FINAL BUSINESS AND REGULATORY IMPACT ASSESSMENT

Title of Proposal
Forth Road Bridge Bill
Purpose and intended effect

Background

The Forth Road Bridge (FRB) is showing signs of deterioration and may
no~ be suitable as the long-term main road crossing over the Firth of Forth.
The new Forth Crossing is currently under construction to safeguard a vital
connection in Scotland's transport network by ensuring a new crossing is'
in place by 2016 before any restrictions are necessary on the existing road
bridge. When the new crossing opens, the bridges will operate as a
managed crossing strategy: the FRB will be retained as a dedicated i
corridor for public transport, pedestrians and cyclists and the new Forth
Crossing will carryall other traffic subject to motorway regulations.

As part of the Scottish Government's Programme for Government, primary

legislation will be brought to the Scottish Parliament in 2012/13 to pave the
way for the most cost-effective and co-ordinated approach to the
management and maintenance of the new Forth Crossing and FRB. The
Scottish Government is of the view that this can be achieved by holding a
competitive tender exercise to award a single bridge operating company
for a contract to manage and maintain both the new Forth Crossing and
the FRB. The contract will also include the connecting roads from the M90
Junction 3 Halbeath in the north through to the M9 Junction 1a in the
south. The Scottish Government will be responsible for the bridges and
the roads over them, with the day-to-day operation and maintenance
functions being carried out by the bridge operating company.
In order to contract out the functions of managing and maintaining the
FRB, the Scottish Government must first take those functions over from
the Forth Estuary Transport Authority (FETA), which is the statutory body
presently tasked with managing and maintaining the FRB. The Forth Road I
Bridge Bill will therefore be brought to the Scottish Parliament to

trunk the road over the FRB (which means the Scottish Government
becomes the roads authority,

transfer all of FETA's property, assets and liabilities to the Scottish

Government, and

dissolve FETA.

The skills, knowledge and professionalism of FETA employees are greatly

valued. Transfer of Undertakings (Protection of Employment)

2006 will apply meaning that FETA employees will be transferred to the
Bridge Operating Company appointed by Transport Scotland. In addition,
the Scottish Government will make it a contract requirement, and will
provide guarantor status, to ensure that the appointed bridge operating
company gains admission to the Lothian Pension Fund to allow FETA
employees to continue with their current pension scheme.
The contract will deliver value for money, operational efficiencies, and we
anticipate that it will be attractive to industry.
It is anticipated that the
procurement process will begin in mid-2013, that a preferred bidder will be
announced by the end of 2014, with the contract commencing in mid-2015.
The dissolution of FETA will take place at the point of the new contract
commencing .

Objectives

The Scottish Government wishes to pave the way for the most costeffective and co-ordinated approach to the management and maintenance
of the new Forth Crossing and FRB.
To enable this policy decision to be taken forward, the Scottish
Government is introducing a Bill which will trunk the FRB, transfer FETA's
property, assets and liabilities to the Scottish Government, dissolve FETA
and transfer FETA employees to a bridge operating company. Thereafter,
Transport Scotland will begin the procurement process to appoint a 'Forth
Bridges Operating Company'.
This BRIA details the process that led to the decision that a competitive
tender exercise will be held to award a single bridge operating company
the contract to manage and maintain the new Forth Crossing and FRB,
whom the decision will affect and in what way .

Rationale for Government intervention

The Forth Road Bridge Bill supports the Scottish Government's strategic
objective to make Scotland a wealthier and fairer country, and in particular,
the Government's emphasis on managing public sector spending effectively.
This is evident through the Bill's policy proposals which will:
o

Deliver value for money and operational efficiencies thereby making

savings to the public purse;

Protect all FETA staff as Transfer of Undertakings (Protection of

Employment)
Regulations
apply meaning there will be no
compulsory redundancies as a result of the transfer;

Bring a strategic and collaborative approach to the management

and maintenance of the Forth Bridges which is in line with public

sector reform.
Consultation

Within Government

The identification of technically feasible options and their assessment

against key criteria involved consultation with other Scottish Government
departments including State Aid Unit, Public Service Reform Unit, Scottish
Government
Legal Department
and Scottish Government
Human
Resource Department.

