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Steady Fleet Replacement Plan


Steady Fleet Replacement Plan

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									                          RAIL CORPORATION NEW SOUTH WALES

Public Private Partnership
Request for expressions of interest: Addendum
Financing, design, manufacture and maintenance of electric passenger trains.


The Proponent is invited to update its Response in accordance with this Addendum to
the Request for Expressions of Interest.

This invitation should be read in conjunction with the terms and conditions set out in
the Request for Expressions of Interest Appendix 1 - Conditions of Tendering.

DOCUMENT No. 2004/0106E Addendum

Responses to this Addendum to the Request for Expressions of Interest must be received by
10 am on 2 February 2005

                                                                          Page 1 of 6


                                                                         14 December 2004


This is an Addendum to the Request for Expressions of Interest issued on 31 August 2004
(the EOI). It is issued in accordance with Clause 12 of the Conditions at Appendix 1 to the
EOI. It seeks further information, to be returned by 2 February 2004, from the 6 Proponents
who submitted Responses to the EOI. The information relates to RailCorp’s requirement for
single deck cars, the likely financial arrangements between major subcontractors and the
PPP Company, and the creation of satisfactory financial backing for the PPP Company’s
obligations for both manufacturing and commissioning and maintenance. RailCorp will
contact each Proponent to invite them to a short meeting where the approach that RailCorp
intends to take to these issues can be discussed.

This Addendum also provides further information for Proponents in relation to Australian and
New Zealand Industry Participation.

Definitions from the EOI apply in the Addendum. The instructions for return of updated
Responses on 2 February are those given in Appendix 1 of the EOI.


Section 4.4 of the EOI said:

“RailCorp is reviewing its operational requirements in the light of the Clearways Program,
including whether the use of single-decker cars and/ or 8-car sets would better meet
RailCorp’s principal objectives in one or more sectors. A full statement of requirements will
be included in the RDP. However, in evaluating Proponents for shortlisting purposes under
the Design, Manufacture and Commissioning criteria (Section 5.4), RailCorp may eliminate
proponents who fail to demonstrate the capability of designing and manufacturing train sets
for current operating configurations.”

EOI Document No. 2004/0106E Addendum
PPP Replacement of Electric Rollingstock
                                                                              Page 2 of 6

At the Market Briefing on 10 September 2004 the Project Director, Louise Hart, explained this
further, as follows:

 “Single deck or double deck? This is an absolutely fundamental question, for you and for us.
The R&S series trains we are replacing represent a third of the current fleet. The single
deck/double deck issue is not simply a purchasing decision. It goes to the heart of how we
operate the fleet, how we allocate trains between sectors, and how we tailor the infrastructure
to deliver the service frequency, capacity and reliability that are required, not just in 2010 but
for the next 35 years.

 “We are investigating the case for single deckers very seriously. We will set out our
requirements in the RDP in December. We recognise that you would really like to know the
answer before making a decision on whether and how to respond to the EOI but it is a
complex evaluation. We can say that on the basis of work done so far, taking into account the
implications of the Clearways program and sectorization, the potential requirement for single
deckers would be somewhere between 200 and 300 carriages. That is, around half the total
number. So, we are pretty certain that we want at least 200 double deck carriages. The
question is whether the remainder will be single or double deck.

 “That ties in with the other question here: will we let one contract or two contracts? Again,
we don’t know the answer yet, and it will depend on a number of factors. What we can say is
that if we choose a split fleet for the PPP – part single, part double decker – we would expect
to let two contracts. It would be open to one party to bid for both, but equally it would be
possible to bid for only one.”

Decision by RailCorp

In the period since August 2004 RailCorp has given careful consideration to its operational
requirements, taking into account the implications of the Clearways Program, sectorization,
the need for an output specification for the PPP, the likely operating performance and
economics of single and double deck trains on different parts of the network, and the
implications of a mixed fleet for maintenance.

This analysis has concluded that on some routes on the network single deck trains could
replace timetabled double deck trains on a one for one basis and provide a more “metro”
style service while still meeting forecast demand; while on other routes single deck trains
could meet forecast demand if additional trains were introduced into the timetable.

