MPs criticise 'limited procurement capability' around UK government's £10.5 billion train deals

Will Green is news editor of Supply Management
17 December 2014

MPs have criticised the Department for Transport’s (DfT) “limited capacity and capability to manage large scale procurements” surrounding the £10.5 billion purchase of new trains.

In a report published today the Public Accounts Committee (PAC) said the DfT’s decisions to buy new trains for Intercity Express and Thameslink, rather then allowing industry to do so, “has left taxpayers bearing all the risk”.

PAC chairman and Labour MP Margaret Hodge said: “The department has no previous experience of running a procurement of this kind, let alone two with a combined value of £10.5 billion.

“Yet it has chosen to break with its previous approach of leaving it to rolling stock companies and train operators to buy trains, transferring risk away from the rail industry back to government.

“This means that if passenger forecasts are wrong and fewer new trains are needed in future, taxpayers will have to pick up the bill.”

Hodge added: “The department’s decision to take over the procurement has led to confusion over the respective roles and responsibilities of government and the industry which need to be clarified.”

The report said the £7.65 billion Intercity Express Programme (IEP) was “poorly managed from the start” and following a review of the deal by Sir Norman Foster in 2010 the successful bidder, Agility Trains, “came back with a revised bid that was 38 per cent cheaper than its original one”.

“Had it not been for the Foster review, the taxpayer could have been badly ripped off,” said Hodge.

MPs said the DfT began the procurement “without any clear idea of how many trains would be needed, which routes they would run on and what form of power would be required”. In 2009 the specification for the trains changed so they could handle both diesel and electric options, “which is likely to mean higher fares for passengers”, said Hodge.

The report welcomed the fact Agility Trains, a consortium led by Hitachi, will build Intercity Express trains in the UK, but it was “extremely disappointing” that Siemens will not be doing the same with Thameslink trains, “when the £2.8 billion contract is funded by the UK taxpayer and farepayer”.

A DfT spokesman said: “The Intercity Express Programme and Thameslink are huge projects that will bring enormous benefits to passengers. Successive governments have considered how best to deliver these orders and have come to the same conclusion, that government should lead with expert support and advice from the train operating companies.

“IEP and Thameslink are making excellent progress and are on track to deliver very good value for taxpayers and improved services for passengers. They are also creating thousands of new jobs across the UK rail industry.”

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