Public Consultation

The provisions of the Bill are tightly defined and technical rather than
broad and conceptual.
The Bill Team concluded that continuous
consultation with targeted stakeholders throughout the project - from
policy
development,
through
the
legislative
process,
into the
implementation of the policy including the dissolution of FETA and
procurement of a Bridge Operating Company - would be more appropriate
than a one off written exercise.
The decision to dissolve FETA will most obviously affect FETA employees,
of which there are currently 72. Stakeholder engagement is therefore
focused on ensuring that employees are aware of developments and that
any questions or concerns are addressed in a timely and open manner.
Transport Scotland has been working closely with FETA management and
will continue to do so as preparations progress for the procurement
competition.
FETA is governed by a Joint Board made up of 10 councillors from Fife
Council, City of Edinburgh Council, West Lothian Council and Perth and
Kinross Council. In advance of a decision being taken, the Minister and
Transport Scotland met with the FETA Board to discuss the options. The i
Minister then wrote to the Chief Executive of FETA in advance of
announcing the decision. Transport Scotland will meet with the FETA!
Board in December to discuss the Bill and the procurement of a bridge I
operating company.
Transport Scotland established the 'Forth Bridges Forum' in November
2011 to ensure that local stakeholders remain at the core of the
management and operation of the Forth Bridges. In addition, it provides a
mechanism for the collective promotion of the FRB, the new Forth
Crossing and Forth Bridge. Membership includes senior officials from
Transport Scotland, Network Rail, FETA, City of Edinburgh Council, Fife
Council, West Lothian Council, Historic Scotland and Visit Scotland.
Other key stakeholder groups are local community groups and residents,
businesses and bridge users.

Business
The Bill Team has written to local businesses both north and south of
river to seek views on the plans to dissolve FETA and to contract a bridge
operating company to manage and maintain the new Forth Crossing and
FRB. In addition, the Bill Team has sought assistance from 'Queensferry
Ambition'. Queensferry Ambition is an umbrella organisation that brings alii
the businesses in Queensferry together to pool expertise and resources to
make their area a better place to do business by increasing footfall and
custom.
They have assisted by cascading questionnaires on behalf of the Bill
Team to members of the Business Improvement District (BID). Sectors
represented include retail, accommodation and food, education and
community and professional services and business.
The Bill Team will set up meeting with local businesses who would like to
discuss the Bill and/or the procurement of a Bridge Operating Company in
more detail.

Options

When the Forth Crossing Bill received Royal Assent, Scottish Ministers
instructed Transport Scotland to work with FET A officials to assess the
technical feasibility of options for the management and maintenance of
both the new Forth Crossing and the FRB.
The options were assessed against key criteria including the ability to
demonstrate value for money; traffic management and maintenance
effectiveness being derived through a twin-bridge strategy; utilisation of
FETA staff and assets; the nature of governance arrangements and extent
of local/national accountability.
The projected costs are based on the information currently available and
represent the operational, maintenance and administrative costs for the
network connections, the new Forth Crossing and the FRB. The costs also
include staff costs.
The key points relating to each of the options are detailed below:
Option 1: FETA continues to manage and maintain the FRB and a
separate bridge operating company is appointed to manage and maintain
the new Forth Crossing following a procurement competition.
Summary: The FRB and new Forth Crossing would be managed and
maintained separately, therefore, any potential resource and traffic
management efficiencies that might be derived from a twin-bridge strategy
would be lost.

FETA would retain responsibility for managing and maintaining the FRB as
a public transport corridor.
The maintenance of the new Forth Crossing would be subject to a
procurement competition thereby allowing value for money to be tested.
The winning bidder would be required to provide their own resources and
assets unless an agreement could be reached with the successful bidder of
the new Forth Crossing.
Sectors and groups affected: Given the reduction in traffic volumes on the
FRB it is likely that FETA would be over resourced and significant job
losses would be likely. FETA's assets would be underutilised.
The FET A Board would continue to govern the FRB and Scottish Ministers
would be responsible for the new Forth Crossing.
Local communities, residents, businesses would have separate points of
contact for issues regarding the management and maintenance of the two
bridges. Bridge users would lose any potential benefits of traffic
management efficiencies gained through the twin-bridge strategy.
Costs: The likely costs of maintaining the existing FRB and the new Forth
Crossing were assessed in 2009, as part of the business case for the new
bridge. To support this Bill, updated and revised organisational structures,
revenue and capital plans supplied by FETA have been applied to the 2009
base cost analysis.
The assessment focuses on OPEX costs revenue savings as these will
form the basis of the bridge operating company contract.
OPEX costs
represent the routine operational, maintenance and administration costs for
the network connections, the new Forth Crossing and the FRB, and staff
costs.
Projected costs of this scenario are 9.10 million per annum.