RailCorp has therefore decided that it will invite detailed Proposals for the PPP on the
following basis.

•     Two contracts, one for double deck and one for single deck cars.

•     The total availability required will be equivalent to about 500 cars.

•     Proposals will be invited for single deck vehicle availability for a minimum of 208 cars.

•     The actual number of single deck and double deck cars contracted for will be decided
      based on further operational analysis and the relative value for money offered by the
      different proposals in response to the RDP.

•     Provision would be made for maintenance of the single and double deck PPP fleets to
      be carried out at the same location.
EOI Document No. 2004/0106E Addendum
PPP Replacement of Electric Rollingstock
                                                                              Page 3 of 6

•     Proponents will be shortlisted to bid for the single deck contract or the double deck
      contract or for both contracts.

•     The contracts may be awarded to different Proponents or to the same Proponent

Value For Money

The RDP will set out in detail how value for money will be assessed and in particular how
RailCorp will evaluate different levels of single and double deck capacity. In summary, the
approach will be as follows:

•     Proponents will be asked to provide information on passenger capacity per train,
      including seating and standing capacities based on train configurations to meet
      RailCorp’s requirements.

•     Proponents will also be asked to provide other information on the performance of the
      rollingstock that will allow its overall impact on RailCorp’s costs and operations to be

•     The cost and benefit of Proposals to RailCorp will be evaluated by taking account of the
      following principal factors, among others:

        the Proponent’s price per unit of availability;

        Other operational costs to RailCorp, including the impact on:

              - Quality of service (via acceleration, dwell times, and comfort)

              - Reliability

              - Operating costs including electricity consumption.

Taking Account of this Decision in the Procurement

On 13 October 2004 RailCorp received six Responses to the EOI for single and double deck

RailCorp requires more information from all Proponents to apply the evaluation criteria in
section 5 of the EOI fairly and in a way that will enable it to make a well-founded decision on
which Proponents should be shortlisted for each contract. It is also mindful of the importance
to Proponents of knowing the likely requirements of the PPP before making final decisions
about their consortium structure or incurring costs in the RDP stage of the procurement.

RailCorp has therefore decided to invite all Proponents to consider whether they wish to
amend or resubmit any or all parts of their Responses in order to demonstrate their
experience, capability, and capacity to fulfil the requirements of the PPP as it will now be
specified. It is inviting the following updated Responses to the EOI.

EOI Document No. 2004/0106E Addendum
PPP Replacement of Electric Rollingstock
                                                                               Page 4 of 6

Updated Responses required

Updated Responses should take account of the following points and specifically address the
additional information that may be required as set out below in relation to the Evaluation
Criteria (sections 5.2 to 5.6), Financial Information (6.8) and Further Information. In other
respects they should be based on the information and requirements as stated in the EOI.

Section 2.9: Project Schedule

The revised indicative Project schedule is set out below.

         Selection of Shortlisted Proponents and            February 2005
         Request for Detailed Proposals

         Return of Detailed Proposals                       June 2005

         Clarification and confirmation of commitment       July-September 2005
         for Detailed Proposals

         Award contract(s) for PPP                          1st quarter 2006

Section 4.4: Operational Requirements

A full statement of requirements will be included in the RDP. Proponents should know that,
as an Addendum to the criteria for evaluating Design, Manufacture and Commissioning
experience, capability and capacity, RailCorp now expects to ask for eight car consists for
both single and double deck rollingstock.

Section 4.6: Australian and New Zealand Industry Participation

RailCorp wants to secure the best expertise and resources for the PPP. It has decided that
some of the requirement for new rollingstock could be met efficiently by designs that have not
previously been used in NSW, and hopes to see participation from domestic and international
companies. At the same time, it is concerned to ensure that proposals offer support for the
local economy and employment in the short and long terms. There will therefore be a
requirement that a minimum of 20% of the value of design, manufacture and commissioning
consists of local content. There will be no price preference for local content.

