APPENDIX 5
Memorandum submitted by Railtrack PLC
Further to your letter of 9 November 2000, the
following response corresponds with the indexing used in your
letter.
(a) Railtrack awards long term Track Renewal
Contracts (typically three or more years) in which it is stipulated
that Railtrack will provide the requisite rail on a free of charge
basis.
Railtrack also awards long term contracts for
infrastructure maintenance whereby the practice has been for the
maintenance contractors to provide an all inclusive price. The
maintenance contractor is free to buy the rail from its chosen
source with no instruction from Railtrack, provided the source
has technical approval from Railtrack, and on occasion the Infrastructure
Maintenance Contractors elect to buy the rail from Railtrack.
This latter policy may change in favour of free issue in the future
for all Railtrack projects.
For the current rail supply contracts, Railtrack's
National Logistics Unit invited tenders for the supply of rail
in September 1999 to the specifications laid down in Railtracks's
Line Standards. The notable changes in these tenders being that
we wished to deliver long welded rail in 216 metre strings with
as few factory welds as possible and that we would be predominantly
using CEN60 rail in the future in line with the heavier European
standard. At the same time as we issued the invitation to tender
for the supply of rail we issued an invitation to tender for the
design and build of a welding depot in the South of England and
for the provision of a welding service.
The benefits of an alternative independent welding
operation are as follows;
— It will allow us to seek competitive
tenders for rail without the constraint of all rail needing to
be welded by Corus.
— It will allow us to produce 216 metre
output strings from the option of 36, 72 or 108 metre input lengths
thus reducing the number of factory welds from the Corus standard
of 36 metre input and 180 metre strings, a major improvement in
track dynamics.
— It will reduce haulage of rail when
delivered to the South of the country where most of the requirement
is (a reduction of around £2 million per annum).
— It will release train paths previously
taken up by the movement of rail from the North to the South of
England.
(b) Over the past 5 years we have bought
approximately 90 per cent of our rail from Corus, with the remainder
from Voest Alpine in Austria. A breakdown of rail type would not
be of benefit because both Corus (formerly British Steel) and
Voest Alpine were able to produce the whole range of our requirement,
except that we would have preferred longer input lengths from
Corus. At this stage our rail delivery trains would not be able
to deliver greater than 182 metre strings, they are being modified
now to do so. The Corus sales to Railtrack have been as follows;
2000-01—now projected at least 70,000 tonnes
(c) When the new rail contracts were placed
in May 2000 it was intended that we would buy around 95,000 tonnes
in total and that this would be allocated as follows: 45,000 tonnes
minimum to Corus; 25,000 tonnes minimum to Voest Alpine (Austria)
and 15,000 tonnes minimum to Lucchini (Italy). The outstanding
10,000 tonnes would be ordered from wherever Railtrack had the
opportunity to optimise volume discounts, provided expedient supply
could be effected. The current emergency procedures to satisfy
the rail replacement programme to eliminate gauge corner cracking
indicates that Railtrack's demand is likely to exceed 120,000
tonnes this year and due to expediency Corus is likely to supply
the majority of the extra 25,000 tonne requirement.
(d) Due to the gauge corner cracking re-railing
programme for which 113A is being used, it is now unlikely that
we take delivery of CEN60 rail in any great volume until that
programme is complete.
(i) The long term strategy is to convert
to CEN60 rail on our premier routes and the West Coast Route modernisation
project will be the first and largest user. The benefits of CEN60
are that it is a stronger rail and is compatible with the standard
used throughout Europe. CEN60 does not involve any metallurgical
change from BR rail sections. In the last two years Railtrack
has approved the use of CEN60 rail and it is now starting to take
effect in earnest, on heavy traffic and high speed lines initially.
Rail to this standard has been in common and highly successful
use in Europe and elsewhere for very many years.
(ii) The primary preference with regard to
length is 216 metre strings so that we reduce the number of on
site applied alumino thermic welds which have been a source of
rail breaks. Since 216 metre is 20 per cent longer than 180 metres,
theoretically, there will be 20 per cent fewer alumino thermic
welds and therefore 20 per cent fewer rail breaks attributable
to them. 216 metres is the preferred length because that is the
maximum length we are able to haul and unload on our rail delivery
vehicles.
The secondary preference is for fewer factory
welds both from a quality and cost viewpoint and the 180 metre
input length at the Southern rail depot will require only one
weld per 216 metre string. A similar string of 216 metre from
Corus (which they cannot supply until they upgrade the Castleton
plant at the end of this year) will require 5 factory welds until
such time as they are able to provide 72 metre lengths from the
Corus plant in France at which point it will require two welds.
We are driven by the relative unreliability of site-made
welds and the rising requirement to reduce the population of site
welds in track. There is also a need to reduce the number of factory-made
welds which are also important but less so than the reduction
of site-welds.
(e) Railtrack is compliant with EC Procurement
Law in the way that we tender and award contracts and within that
framework we seek to obtain the most economically advantageous
contract terms in the broadest sense giving due consideration
to quality, safety, logistics and costs. We have opened up the
market to fair competition from mainland Europe with our strategy
and that is wholly compatible with our efforts to improve the
position for our customers and shareholders alike. The ability
of a supplier to meet that requirement would be a key element
of the acceptance process. No supplier will be used if their product
does not get technical acceptance.
5 December 2000
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