Kier Transportation Limited ("Kier") previously provided interim highways maintenance and associated operational services across the Birmingham highways network (the "Services") through an Interim Services Contract ("ISC") with Birmingham City Council's ("the Authority") subcontractor, Birmingham Highways Limited ("BHL"). The ISC novated from BHL to the Authority on 31 July 2026. The ISC was originally procured in accordance with the Public Contracts Regulations 2015. Following the Department for Transport's recent decision to withdraw its support for the continued funding of the Authority's highways PFI project, the Authority will procure an alternative long-term solution to replace this project. To enable the procurement of this alternative solution, the Authority requires the continued provision of the Services on an interim basis and therefore proposes to enter into a variation agreement to extend the ISC, such that it will expire on 31 July 2028 (or on 30 April 2029 if the Authority exercises an option to extend the ISC set out in the variation agreement). The variation agreement will therefore ensure the continued uninterrupted delivery of critical public services and the continued safety of the public in accordance with the Authority's statutory duties.

Procurement Act 2023

Direct award The Authority has determined that the variation agreement constitutes a direct award under the Procurement Act 2023 (the "Act"). The Authority is relying on the following the direct award justifications set out in Schedule 5 of the Act for the purposes of the award of this variation agreement: 1. Continuity and integration of existing services The Services to be provided under the variation agreement are a continuation of the Services currently delivered by Kier under the ISC. The direct award is intended to ensure continuity of service in respect of the operation and maintenance of the Birmingham highway network, which is a critical public service. The Authority has determined that a change of supplier and immediate replacement of Kier as the incumber supplier would give rise to incompatibility, and such incompatibility would result in disproportionate technical difficulties in the operation and maintenance of the Service which would give rise to a material risk to service continuity. 2. Urgency and interim nature of the arrangement The need for the variation agreement to ensure the continuation of the Services currently delivered by Kier has arisen as a result of circumstances outside of the Authority's control, resulting from the Department of Transport's decision to withdraw its support for the continued funding for the Authority's highways PFI project. The Authority considers that the direct award was strictly necessary for reasons of extreme and unavoidable urgency to ensure continuity of a critical public service while it undertakes the steps required to develop and procure a longer-term solution and the continued safety of the public in accordance with the Authority's statutory duties. The Authority has determined that it would not be possible to run a competitive procurement process to procure a supplier which could ensure such continuity of service in the timeframes available. The variation agreement with Kier is therefore intended to operate as a temporary measure pending the completion of a procurement process for a replacement solution to the Authority's highways PFI project. The Authority will shortly provide further information concerning the procurement of the replacement solution and the opportunities this will present to the market.