Procurement of New Rolling Stock

Southern is pleased to announce two significant developments. Firstly, with the approval of the Department for Transport, it intends to exercise an existing option for 40 new Electrostar carriages from train manufacturer Bombardier, a run on to its 130 carriage order announced at the end of last year. Separately, Southern is developing proposals with the Department for a new procurement competition for 116 electric (dual voltage) new rolling stock vehicles, with an option for a further 100.

The procurement of 40 new carriages will enable additional capacity on the Southern network as well as a cascade of rolling stock around the wider network.

The new procurement competition will assist the Department’s ability to address the wider rolling stock needs of the country.

Southern Managing Director Chris Burchell said “I am pleased that Southern is able to assist the Department in introducing additional capacity. The potential new order for 116 carriages will be exciting news for train manufacturers and for passengers”.

The option for 40 new vehicles from Bombardier appears in the manufacture and supply agreement (the “MSA”) for the order of 130 Electrostar vehicles from Bombardier announced by Southern on 28 December 2011. This order was placed by Southern with Bombardier following a competitive process that began in September 2011 with the issue of a pre-qualification questionnaire on the rail Link-Up system for 130 new vehicles which was followed up with tender documentation which included the option for 40 further vehicles. The MSA provides that the option for the further 40 vehicles expires on 31 December 2012. The 40 vehicles will be in 5 car formation with dual voltage configuration, will cost c£60 million in total and it is expected that they will be delivered during 2014 for service entry in December of that year.

The 40 option vehicle order takes advantage of the price and timescales agreed with Bombardier in the rolling stock order placed in December 2011.

This means that passengers will benefit from the extra capacity offered at the earliest opportunity.

The funding for the 40 vehicles has been lined up. (Southern recently announced that Porterbrook Leasing Company has been selected as preferred bidder, again following a competitive process, for the necessary financing of the original rolling stock order as provided under the MSA. This preferred bidder status relates to both the initial order of 130 vehicles and any further order of 40 vehicles pursuant to exercise of the option in the MSA).

The potential competition for 116 electric (dual voltage) new rolling stock vehicles, with an option for a further 100 vehicles, would be openly tendered via the rail Link-Up system. The new rolling stock will be of dual voltage configuration and is required to operate up to 110 mph. Any rolling stock manufacturer registered on the rail Link-Up system would be able to compete for this opportunity.

Completion of the order would be reliant on the Department for Transport accepting the business case for the new vehicles and agreeing consequential amendments to Southern’s franchise agreement.