NCTS may lose car test contract

THE COMPANY operating the national car test, NCTS Ltd, may lose the contract after being ranked second in a tender to provide the service for the next 10 years. NCTS Ltd is a wholly-owned subsidiary of SGS Ireland Ltd, and has run the vehicle roadworthiness test since January 2000. Three companies tendered for the new contract, and NCTS is understood to have been ranked second during the evaluation period.

Negotiations between the Road Safety Authority (RSA) and the preferred bidder are under way, with a contract expected to be signed within weeks.

A national car test was introduced in 2000 after EU legislation made it compulsory, as part of a bid to improve road-worthiness in private cars. The test is mandatory for all cars over four-years-old, and vehicles must be retested every two years.

The new contract envisages up to 11 million car tests being conducted between 2010 and 2019, suggesting potential fee income for the successful company of over €400 million at 2008 prices. The test costs €49, and a retest €27.50.

A spokesman for the RSA said last night: "The current contract expires at the end of 2009. As the tender process is not complete the RSA is precluded from discussing it further at this time." A spokesperson for NCTS was unavailable for comment yesterday.

The RSA has decided to follow the current model of awarding the contract to one operator for a 10-year period. It started a European-wide tender process last year, and retained PricewaterhouseCoopers as advisers.

PricewaterhouseCoopers carried out a mid-term review of the car testing service in 2005, suggesting a number of changes, including the establishment of a testing centre on the Inishowen peninsula in Co Donegal. The review also recommended free-retests where defective tyres were the only cause of failure.

In a note in its 2007 annual report, the NCTS directors state revenues are largely dependent on one contract. "If this contract was to cease, this would have a detrimental effect on revenues", adding that wage increases were impacting on profitability.

Revenues for NCTS increased to almost €35 million last year as the number of cars tested rose to 701,271, compared with 686,705 in 2006.

However, rising staff and administration costs saw pre-tax profits for 2007 fall 10 per cent to €6.17 million. NCTS employs 497 people in 48 test centres across the State, and also provides driving tests under licence to the RSA.