Mayor criticised over Barclays cycle scheme expansion

Barclays was given the assurance no banking rival could sponsor any other mayoral cycling initiative.

Mayor Boris Johnson's decision to extend Barclays' sponsorship of London's bike hire scheme without fresh competition has been criticised by the Liberal Democrats.

Caroline Pidgeon, who leads their group on the London Assembly, says she has "serious concerns" about the deal.

The mayor announced last week that Barclays would sponsor the bikes for a further three years up to 2018.

But Ms Pidgeon is questioning whether the bank is paying enough and says the sponsorship should be put out to a new competitive tender process in 2015 as originally planned.

'Bidding war'

In a letter to Mr Johnson, she asks: "Why was a decision specifically made to not test the market and see whether far more sponsorship income could be generated from 2015 onwards?"

Ms Pidgeon says she is seeking answers to a number of "very serious" questions about Barclays' sponsorship following a BBC London investigation.

It revealed the mayor had personally approached Barclays about backing the scheme, but did not make contact with any other banks.

Ms Pidgeon says: "If this is true, why was no consideration given to approaching a number of banks or other organisations? Was no consideration given to encouraging a bidding war?"

A Transport for London spokesman said: "A range of alternative sources of sponsorship were sought, including the banking and finance industry."

Mr Johnson is said to have offered Barclays chairman Marcus Agius "an exciting opportunity"

BBC London revealed last week that Barclays were awarded the contract after a second tender process which wasn't advertised or openly competitive.

The first tender process in August 2009 failed to secure a sponsor after bids by energy suppliers EDF and phone giant Nokia were deemed too low.

Two other companies, O2 and News International, expressed initial interest but did not go on to bid.

The deal on offer to potential sponsors was then significantly improved by TfL officials, after discussions with Barclays.

Added in was sponsorship of the £200m cycle superhighways - a scheme almost as costly as the bikes - and a guaranteed expansion of the scheme to east London in time for the Olympics.

Barclays' headquarters is in Canary Wharf, which is to be covered by phase two of the scheme.

Legal challenge

The sponsor was also given the right to have access to the personal details of bike users, enabling it to send direct marketing material to them. TfL says that hasn't been used so far by Barclays.

Barclays was also given the assurance that no banking rival could sponsor any other mayoral cycling initiative.

Barclays was then invited to bid for for the contract in March 2010.

The bank has already provided £25m towards the cycle hire scheme and will provide an additional £25m towards its extension.

Previously, a Barclays spokesman said: "We think £50m is a significant investment in the scheme. We were aware of phase two in the initial £25m agreement. We knew it would go east but not the exact location."

Barclays only competitor was EDF, whose bid in the original tender, consisting partly of cash and partly of a pledge of infrastructure investment, had been rejected.

The cycle hire scheme is expected to be expanded to east London in time for the Olympics

There was no fresh advertisement in the Official Journal of the European Union, nor a competitive process thrown open to all which could have attracted more sponsors - especially given the improved offer.

Lawyer David Wollfe, from Matrix chambers, says because the second "private" process didn't follow the same procedure as the first, it could have been open to legal challenge and couldn't be said safely to have achieved best value for the taxpayer.

Transport for London admits it didn't advertise the deal the second time, but says it informed the four companies that had previously expressed an interest that the deal had been made more attractive.

A TfL spokesman said:" All of those companies were given ample opportunity to improve their bids, but only one other company chose to proceed.

"Both bids were fully evaluated and Barclays were chosen as their bid offered by far and away the greatest financial support for the scheme."