Option 2: A single bridge operating company is appointed to manage and

maintain the new Forth Crossing and FRB following a procurement
competition.
Summary: If FETA use state funding to finance a tender bid (as they are
fully funded by the Scottish Government) then this would very likely
constitute State Aid1.
In general, the European Commission considers
State Aid to have a damaQinQ effect on competition and therefore takes a

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aid/SA Home View. isp; isessionid=4003 7E868D BB9F63523
8BC89B 17A933A?p applic=CCC&p service=Content.show&pContentID=323&

serious view of aid given in contravention of the State Aid rules.

The 2002 Order provided FETA with borrowing powers but it would need a
mechanism for repaying a loan if the bid was unsuccessful.
Given the risks and constraints attached to enabling FETA to compete
directly in a procurement competition, the more viable option for a twinbridge strategy that tests the market through competitive tender is for
Scottish Ministers to dissolve FETA using primary legislation.
Benefits: The management and maintenance of both bridges would be
subject to competitive tender allowing value for money to be tested fully.
FETA's land, assets, rights and liabilities would be transferred to the
Scottish Government. The land and property required for the management
and maintenance of the bridges would be leased to the appointed bridge
operating company.
The governance arrangements would mirror those for Scotland's existing
trunk road and motorway network: the Scottish Ministers will be responsible
for the bridges and the roads over them, with the day-to-day operation and
maintenance functions carried out by the bridge operating company.
Sectors and groups affected: Dissolving FETA would result in a relevant
transfer for the purposes of TUPE regulations meaning that FETA
employees would be transferred to the employ of the appointed bridge
operating company.
The FETA Joint Board will be disbanded, relieving the councillors of their
role in respect of the FRB.
Local communities, residents, businesses may benefit from having one
point of contact for issues regarding the management and maintenance of
the two bridges. Bridge users may benefit from traffic management
efficiencies gained through the twin-bridge strategy.
Costs: The likely costs of maintaining the existing FRB and the new Forth
Crossing were assessed in 2009, as part of the business case for the new
bridge. To support this Bill, updated and revised organisational structures,
revenue and capital plans supplied by FETA have been applied to the 2009
base cost analysis.
The assessment focuses on OPEX costs revenue savings as these will
form the basis of the bridge operating company contract.
OPEX costs
represent the routine operational, maintenance and administration costs for
the network connections, the new Forth Crossing and the FRB, and staff
costs.

Projected costs of this scenario are 7.78 million per annum.

Option 3: Responsibility for managing and maintaining the new Forth
Crossing is delegated by Scottish Ministers to FETA, in addition to their
responsibility for the FRB.

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Summary: Statutory responsibility for managing and maintaining the new
Forth Crossing may be delegated to FETA by Scottish Ministers.
A
comprehensive redrawing of its functions would first be necessary. There is
a risk that delegating the functions to FETA may be perceived as being
uncompetitive as the market has not been tested. Without testing the
market, value for money cannot be demonstrated.

Benefits: FET A's land and assets would be fully utilised.

Sectors and groups affected:
FETA employees would be given the
opportunity to work on a second structure and additional employees would
be required.
FETA has projected that the twin-bridge strategy would
increase headcount from 72 to 92.

The FET A Board would continue to govern the FRB. As Scottish Ministers
will be responsible for the new Forth Crossing as a trunk road, the
governance arrangements would need to reflect the mix of local and
national accountability.
Local communities, residents, businesses may benefit from having one
point of contact for issues regarding the management and maintenance of
the two bridges. Bridge users may benefit from traffic management
efficiencies gained through the twin-bridge strategy.
Costs: As it was established that FETA cannot participate in a procurement
competition, the costs of this option have not been assessed.

Option 4: Do nothing - The FRB continues as the only crossing of the

Firth of Forth in this locality. FETA would continue to manage and
maintain the FRS as the main road crossing of the Firth of Forth.

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Summary - This scenario provides a baseline on which the other scenarios

can be compared. The Scottish Parliament passed the Forth Crossing Act
in 2011 allowing the Scottish Government to begin construction of the new
Forth Crossing project. The project is designed to safeguard cross-Forth
travel by ensuring a new crossing is in place by 2016 before any restrictions
are necessary on the FRB. The project will cost between 1.7bn to 2.3bn
(total outrun cost in 2016) to deliver and will be directly funded by the
Scottish Government
FETA has estimated that without the new crossing in place, economic
outturn is likely to fall by c1 bn, a drop in turnover in excess of 1.3bn and
a loss of 3,200 jobs, many of which would be permanent.

Sectors and groups affected - FETA employees would continue to manage

and maintain the FRB and the FETA Board would continue to govern the
FRB.
FETA would continue to be the point of contact for local communities,
residents and businesses for issues regarding the management and
maintenance of the FRB.
Costs - The costs of managing and maintaining the FRB are projected at
5.64 million per annum based on the cost of FETA's current operations.
However, the lifecycle and capital costs that would be much higher and the
impact on the Scottish economy would be untenable.

