The Corporate Director of Place has decided to approve the extension of the Highway Maintenance Contract with FM Conway Ltd.

URL: https://democracy.croydon.gov.uk/ieDecisionDetails.aspx?ID=2752

Decision Maker: Corporate Director of Place

Outcome:

Is Key Decision?: Yes

Is Callable In?: Yes

Purpose: The report sets out recommendations and seeks authority to approve the year 2 extension of the existing Highway Maintenance Contract with FM Conway Ltd.  

Content: The report sets out recommendations and seeks authority to approve the year 2 extension of the existing Highway Maintenance Contract with FM Conway Ltd.   For the reasons set out in the report, the Corporate Director for Place AGREED.   -       to approve the second year permitted extension to the Next Generation Highways Contract with FM Conway, from 1 October 2026 to 30 September 2027, at an additional value of 19m, resulting in an increase in the overall value of the contract from £130m to £149m.   And to note that   -       Though formal notification of the contract extension needs to be issued to FM Conway up to six months before the end of the contract period (30 March 2026), written agreement has been received from FM Conway that the formal notification can be delayed. The Council has also provided a letter of comfort to FM Conway setting out intentions to formally request a second-year conditional extension to the existing contract.   -       Through collaborative engagements, to explore a further £300k of additional cost /efficiency savings from operational and delivery planning opportunities as part of the contract extension   The Council has a statutory duty under the Highways Act 1980 to maintain the public highway in a safe and serviceable condition. The existing Maintenance Contract is approaching the end of its permissible term and cannot be extended beyond October 2027 without risking challenge for breaching the Public Procurement Regulations 2023. A compliant re- procurement is underway to ensure continuity of service, legal compliance and the continued delivery of essential highways maintenance and improvement functions.   For the reasons set out below and within this report, recommending the exercise of the second year permitted extension to the Next Generation Highways Contract (NGHC) allows the Council to continue to fulfil its requirement to maintain its highways and related assets in the borough, whilst allowing time for a re-procurement with the new contract schedule to start 1 October 2027; giving sufficient time to ensure the new contract will provide best value to the Council.   FMC’s performance on the contract is measured by Performance Points against defined Key Performance Indicators (KPIs). As the average score per KPI is greater than zero, it meets the criteria for a contract extension.   The Council is required to undertake maintenance, and improvements in accordance with the Highways Act 1980. The initial term for this contract was 7 years, with an annual (1-year) conditional extension over an additional 3 years to bring the total contract term to 10 years. The first-year extension (year 8) commenced from 1 October 2025 to 30 September 2026, with no further automatic extension of the contract.   The alternative option to continue the existing contract to the end of its permitted 3-year annual extension period totalling the 10-year term (that is to arrange for year 9 and year 10 conditional extensions) – could lead to an increased risk in terms of breach of procurement regulations as per the contract value threshold and acceptable variations. If the recommendation is not agreed, the procurement exercise in planning for the new highway maintenance contract would need to be significantly accelerated to ensure a contractual arrangement is in place from 1 October 2026. Given the size and complexity of the contract, the procurement process is expected to take several months. The current intention is to go to market in Autumn 2026, appoint a contractor in May 2027, and allow a mobilisation period of five months to enable service commencement on 1 October 2027. This programme is already considered challenging. If the existing contract is not extended, the timeframe for evaluation and mobilisation would be further compressed, increasing the risk of entering into a new contract without sufficient assessment of associated risks. Therefore, again, the Council may be at risk of breaching its statutory duty under the Highways Act 1980 from 1 October 2026 by not having a contractual provision in place for the maintenance of the highway network.   The Council has considered the option of using the Transport for London (TfL) Surface Transport Infrastructure Construction (STIC) Framework; however, it is not proposed to progress with this route at this time. The Council has its existing Next Generation of Highways Contract, which is fully mobilised and includes extension provisions, providing a stable and fit-for-purpose delivery model. Moving to an alternative framework at this stage would represent an unnecessary change to existing contractual arrangements that are already performing effectively.   In addition, adopting the STIC framework would require significant system and operational changes. This includes the integration of new pricing mechanisms into existing IT systems (such as Confirm), alongside the need to train staff on new contract terms, conditions and processes. As with any transition to a new contractual model, there would be a period of adjustment during which staff become fully conversant with the new arrangements, introducing potential inefficiencies and delivery risk.   Taking these factors together, a change to the STIC framework would create avoidable disruption, cost and implementation risk without delivering commensurate benefits. The Council will therefore continue with its current contract as the primary delivery mechanism, with external frameworks such as STIC retained only as potential supplementary options where required for specific or specialist schemes.

Date of Decision: July 22, 2026