West Coast Main Line contest to be re-run after “unacceptable” franchise process mistakes

THE contest to decide who will run the West Coast Main Line rail route is to be fought again after the Government scrapped its decision to award the 13 year franchise to FirstGroup.

Transport secretary Patrick McLoughlin announced that the competition to run trains on the West Coast Main Line has been cancelled following the discovery of significant technical flaws in the way the franchise process was conducted.

The flaws uncovered relate to the way the procurement was conducted by department officials. An announcement will be made later concerning the suspension of staff while an investigation takes place.

The decision means that the Department for Transport (DfT) will no longer be awarding a franchise contract to run the West Coast service when the current franchise expires on December 9. Bidders for the franchise will have their costs reimbursed.

FirstGroup was awarded the £5.5bn franchise in August and was due to take over running trains on the route that links London with the West Midlands and the North West in December.

But the contract wasn’t signed following a legal challenge by the incumbent Virgin Rail. Sir Richard Branson’s company has argued that the decision to select FirstGroup was based solely on finance and that its bid was unsustainable.
The Government is no longer contesting the judicial review sought by Virgin Trains Ltd in the High Court.

It says it is “resolving urgently” the future arrangements for operation of the West Coast and will ensure that train services continue uninterrupted.

The transport secretary has also ordered two independent reviews:  the first into what went wrong with the West Coast competition and the lessons to be learned and the second into the wider DfT rail franchise programme. They will both overseen by leading business figures.

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.

“A detailed examination by my officials into what happened has revealed these flaws and means it is no longer possible to award a new franchise on the basis of the competition that was held.

“I have ordered two independent reviews to look urgently and thoroughly into the matter so that we know what exactly happened and how we can make sure our rail franchise programme is fit for purpose.”

The news is a bitter blow to FirstGroup which said only yesterday that it was confident Virgin Rail’s legal challenge would not succeed. 

“We have every confidence in the DfT’s process which is rigorous, detailed and fair and in which bids are thoroughly tested,” it said.

But less than 24 hours later it was declaring itself extremely disappointed that its franchise victory has been overturned.

“We were notified late last night that the Department for Transport (DfT) has apparently discovered significant technical flaws in the way their franchise process for the InterCity West Coast was conducted and have consequently cancelled the competition for this franchise,” it said in a statement this morning.

“We understand the DfT has ordered two urgent independent inquiries into the West Coast competition and the wider DfT rail franchise programme. Until this point we had absolutely no indication that there were any issues with the franchise letting process and had received assurances from the DfT that their processes were robust and that they expected to sign the contract with FirstGroup soon.

“We are extremely disappointed to learn this news and await the outcome of the DfT’s inquiries.

“The DfT have made it clear to us that we are in no way at fault, having followed the due process correctly. We submitted a strong bid, in good faith and in strict accordance with the DfT’s terms. Our bid would have delivered a better deal for West Coast passengers, the taxpayer and an appropriate return for shareholders.”

Virgin boss Branson welcomed the announcement. He said: “From the moment we found out that FirstGroup had been made the preferred bidder with a completely unrealistic bid, we questioned the way the offers had been assessed, and asked Government to review and explain how it came to its decision.

“I am pleased to say that the DfT has looked at all of the facts and found significant flaws in the way its officials handled the process.

“They have basically acknowledged that what we had been saying is correct.”

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