News0 min ago
West Coast Main Line deal scrapped after contract flaws discovered
// Three civil servants are suspended after flaws in the bidding process for the UK's West Coast rail franchise will see it re-run at a cost of at least £40m. //
Anyone else thinking bribes?
Anyone else thinking bribes?
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The process was run by civil servants and it rather looks as if they may have taken the cheapest bid without properly assessing whether the business case behind it was viable.
As I recall it assumed something like 10% year on year growth
Mostly this looks like a civil service failure regardless of politics ( Unless it come out there was pressure of a political nature).
However one is tempted to ask whether the minister at the time (Theresa Villers?) did due dilligence in overseeing the civil servants.
As I recall it assumed something like 10% year on year growth
Mostly this looks like a civil service failure regardless of politics ( Unless it come out there was pressure of a political nature).
However one is tempted to ask whether the minister at the time (Theresa Villers?) did due dilligence in overseeing the civil servants.
redman41 - sort of - if it ain't broke , dont fix it . I take your point .
However that could be a fit unfair if no other company stood a chance of running a business , if the incumbent was doing a good job .
I think that it is right that a contract is awarded for a specific period of time and at the end of that period , other companies are afforded the chance to bid .
In this case it's apparent that first group won the contract based on a flawed tender process and would not have been able to deliver what was in their tender .
I bet Virgin are having deja vu - remember the national lottery .
On a personal note - i like Richard Branson and hope virgin retains the franchise .
However that could be a fit unfair if no other company stood a chance of running a business , if the incumbent was doing a good job .
I think that it is right that a contract is awarded for a specific period of time and at the end of that period , other companies are afforded the chance to bid .
In this case it's apparent that first group won the contract based on a flawed tender process and would not have been able to deliver what was in their tender .
I bet Virgin are having deja vu - remember the national lottery .
On a personal note - i like Richard Branson and hope virgin retains the franchise .
Regardless of which political party was responsible, the minister responsible for costing taxpayers multiple millions of pounds should be summarily sacked. Such calamitous judgement is inexcusable.
I believe that to have been Justine Greening. Suspending a few scapegoat civil servants is a total insult to us all.
I believe that to have been Justine Greening. Suspending a few scapegoat civil servants is a total insult to us all.
How far back do you want to go? Since 2002, according to http://
Alistair Darling, 29 May 2002 - 5 May 2006, Labour
Douglas Alexander, 5 May 2006- 27 June 2007, Labour
Ruth Kelly, 28 June 2007 - 3 October 2008, Labour
Geoff Hoon, 3 October 2008 - 5 June 2009, Labour
The Lord Adonis, 5 June 2009 - 11 May 2010, Labour
Philip Hammond, 12 May 2010 - 14 October 2011, Conservative
Justine Greening, 14 October 2011 - 4 September 2012, Conservative
Patrick McLoughlin, 4 September 2012 - date, Conservative
Alistair Darling, 29 May 2002 - 5 May 2006, Labour
Douglas Alexander, 5 May 2006- 27 June 2007, Labour
Ruth Kelly, 28 June 2007 - 3 October 2008, Labour
Geoff Hoon, 3 October 2008 - 5 June 2009, Labour
The Lord Adonis, 5 June 2009 - 11 May 2010, Labour
Philip Hammond, 12 May 2010 - 14 October 2011, Conservative
Justine Greening, 14 October 2011 - 4 September 2012, Conservative
Patrick McLoughlin, 4 September 2012 - date, Conservative
Whatever became of the words, "The buck stops here"? If this grotesque fiasco had happened during Labour's watch, how many Tories would be putting forward the notion that - in all conscience - the blame applied just as much to them?
This is simply yet another layer to the ongoing omnishambles that the Tory-led coalition is.
This is simply yet another layer to the ongoing omnishambles that the Tory-led coalition is.
OK, if we do want to make a political football out of this, then I look forward to discovering who was on watch when the process was put in place.
If it was sometime in the last ten years, then for the first four of those Alistair Darling was in office. He then went on to the Treasury and look what happened there ...
No other minister held the post for much longer than a year. Darling held it for four.
At least in this case, thanks to Branson/Virgin more than any MP of anyy persuasion or the civil service, we pulled back from potentially making a very big mistake. Unlike the East Coast line, where a similar process appeared to be followed and did result in a big mistake. The East Coast franchise was awarded in 2005, under Darling's tenure. Try reading the "History" and "Demise" sections of this page:
http://
Highlights:
Sea Containers was awarded a new 7 year franchise by the Department for Transport from May 2005 with a 3 year extension dependent on performance targets being met. GNER committed to pay a £1.3 billion premium to the Department for Transport over ten years.
However due to the financial problems caused by it having overbid as well as financial difficulties encountered by the parent company, on 15 December 2006 the government announced it was stripping the franchise from Sea Containers and would put it up for re-tender, with GNER running the franchise on fixed fee management contract in the interim.
On 20 February 2007 the Department for Transport announced that Arriva, First, National Express and Stagecoach/Virgin Group had been shortlisted to lodge bids for the new franchise.
On 14 August 2007 the Department for Transport awarded the InterCity East Coast franchise to National Express. National Express committed to pay a £1.4 billion premium to the Department of Transport over 7 years 4 months. At the time rail analysts had speculated that the Group had paid too much for the franchise. National Express East Coast commenced operating the franchise on 9 December 2007.
On 1 July 2009 it was announced that National Express planned to default on the franchise, having failed to renegotiate the contractual terms of operation, with National Express stating that it would not provide any further financial support necessary to ensure NXEC remained solvent. This meant NXEC would run out of cash by the end of 2009. As a result, the Department for Transport announced it would establish a publicly owned company to take over the franchise.
