Virgin Trains challenges West Coast contract award

29 August 2012

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29 August 2012 | Adam Leach

Virgin Trains is taking legal action against the Department for Transport (DfT) over its decision to award the rail franchise for the West Coast Mainline route to FirstGroup.

The rail company, which has operated the line between London and Glasgow since 1997, said it had “no choice” but to take the matter to the courts. Last week, the DfT announced First West Coast – a subsidiary of FirstGroup - was its preferred bidder for the franchise.

Virgin has expressed anger in public at the decision and an e-petition calling for the award to be reconsidered has passed 100,000 signatures, the threshold that could prompt a debate in Parliament. At the same time, both the Committee of Public Accounts (PAC) and the Transport Select Committee have voiced concerns over the award of the contract. But transport secretary Justine Greening said yesterday the contract would be signed today as planned.

A spokesman for Virgin Trains told SM the tender documents say the contract cannot be signed if a legal challenge is lodged. A statement from the company said: “We are left with no choice but to commence court proceedings as we believe the procurement process has ignored the substantial risks to taxpayers and customers of delivering FirstGroup's bid over the course of the franchise.”

The precise nature of the legal action is not yet known, but SM understands Virgin’s challenge will focus on how risk has been calculated in relation to the various bids. The company wants clarification from DfT on how bids were weighted against each other with regards to projected future payments. The company will claim the majority of FirstGroup’s higher bid is paid to the government towards the end of the franchise, which could mean there is a greater financial risk for longer.

The DfT said in a statement: “We are confident our process is robust and that the decision was absolutely the right one for taxpayers and passengers. We expect to sign the contract soon.”


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