Your browser is no longer supported

For the best possible experience using our website we recommend you upgrade to the newest version of your browser.

Your browser appears to have cookies disabled. For the best experience of Construction News, please enable cookies in your browser.

Welcome to the Construction News site. As we have relaunched, you will have to sign in once now and agree for us to use cookies, so you won't need to log in each time you visit our site.
Learn more

Carillion on £3.6bn of transport contracts before collapse

Carillion held contracts worth nearly £3.6bn before it went into liquidation, transport secretary Chris Grayling has revealed.

In a letter to the transport select committee, Mr Grayling listed deals worth £3.6bn between Carillion and the government’s arm’s length transport bodies (ALBs) such as Network Rail, Highways England and HS2.

Mr Grayling’s response followed questions by the committee on the Department for Transport’s actions in the lead up to Carillion’s collapse, and the impact the liquidation would have on UK transport.

Of the 36 transport contracts listed, five were handed out following its July 2017 profit warning (see full table).

These included the two HS2 civils contracts handed to the Carillion / Kier / Eiffage JV in late July, and a £260m contract to electrify the line between London and Corby.

When asked by the select committee whether Carillion was regarded as a “high-risk supplier” when these contracts were awarded, Mr Grayling said Carillion was deemed able to deliver these contracts.

“Assessments of a company’s ability to deliver its obligations are performed during each procurement exercise before the award of contracts,” he said.

“Before contracts are signed there are various layers of governance across the ALBs, department, Cabinet Office and Treasury depending on each procurement.”

It was revealed today that Mr Grayling had employed auditing firm EY to carry out extra financial tests on Carillion ahead of awarding its HS2 contracts.

The letter said EY was hired to carry out checks on the company’s liquidity, interest cover and gearing. Carillion passed all of these extra checks, Mr Grayling said.

The transport secretary came under fire from MPs today over his decision to appoint EY, despite the auditing firm also advising Carillion on its turnaround plan at the time of the appointment.

Following Carillion’s collapse, the DfT said there had been “no operational issues” on any transport projects, and only Network Rail had reported productivity issues on some sites.

The response also chronicled the steps the DfT took in the lead-up to Carillion’s collapse, including to mitigate any impact on projects or costs.

Mr Grayling said his department tested its ALBs’ contingency plans across Carillion’s suite of contracts and came up with a “day one” scenario if the company collapsed. 

He said: “The department worked with the ALBs to develop contingency plans to mitigate any potential impact on programmes.

“This included plans for a ‘day one’ situation if Carillion were to enter liquidation.”

Mr Grayling said the department had brought in a number of extra processes to try to lessen the impact of future liquidations of its strategic suppliers.

These included the creation of a Heads of Procurement Board (HoPB) which will collate and submit contingency information for suppliers deemed at risk.

“The HoPB is creating an agreed group-wide contingency planning approach that can be used to assess strategic suppliers and incorporate lessons learned from previous emergency situations like Carillion,” Mr Grayling said.

Carillion transport contracts held at time of collapse

ContractClientContract letExpected completionValue Other parties involved
Main works civils lot C2 (North Portal Chiltern Tunnels to Brackley) HS2 31/07/2017 28/10/2022 £724m Eiffage and Kier
Main works civils lot C3 (Brackley to South Portal of Long Itchington Wood Green Tunnel) HS2 31/07/2017 08/11/2019 £616m  
A1 Leeming to Barton  Highways England n/a 01/12/2017 £308m Morgan Sindall
L2C Electrification Midland Main Line Network Rail 01/09/2014 01/12/2018 £260.2m Powerlines
North West Electrification Network Rail 01/09/2015 01/01/2020 £187.9m  
CDF contract (Smart motorways): M6 J13-15 Highways England 07/07/2015 31/03/2019 £166.4m Kier
CDF contract: A14 Cambridge to Huntingdon package 3 Highways England 15/09/2015 01/04/2020 £164.5m Balfour Beatty
Crossrail: Old Oak Common to Paddington approaches Network Rail 01/07/2013 01/07/2019 £138.2m  
CDF contract (Smart motorways): M6 J16-19 Highways England 07/07/2015 01/11/2019 £128.5m Kier
Western Inner Track Improvements Network Rail 01/06/2013 01/02/2018 £123.8m  
CDF contract (Smart motorways): M23 J8-10 Highways England 07/07/2015 30/11/2020 £116.9m Kier
East London Overground Maintenance Transport for London 30/03/2009 31/03/2018 £80.6m  
M40 Denham to Warwick maintenance Highways England 06/01/1997 05/01/2027 £65m  
Shotts Electrification Network Rail 01/11/2015 01/05/2019 £62.6m Powerlines
Kettering to Corby works  Network Rail 01/04/2015 01/03/2018 £62m  
London to Corby Midland Main Line Network Rail 01/02/2017 01/03/2020 £61.8m  
Sheffield Tram Train main works Network Rail 01/04/2015 01/11/2018 £50.5m  
CP5 Renewals Oxford Network Rail 01/12/2015 01/12/2018 £36m  
Oxford Corridor Track Works Network Rail 01/09/2016 01/11/2018 £34m  
Market Harborough line speed improvements Network Rail 01/03/2016 01/04/2018 £32m  
Plain Line Track Renewals London North East 16/17 Network Rail 01/04/2016 01/03/2017 £24.7m  
Plain Line Track Renewals London North East 17/18 Network Rail 01/04/2017 01/03/2018 £22.8m  
Kentish Town Improvements Network Rail 01/03/2016 01/07/2017 £21.8m  
Waverley Area Works Network Rail 01/10/2016 01/12/2018 £21.8m  
L2C T&C Midland Main Line  Network Rail 01/03/2017 01/10/2018 £21.1m  
Manchester Smart Motorways: M60 improvements Highways England 01/05/2014 01/07/2018 £17m Balfour Beatty 33%, Carillion 22%, Costain 22%, Morgan Sindall/Bam 22%
Area 7 Temporary Traffic Management Highways England 17/05/2016 31/05/2020 £8.5m Multiple suppliers framework
Splott Road Bridge Network Rail 01/08/2015 01/07/2018 £8.3m  
IEP Gauging Priority 2 sites Network Rail 01/05/2017 01/05/2020 £7.6m  
Knottingley Area Renewals Network Rail 01/06/2015 01/09/2018 £7.6m Bombardier
Brent Cross station Network Rail 01/03/2017 01/09/2018 £7.4m  
Area 13 Temporary Traffic Management Highways England 23/01/2017 31/03/2021 £7.1m Multiple suppliers framework
Historical Railways Estate Examination Highways England 15/03/2016 15/03/2019 £2.4m Carillion part of framework with Balfour Beatty
Collaborative Delivery Framework (CDF) contract: Lot 3B advice Highways England 15/01/2016 31/12/2019 £0.5m  
CDF contract (Smart motorways): M20 J3-5  Highways England 07/07/2015 30/11/2020 £0.1m Kier
A1 Elkesley Junction Highways England n/a 01/12/2017 £0.05m  

Have your say

You must sign in to make a comment

Please remember that the submission of any material is governed by our Terms and Conditions and by submitting material you confirm your agreement to these Terms and Conditions. Links may be included in your comments but HTML is not permitted.