Government cancels West Coast franchise tender

3 October 2012

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3 October 2012 | Adam Leach

The Department for Transport has cancelled the current competition for the West Coast Main Line railway franchise, and put the brakes on all others currently being conducted, over concerns about the procurement process.

Transport secretary Patrick McLoughlin today announced an initial review by the department into the contracting process had discovered “significant technical flaws” in the way “procurement was carried out” by DfT officials. As a result, the contract where First Group was selected as the preferred bidder has been cancelled. The department also confirmed it will pay back all costs incurred by bidding parties, which, when combined with the costs of retendering the franchise, could cost the taxpayer as much as £40 million.

McLoughlin said in a statement: “I have had to cancel the competition for the running of the West Coast franchise because of deeply regrettable and  completely unacceptable mistakes made by my department in the way it managed the process.”

In August unsuccessful bidder Virgin Trains started court proceedings against DfT on the grounds the tender did not calculate risk sufficiently. The department confirmed while it was gathering evidence for the proceedings, which are no longer required, it found mistakes in the way both inflation and passenger numbers on the lines had been calculated.

In response, McLoughlin has taken a number of actions to root out the problems and strengthen the procurement process. He has announced two independent reviews into the train franchise awards. The first will specifically look at the West Coast Main Line award, while the second review will take a broader look at how the department awards franchises. Both reviews will report in December, and until then neither the West Coast contract, nor any other rail franchise tender process currently under way will progress.

The department confirmed it is seeking advice on how best to continue running the service, which is currently operated by Virgin Trains, over the period between the end of the current deal on 9 December and the award of the next contract. But it stressed that the same trains run by the same staff will operate.

The department also explained it will make an announcement regarding staff suspensions, suggesting officials involved in the franchise will face disciplinary action.

***Update***

The Department for Transport has confirmed that three officials involved in the failed West Coast Main Line franchise process have been suspended. A spokesman, said: “Three officials involved in the West Coast franchise competition were today suspended by the Permanent Secretary while the full facts are established. No further details will be issued at this time about the suspensions.”

***Update***

5 October

CIPS CEO, David Noble, commented: “Appropriate management and awarding of complex contracts must be managed effectively with highly qualified and trained staff.  As the world’s leading procurement professional body, CIPS will always encourage and support continued development of skills and techniques.

"What is important now is to ensure large, complex contract awards of this nature are successful and efficient going forward, delivering the best result for the public purse.”


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