DfT must improve plans for future major procurement projects, says NAO

Gurjit Degun
8 July 2014

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9 July 2014 | Gurjit Degun

The Department for Transport (DfT) has been urged to improve the way it plans major procurement projects, by the National Audit Office (NAO).

An investigation into the DfT purchasing 2,006 new trains for Thameslink and Intercity Express found that it did not handle relationships with bidders well.

“On Intercity Express, we consider that the department could have done more to explain to the unsuccessful bidder the features of the Agility Trains’ revised bid which led the department to proceed with that bid,” said the NAO. “In our view, this increased the risk of legal challenge.”

The report explained for the Intercity Express contract, the DfT proceeded with a revised bid without rerunning the competition. “The department view is that no other manufacturer could offer better value for money but this remains untested,” the NAO said.

The report added: “Just two years after the Intercity Express procurement began, the department decided to electrify the Great Western Main Line which meant that diesel trains were no longer needed.

“While the programme was designed to be flexible enough to accommodate this change of direction, the NAO recommends that the department in future major procurements produce a detailed, integrated plan to bring together infrastructure, rolling stock and franchising strategy.”

The NAO also said the DfT needs to “continue to manage risks going forward and maintain an effective oversight role”. In particular, it pointed to the electrification works which are also currently over budget.

The report added the department should “increase and maintain competitive pressure” in future procurements. “Where possible, the department should limit changes once it has chosen a preferred bidder and the time spent on this phase,” the report added.

A statement from Margaret Hodge, Labour MP and Public Accounts Committee chairman, added: “I am worried that the department accepted a revised bid from its preferred bidder, Agility Trains on the Intercity Express, without first checking whether other providers could deliver a better deal. I would have expected a more considered judgement from the department given the scale of the project and the amount of money involved.”

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