Transport for London learns lessons after "woeful failure" of £350 million contract

Andrew Pring
28 October 2014

Transport for London (TfL) has overhauled its procurement process in the wake of the failure of a £350 million contract with Bombardier to upgrade signalling on the Circle, District, Hammersmith & City and Metropolitan underground lines.

Following the termination of the contract in December 2013, TfL commissioned a “Lessons Learnt” review which recommended numerous changes including: adopting processes for early contractor involvement; the development of an enhanced procurement and commercial strategy; and strengthening of mechanisms to identify and verify bidders’ claims regarding technical capacity to deliver projects. Additionally, a new pre-qualification questionnaire (PQQ) has been designed to set a much higher bar in terms of pass/fail criteria for consideration of technical capabilities.

TfL’s procurement changes mirror many of the recommendations made by KPMG in a report commissioned by London Underground (LU) to examine the contract failure. The collapse of the deal concluded with Bombardier receiving a controversial £80 million pay off – for “work to date”.

Last week, TfL was heavily criticised by the London Assembly Transport Committee for making the payment, questioning why Bombardier’s "woeful failure" was rewarded with "a fat cheque".

Caroline Pidgeon, chairwoman of the committee, called for further investigation into the letting of the contract to Bombardier and the cost of aborting this deal, despite TfL’s contract overhaul.

“The failure of such a significant contract justifies a major examination of TfL’s assurance and approval processes for all its investment projects and programmes.”

Noting TfL’s admission “we had a bad contract”, she added: “We, therefore, request further information on why Bombardier was not financially penalised for its failure to deliver and the steps TfL is taking to improve the terms of its contracts. TfL should ensure adequate financial consequences for contractors that fail to deliver.”

In the light of both the KPMG review and LU’s own findings, TfL highlighted “the importance of stringently testing the claims made by bidders about their technical capability before commercial evaluation is undertaken”.

It added: “This has been taken forward in the PQQ for the new contract, in particular by: using the learning from the previous Bombardier Transportation procurement (including reviews by recognised independent external experts and by IIPAG) and also from other signalling projects across the industry (not just LU) to develop a PQQ that sets a very ‘high bar’ in terms of pass/fail criteria; requiring potential bidders to provide detailed organisation structure and governance plans; focusing on the suppliers’ capabilities leadership and management, interviewing key delivery personnel and contractually requiring retention of those companies, teams and individuals; and requiring independent proof or verification of data supplied in support of bidders’ answers."

TfL said it was now working with one sole bidder on the project, Talus, which has successfully supplied signalling on the Jubilee and Northern lines.

Bombardier Transportation continues to deliver 191 vehicles for London Underground on the lines it was to supply signalling for, as well as 66 new trains for Crossrail.

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