recommendations, including:

  • A new approach to procurement aimed at rewarding pro-competitive behaviour, widening the pool of suppliers, and reducing Network Rail’s dependency on incumbent suppliers;
  • Ensuring Network Rail’s procurement processes are run on genuinely competitive terms and do not unduly favour existing suppliers or penalise ‘first movers’ in new technology;
  • Providing suppliers with greater certainty in the volumes of work awarded to them and reducing the risk when developing new technologies.
John Larkinson, ORR

ORR chief executive John Larkinson said: “There are more than 40,000 signals on the mainline network, with 65% of these needing to be renewed within the next 15 years – and essentially there are only two main players in the GB market for major signalling projects, namely Siemens and Alstom, who account for over 90% of Network Rail’s major signalling spend.

“The shift from conventional to digital signalling systems has the potential to revolutionise the way the railway operates, delivering transformative improvements to increase capacity, lower unit costs, and reduce disruption.

“Our recommendations set out how Network Rail can reduce reliance on the dominant suppliers, and make the market more attractive to potential new suppliers by increasing suppliers’ confidence in the market and reducing costs.”

ORR adds that continued cooperation from Network Rail, particularly from the regions, will be the key to the recommendations being successful.

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