Doubts over Borders rail line as firm quits

• The withdrawl of Fluor has been described as 'worrying' Picture: Ian Rutherford

The Scotsman has learned that Fluor has unexpectedly quit one of three groups that have been short-listed for the 300 million Borders railway - the longest new rail line planned in Britain.

There is little prospect of a replacement being found, which would leave just two groups competing in the contest compared to five who lodged initial bids.

Labour described the news as "doubly worrying" as it could push the price up and because only a few firms had sufficient expertise for such a unique rail project.

The winner will have to build and maintain the 30-mile line between Edinburgh and Tweedbank, just south of Galashiels, separate from the rest of the British rail network. This means it would not benefit from the equipment and expertise of Network Rail, which runs the rest of the network.

The contract accounts for 230m of the overall scheme, with 52m spent so far on preparatory work such as land purchase and moving pipes and cables from the line.

The bidders are due to lodge final submissions next May, with a winner to be chosen in September and work starting soon afterwards.

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Labour's transport spokesman, Charlie Gordon, said: "The odds are now worse. We had a better chance to get best value for the taxpayer with three bidders, so this is obviously not good news. It's a potential setback for the taxpayer in value for money.

"In addition, the specialist nature of the contract makes the situation even more worrying - rail infrastructure operation firms are not ten-a-penny. There is Network Rail - the elephant - and only a few fleas. This is doubly worrying for the project."

Mr Gordon drew parallels with the 700m M74 extension in Glasgow, which attracted a single consortium bid, and the 2 billion new Forth road bridge, which attracted just two.

The cost of another major Scottish infrastructure project - Edinburgh's trams - is expected to top 600m. Work has virtually ground to a halt because of disputes with contractors, and the original plan for three lines has been scaled back to just one.

Fluor, whose previous projects include a high-speed line in the Netherlands, yesterday declined to say why it had pulled out. Spokesman Keith Stephens said: "I can confirm Fluor has withdrawn from the bidding process. The reasons for the move will remain business confidential."

There was speculation yesterday it may relate to changes to the specification of the contract and delays to the project, which has been taken over from local authorities by the Scottish Government's Transport Scotland agency.One insider said: "There have been various issues, including concerns about the length of the decision-making process and specification changes."

The planned opening of the route has already been delayed by three years to 2014, which was blamed on the poor economic climate. Ministers had also previously promised work would start before the Scottish election next May.

The Scotsman understands fellow members of Fluor's New Borders Railway consortium do not expect to find a replacement. The group, which also comprises Edinburgh-based Miller Construction and Uberior Infrastructure Investments, part of the Lloyds Banking Group, is likely to have to pull out of the race.

One insider said: "Transport Scotland would like Fluor to be replaced, but realistically that is not going to happen unless someone comes in with the right expertise. If you lose your rail expert, the bid disappears."

That would leave BAM UK, which built the Stirling-Alloa-Kincardine line, competing with the IMCD consortium, made up of Sir Robert McAlpine, Spanish rail firm Iridium Concesiones de Infrastructuras, and Carillion Construction. However, industry officials predicted there will be a keen fight even if only two groups remained.

Alan Watt, chief executive of the Civil Engineering Contractors Association, said: "I think Transport Scotland will still have a good competition between the remaining bidders, which involve firms experienced in this type of work."

Both BAM and McAlpine are understood to be desperate to win new work in Scotland after current contracts, such as the M74 extension, finish.

Transport Scotland insisted last night the project was still on course. A spokeswoman said: "The competition for Borders Railway remains on track and we expect to begin construction in 2011 and have an operational railway up and running for communities in Midlothian and the Scottish Borders in 2014.

"It should be noted that changes to the commercial priorities of individual bidders during procurement is not uncommon."