West Coast Main Line deal cancelled

3 Oct 2012 by ScottCarey7

Transport Secretary Patrick McLoughlin has announced that First Group will not take over the running of trains on the West Coast Main Line in December “following the discovery of significant technical flaws in the way the franchise process was conducted”, a government statement reads.

The Department of Transport (DfT) says that it will not be awarding a franchise contract for the running of West Coast train services when the current deal expires with Virgin Trains on December 9. The future of the franchise is now uncertain and the DfT is examining options for the future operation of the West Coast service, taking into account procurement and competition law.

McLoughlin stressed that “passengers will continue to be served by the same trains and frontline staff”. Passengers holding tickets have been assured by McLoughlin that their travel plans will not be affected by this decision.

The flaws uncovered relate to the way the procurement process was conducted by department officials. An announcement is due later today concerning the suspension of staff following an investigation of internal procedures.

These flaws stem from the way the level of risk in the bids was evaluated. Mistakes were made in the way in which inflation and passenger numbers were taken into account, and how much money bidders were then asked to guarantee as a result.

McLoughlin said: “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.”

After losing out to First Group in the original decision, Virgin Trains had been seeking a judicial review in the High Court (see online news August 28) owing to concerns over the procurement process and the potential risks to taxpayers and customers. This is no longer being contested.

In a statement, Virgin Trains said: “We welcome today's frank announcement by the Secretary of State, acknowledging the flaws in the way the InterCity West Coast competition was assessed and launching a review into franchising more widely.

"In the meantime, we will assist the Department for Transport in ensuring continuity of service for the millions of customers who depend on train services on the West Coast mainline."

A statement from First Group says it is, “extremely disappointed to learn this news and await[s] the outcome of the DfT's inquiries”.

Maria Eagle, Labour's shadow transport secretary, says: "The West Coast rail franchise fiasco has yet again exposed the shambolic incompetence of this Tory-led government [...] It will be appalling if Ministerial incompetence has left the Government open to legal challenge for which taxpayers will pick up the bill.

"If the Government now transfers the running of this line to its own not for private profit rail company, as seems sensible and likely, then Labour will support that decision."

Two independent reviews will now be conducted to try to establish what went wrong. All other outstanding franchise competitions (Great Western, Essex Thameside and Thameslink) will be paused until after the independent reviews, with an initial report due by the end of October.

The DfT has since spoken to the four bidding companies (First, Virgin, Keolis-SNCF and Abellio) to inform them of the flaws that have been discovered. All bid costs will be reimbursed by the DfT and it has assured them “that a fresh competition will be started as soon as the lessons of this episode are learned”.

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Report by Scott Carey

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