Direct award of a Lease for Class 444/450 rolling stock

Direct award of a contract of between 3 to 5 years in duration (which remains subject to settlement of commercial terms) for the leasing of 45 x 5 car units of Class 444 rolling stock and 127 x 4 car units of Class 450 rolling stock and related spares and special tools. The lease of the rolling stock is on the basis that the contracting authority (rather than the supplier) is responsible for all maintenance of the vehicles.

The Lease also contains a right to transfer or sub-let the contract to certain third parties and an obligation for the supplier to enter into a direct agreement with the Secretary of State in parallel to the Lease. The direct agreement permits the Secretary of State to call for a New Contract in the event of the termination or expiry of the contracting authority's services agreement with the Secretary of State.

The duration of the New Contract would typically be up to 3 years and the terms of the New Contract and the circumstances in which the direct agreement can be relied upon are all

unambiguously set out in the direct agreement. The Lease also contains provisions addressing adjustments to monthly rentals on the basis specified in the Lease if certain modifications to the rolling stock are required which are to be funded by the Lessor. In the event that the contract is transferred or sub-let to a third party, a direct agreement is relied upon by the Secretary of State or modifications to the rolling stock are required and are to be funded by the Lessor, it is considered that these would be permitted modifications provided for in the contract.