East Anglia: Review could delay new regional rail franchise

THE award of a new long-term contract to run rail services in East Anglia could be delayed following the Government’s decision to cancel the award of the West Coast main line franchise to FirstGroup.

In a shock move, the Department for Transport has decided not to contest a judicial review sought by current operator Virgin Trains whose bid to renew its West Coast deal was controversially rejected earlier this year.

Transport Secretary Patrick McLoughlin said the decision to pull the new franchise had been taken after the discovery of flaws in the handling of the procurement process within the DfT, which today saw three departmental officials suspended.

Mr McLoughlin also announced two independent reviews, one to identify what went wrong with the West Coast bidding contest and another to consider the DfT’s wider programme of rail franchising.

As a result, three other franchise competitions currently in progress – Essex Thameside, Thameslink and Great Western – have been suspended pending the outcome of the reviews.

And it is possible that other franchises further down the queue, including the new 15-year Greater Anglia contract currently due to begin in July 2014, could also suffer knock-on delays.

Although the formal bidding process for the new franchise is not due to start until well into next year, it is expected to be preceded by a consultation period giving interested parties an opportunity to indicate the hopes in terms of service levels.

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With the entire rail franchising programme now subject to a review, this part of the process at least could be delayed.

However, a spokesman for Greater Anglia, on which Dutch-owned operator Abellio commenced an interim franchise in February this year, said the company had received no notification from the DfT over any change in the timetable for awarding the new long-term deal.

The DfT’s decision to pull the West Coast franchise came just hours after a scheduled trading update from FirstGroup in which it expressed confidence that it would take over the route as scheduled on December 9.

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

Following the DfT announcement, FirstGroup it was “extremely disappointed” at the move and insisted it had no prior knowledge of the decision.

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

“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 its processes were robust and that it 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,” it added. “The DfT has 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.”

However, Virgin Trains welcomed the DfT’s decision and pledged to work with the department in ensuring continuity of service for passengers.

Virgin Group boss Sir Richard Branson 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 the Government to review and explain how it came to its decision.

“We were convinced the process was flawed but despite our best efforts we were met with silence by the Department for Transport.

“We also asked for the Government to appoint an independent advisor to look at the situation, which was turned down. Reluctantly we were forced to seek a judicial review.”

He added: “I am pleased to say that the DfT has looked at all of the facts and found significant flaws in the way it’s officials handled the process. They have basically acknowledged that what we had been saying is correct.”