Scottish Firms Impact Test

As noted above, although it is FETA who will be directly affected by the Bill,
the Bill Team has also been engaging with local businesses on the provisions
of the Bill and the procurement of a bridge operating company. This will
involve meeting with businesses who wish to find out more. Engagement Willi
continue throughout the Bill and procurement processes.
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The policy introduces a new contract to the market thereby stimulating

competition and economic benefits. The scope of the contract is for the
management and maintenance of a cable stayed bridge, a suspension bridge
and an area of the connecting road network.
The contract will be advertised on the Official Journal of the European Union
as required by procurement law.
Although FETA is to be dissolved, the staff will be transferred to the winning
operating company.
It is anticipated that the contract will be appealing to the market due to its size
and the provision of an already skilled and knowledgeable workforce .

Competition Assessment

Taking account of the information provided above, we have considered

OFT's competition filter questions.
Could the proposal directly limit suppliers? - No
Could the proposal indirectly limit suppliers? - No
Could the proposal reduce ability to compete? - No

Could the proposal reduce incentives to compete? - No

Following application of the competition filter, it has been concluded that
the Bill will have no negative impact on competition .

Test run of business forms

The policy does not introduce any new business forms.

Legal Aid Impact Test
It is not expected that these proposals will have any impact on the use of the
legal aid fund.
Enforcement, sanctions and monitoring
Transport Scotland will manage the procurement of the Forth Bridges
Operating Company to ensure that the predicted benefits of this option are
delivered.
Key stakeholders will be consulted on aspects of the contract
i before going to tender.
Once appointed, the operating company will be audited by the Performance
Audit Group (PAG), and independent body appointed by Transport Scotland
to review and report on the performance of all the Trunk Road Operating
Companies in Scotland. PAG review operating companies against a set of
key performance indicators and the results are published on the Transport
Scotland website.
Implementation and delivery plan
The indicative timetable for the procurement competition is outlined below:
j

June 2013

Publish PIN

July 2013

Publish OJEU Notice

December 2013

Issue Tenders

December 2014

Award Contract

June 2015

Commence Contract

2016

New Forth Crossing Complete

Post-implementation

review

Transport Scotland's Forth Bridges Special Project Team will >e

responsible for ensuring the implementation of the Bill provisions including
overseeing the procurement competition for the operating company and!
ensuring a smooth transition for FETA staff to the new arrangements.

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The Team will also undertake a post implementation review of the BRIA
prior to the procurement process commencing in summer 2013. This will
involve engaging with industry on the scope and content through contacts
in Scottish Enterprise and through an Industry Day.

Summary and recommendation

Following consideration of the options and advice from Transport Scotland, in
November 2011 the Minister announced his intention to take forward a
procurement competition to put in place a single company to undertake the
management and maintenance of the new Forth Crossing and FRB. Since
then, Transport Scotland has been preparing the legislation that will enable
this competition to take place and has begun preparations for the open
competition. Option 2 is the recommended option.
Summary costs and benefits table
Based on current estimates, it is projected that there is potential for
approximate savings of around 1 million per annum through one bridge
managing and maintaining both bridges as opposed to two separate future
maintenance contracts.
Benefits
Value for money for new Forth
Crossing tested through competitive
tender;
Legislative change not required.

Costs
c9.10 million

Value for money tested through

competitive tender for management
and maintenance of both bridges;
Traffic management and
maintenance effectiveness gained
through twin bridge strategy;
Utilisation of FETA assets through
twin-bridge strategy;
Protection of FETA staff;
Boost for industry

c7.89 million

Traffic management and

maintenance effectiveness gained
throuqh twin bridqe strateqy;

As it was established
that FETA cannot
participate in a

Option

10

Utilisation of FETA assets;

Minimum impact to FETA staff.

procurement
competition, the costs
of this option have not
been assessed.

Negative impact.

c5.64 million

FET A has estimated that without the

new crossing in place, economic
outturn is likely to fall by c1 bn, a
drop in turnover in excess of 1.3bn
and a loss of 3,200 jobs, many of
which would be permanent.

Declaration and publication

I have read the impact assessment and I am satisfied that (a) it represents the
costs, benefits and impacts of the policy, and (b) that the benefits justify the
costs. I am satisfied that the business impact has been assessed with the
support of businesses in Scotland.
Signed:

\;\

~~

Date:
Minister' Name and Title: Keith Brown MSP, Minister for Transport and
Veterans
Scottish Government Contact Point:
Carron Flockhart, Forth Bridges Special Project Team x27377

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