Section 5.2 to 5.6: Evaluation Criteria

In relation to the criteria set out in the EOI, references to the Proponent’s experience,
capability and capacity in sections 5.2, 5.3, 5.4,and 5.6 will now include the experience,
capability and capacity of any major supplier of rollingstock, even if the supplier is not part of
the Proponent (because it is not an equity investor). Similarly sections 5.2, 5.3, 5.5 and 5.6
will include the experience, capability and capacity of any major maintainer of rollingstock that
is not part of the proponent
EOI Document No. 2004/0106E Addendum
PPP Replacement of Electric Rollingstock
                                                                               Page 5 of 6

Section 6.5: Response to the Evaluation Criteria

This should be revised as necessary to address the revised criteria at 5.2 to 5.6

Section 6.8: Financial Information

This should be revised to include the following additional information:

•     Although it is too early to determine the likely equity requirement for the PPP with
      confidence, RailCorp wishes to consider the ability of Proponents to invest or secure
      the appropriate combination of equity and performance guarantees from major
      suppliers and contractors in order to raise funding suitable for the risk profile of the
      contracts. As an illustration of this, please provide:

        A description of the proposed arrangements between                 the manufacturing and
      maintenance entities and the PPP Company;

        The identity of the company or companies providing guarantees for the design,
      manufacturing and commissioning obligations and the maintenance obligations

        Where two or more major suppliers will work together to supply cars or maintenance
      services, a statement on whether they will be jointly and severally liable to the
      Proponent under the supply contract, and if not how the arrangements will provide
      reassurance to RailCorp;

        Financial Information as set out in section 6.8(a) in relation to any major supplier of
      rollingstock or maintenance services, even if it is not part of the Proponent.

        And, on the illustrative assumptions that:

                  the total requirement will be met 50% by single deck and 50% by double
                deck trains

                  the total funding requirement is $1.8billion

                  the amount of equity and quasi equity that Proponents decide is required to
                   fund the PPP is 15% of the total (ie $135m for a single deck contract and
                   $135m for a double deck contract, or $270m if the Proponent proposed to
                   bid for both):

         (i) the name of the likely investing entities;

         (ii) the amount of equity/quasi equity expected to be provided by each entity;

         (iii) how each investing entity expects to fund its investment:

         (iv) the extent of guarantees they would expect to be in place from rollingstock
                suppliers and maintenance contractors to mitigate the level of risk carried in
                PPP Co itself.

EOI Document No. 2004/0106E Addendum
PPP Replacement of Electric Rollingstock
                                                                               Page 6 of 6

Further Information

Proponents should also provide:

1) A description of any change to the membership or constitution of the Proponent to take
account of the way in which the PPP is now specified.

2) A statement on whether the Proponent will bid for both the single and the double deck
contracts or for one only, and in the latter case which one.

Changes to a Proponent’s Team

Clause 20 of the Conditions of Tendering in Appendix 1 the EOI said that after selection
Proponents would only be allowed to change their proposed shareholders and major
suppliers with the prior written consent of RailCorp. While it is not necessarily seeking
changes to a Proponent’s team, RailCorp wishes to confirm that this condition will not apply
to any changes made in a Proponent’s updated Response.

Full Resubmission

Where any change is made to a shareholder or major supplier the full Response should be
resubmitted. In other cases Proponents are not required to resubmit a full Response to the
EOI (although they may do so if they wish). It will be acceptable to submit new information
purely in response to this Addendum. Where this is done the entire subsection of the original
Response should be replaced and will then be regarded as superseded. In any case, updated
Responses should be lodged in accordance with Clause 7 of Appendix 1 to the EOI and
comply with the page limits stated there.

EOI Conditions

The conditions applying to the EOI will apply in full to this addendum including (without
limitation) those to the effect that RailCorp will not be liable to any Proponent for any costs,
losses, damages or expenses incurred by any Proponent in preparing or submitting its
response to this Addendum.

EOI Document No. 2004/0106E Addendum
PPP Replacement of Electric Rollingstock

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