Provisional view of the Procurement Strategy Phil Bennett Commercial Director

Digital Railway Overview | PROTECT Digital Railway - A Three Phase Approach Early Deployment Scheme delivered by 2019 Phase 3: Defined by 2016, Developed by 2019 National Roll Out: 2019 to 2029

Strategy Development Stakeholder Engagement Stakeholder Workshops & Focus Groups both with internal stakeholders, external stakeholder groups and suppliers. Engagement and review of proposals as developed with industry groups including RIA and RSG. Digital Railway Supplier conferences in July 2015 and November Principles included in the framework Outline Business Case (October 2015). In the development of the strategy the following key assumptions have been made: Phase 2 contains 1nr “Early Deployment Scheme”, which is defined and funding confirmed in Q4 2015/16. DR will not be the IPR owner for all the technology developed in the programme for the ‘open architecture’ elements, but will instead hold free to use licences for any technology developed. Tender bid evaluations will be against “Most Economically Advantageous Tender”.

Programme Delivery Approach

Overview – DR Delivery Model DIGITAL RAILWAY DEFINITION GBS SYSTEMS INTEGRATION PROGRAMME MANAGEMENT NRT BUSINESS CHANGE IP TOC FOC Delivery Owner: Development & Deployment ROSCO

Digital Railway Overview | PROTECT Programme Approach - the DR System DEFINITION STAGEDEVELOPMENT STAGEDEPLOYMENT STAGE AGREED DR OUTCOMES DEFINITION OF DR SYSTEM CHECKED FOR ROBUSTNESS NATIONAL DR REQUIREMENTS SET AREA/ ROUTE DEFINITION ASSESS AREA/ ROUTE DEPLOYMENT DEVELOP DR SYSTEM DR DEPLOYMENT ASSESSMENT DEPLOY DR SYSTEM CONFIGURE/ INSTALL/ TEST AREA/ ROUTE DEPLOYMENT CONFIGURE/ INSTALL/ TEST DIGITAL RAILWAY PROGRAMME TEAM - SYSTEMS INTEGRATION AND PROGRAMME MANAGEMENT DIGITAL RAILWAY PROGRAMMEDELIVERY OWNER

Two Tier DR Procurement Model Tier 1 – The Overall DR Procurement Principles Industry-level strategy Tier 2 – Toolkit to determine Category Specific Approach Guidance on ‘delivery route’ selection Balanced scorecard Guidance for Category Analysis (matrices, supply market analysis, technology readiness, level of skilled/ available resource in supply chain etc.) Guidance for common procurement and supplier selection process Guidance on appropriate contractual approach with templates

Example Tier 1 Industry Level Strategy (under development) The DR programme will rely on suppliers to deliver the required new technology, from design to installation, operation, maintenance and through to disposal. These core principles will underpin all supply chain arrangements: Meeting performance, productivity and capacity targets Social Responsibility Value for Money Safety and Security

2. Supply market analysis for Category 4. Variety of Procurement Analysis Tools 5. Balanced Scorecard to Evaluate & Manage Performance Example Category Toolkit Suite (under development) EVALUATION TO DETERMINE CATEGORY DETAIL 3. Elements of IUK method to determine ‘Procurement Route’? 1. DR System Plans – All future volumes Categories (Systems) Pathfinder Area 1 Area 2Area 3Area 4 Category A Category B Category C Category D Category E Category F

Collaboration is Key to Success… Categories (Systems) Early Deployment Area 1 Area 2Area 3Area 4 Category A Category B Category C Category D Category E Category F SYSTEMS INTEGRATION PROVIDER PROGRAMME MANAGEMENT PROVIDER COLLABORATE ACROSS AREAS INCENTIVE TO COLLABORATE WITHIN AREA PHASE 2PHASE 2/3

Driven by Contract Strategy for ECI and Incentivisation Supplier Selection OJEU PQQ ITT Stage 1 COST PLUS ARRANGEMENT Appoint Suppliers Stage 2 INCENTIVISED TARGET COST CONTRACT Set Target Costs NEGOTIATION INPUTS: NATIONAL DR SPECIFICATION DEFINED AND DEVELOPED OUTPUT: DETAILED DEVELOPMENT & DEPLOYMENT INPUTS: AREA & ROUTE ASSESSMENT TO DETERMINE LOCAL RISK/ SCOPE OUTPUT: INITIAL DEVELOPMENT TO ESTABLISH SCOPE, SCHEDULE & RISK

Approach to System Packages by DR Phase (Note limited example - not exhaustive list of all categories) DIGITAL RAILWAY INDUSTRY WIDE (principles, toolkit etc.) NATIONAL SYSTEMS INTEGRATION NATIONAL PROGRAMME MANAGEMENT NATIONAL TOOLKIT & CHANGE MANAGEMENT ETCS COMPASS GSM-R Traffic Management New trains Train braking systems Train control system Cab Fitment Volume throughput Depot Design Station Design E-ticketing Barrierless Detection Sales system Passenger Comms system Phase 1Phase 2Phase 3 Infrastructure Rolling Stock Stations & Depots Customer Experience ROCs Rail Operations Rail Maintenance Operations & Maintenance NATIONAL DATA/ IT PLATFORM NR TOC & FOC TOC/ FOC & NR TOC NR Categories Delivery Owner Programme Services DR SYSTEMS INTEGRATION PROGRAMME MANAGEMENT TOOLKIT & CHANGE MANAGEMENT DATA/ IT PLATFORM Key: Plans establishedIn PlaceRequired To Be Confirmed N/A

Phase Two Early Deployment

Digital Railway Phase 2 Scope People: - Culture Change - Org Design - Competencies - Training - Simulation Network Code Data: Systems & standards Operating processes & procedures Safety Regulations Costs Benefits GSM-RETCSC-DASTM COMPASS Implementation standards, templates, specifications, commissioning … Security & Cyber-security Programme mgt & Business Change FTNx

Phase 2 Strategy Summary Digital Railway will procure and provide system integration and programme management activities to support phase 2 activities. Category specific strategy to be developed for non control system elements as scope confirmed. The following slide shows the 6 packages of work that need to be placed for the infrastructure based control systems elements of the Phase 2 Early Deployment Area. These requirements will be procured and delivered as follows:  4nr packages of activity for TM, ETCS, C-DAS and COMPASS; procured and delivered by IP signalling.  2nr packages of activity for FTN and GSM-R; procured and delivered by NRT Winning Phase 2 work does not guarantee follow on work for the packages when rolled out in Phase 3. DR templates for the Toolkit to be developed, tested and refined prior to Phase 3.

Phase 2 Control Systems Categories (Systems)Early Deployment Area Traffic Management ETCS C-DAS COMPASS National - GSM-R National - FTNx SYSTEMS INTEGRATION PROGRAMME MANAGEMENT INCENTIVE TO COLLABORATE ON PATHFINDER DR IP NRT

Next Steps Continue to develop and engage with supplier market & stakeholders to review and establish remaining details of procurement strategy (e.g. optimum phase 3 packaging). Establish a stakeholder group to engage on development of specific contract approach, incentivisation, contract forms etc. Proceed with proposed phase 2 procurement approach as detailed to trial proposed strategy and monitor/capture lessons/issues.

Quick Feedback Opportunity

Strategy feedback On-line survey to be launched shortly for anonymous feedback – link will be issued following the event to all delegates present today. Establishment of engagement group on contract mechanism proposals – if you want to be involved please