In prior negotiations, the Group had reportedly offered to pay over £100 million in order to be released from its commitment to operate the franchise. Transport Secretary Lord Adonis had rejected this on a matter of principle. He stated: "The government is not prepared to renegotiate rail franchises, because I'm simply not prepared to bail out companies that are unable to meet their commitments". In defaulting on the franchise, under the franchising system, National Express Group only directly incurred losses of £72 million by forfeiting bonds.
The franchise failure sparked public and industry calls for the permanent public ownership of the InterCity East Coast franchise, or even the complete scrapping of the entire franchise system. In response, Lord Adonis reiterated the findings of a 2008 National Audit Office report, which had concluded that the rail franchising system delivered good value for money and steadily improving services.
National Express East Coast continued to operate the franchise until 23:59 on 13 November 2009, when the Department for Transport took over through its East Coast subsidiary.
If it was sometime in the last ten years, then for the first four of those Alistair Darling was in office. He then went on to the Treasury and look what happened there ...
No other minister held the post for much longer than a year. Darling held it for four.
At least in this case, thanks to Branson/Virgin more than any MP of anyy persuasion or the civil service, we pulled back from potentially making a very big mistake. Unlike the East Coast line, where a similar process appeared to be followed and did result in a big mistake. The East Coast franchise was awarded in 2005, under Darling's tenure. Try reading the "History" and "Demise" sections of this page:
http://
Highlights:
Sea Containers was awarded a new 7 year franchise by the Department for Transport from May 2005 with a 3 year extension dependent on performance targets being met. GNER committed to pay a £1.3 billion premium to the Department for Transport over ten years.
However due to the financial problems caused by it having overbid as well as financial difficulties encountered by the parent company, on 15 December 2006 the government announced it was stripping the franchise from Sea Containers and would put it up for re-tender, with GNER running the franchise on fixed fee management contract in the interim.
On 20 February 2007 the Department for Transport announced that Arriva, First, National Express and Stagecoach/Virgin Group had been shortlisted to lodge bids for the new franchise.
On 14 August 2007 the Department for Transport awarded the InterCity East Coast franchise to National Express. National Express committed to pay a £1.4 billion premium to the Department of Transport over 7 years 4 months. At the time rail analysts had speculated that the Group had paid too much for the franchise. National Express East Coast commenced operating the franchise on 9 December 2007.
On 1 July 2009 it was announced that National Express planned to default on the franchise, having failed to renegotiate the contractual terms of operation, with National Express stating that it would not provide any further financial support necessary to ensure NXEC remained solvent. This meant NXEC would run out of cash by the end of 2009. As a result, the Department for Transport announced it would establish a publicly owned company to take over the franchise.
In prior negotiations, the Group had reportedly offered to pay over £100 million in order to be released from its commitment to operate the franchise. Transport Secretary Lord Adonis had rejected this on a matter of principle. He stated: "The government is not prepared to renegotiate rail franchises, because I'm simply not prepared to bail out companies that are unable to meet their commitments". In defaulting on the franchise, under the franchising system, National Express Group only directly incurred losses of £72 million by forfeiting bonds.
The franchise failure sparked public and industry calls for the permanent public ownership of the InterCity East Coast franchise, or even the complete scrapping of the entire franchise system. In response, Lord Adonis reiterated the findings of a 2008 National Audit Office report, which had concluded that the rail franchising system delivered good value for money and steadily improving services.
National Express East Coast continued to operate the franchise until 23:59 on 13 November 2009, when the Department for Transport took over through its East Coast subsidiary.
The 'process' may well be faulty but the point is that it has been under the supervision of Tory ministers now for over two years. It used to be that ministers were responsible for what happened in their departments...no longer, it seems.
Recently, Hunt crawled out from under by claiming he had no idea what his special adviser was doing. As Dennis Skinner said, "When posh boys get into trouble, the servants get the blame" or words to that effect. If Hunt was free of guilt, he was certainly not free of incompetence.
Now, Greening - an accountant - has slithered away just in time from a money fiasco and it's HER 'servants' turn to get the blame. Or maybe someone already knew what was coming "down the line," if you'll forgive the phrase!
It's utterly irrelevant to point out that Labour suffered from fiascos and incompetencies, too. We might as well go back to MacMillan or Churchill on that basis. The point is that they're not in power NOW and anyone disagreeing and ignoring that fact might just as well say that his dad can fight my dad.
Recently, Hunt crawled out from under by claiming he had no idea what his special adviser was doing. As Dennis Skinner said, "When posh boys get into trouble, the servants get the blame" or words to that effect. If Hunt was free of guilt, he was certainly not free of incompetence.
Now, Greening - an accountant - has slithered away just in time from a money fiasco and it's HER 'servants' turn to get the blame. Or maybe someone already knew what was coming "down the line," if you'll forgive the phrase!
It's utterly irrelevant to point out that Labour suffered from fiascos and incompetencies, too. We might as well go back to MacMillan or Churchill on that basis. The point is that they're not in power NOW and anyone disagreeing and ignoring that fact might just as well say that his dad can fight my dad.
It seems to be irrelevant who was Transport Minister at the outset? That's neither here nor there because I don't think anyone has denied the benefits of the project.
Therefore it makes no difference how many predecessors had come and gone, it's whoever ultimately gave the green light who must be held accountable, and in this particular instance it was Ms Greening who, mysteriously, was only in situ a mere 11 months before being shuttled away to the far less important post she now holds. Wonder why?
Therefore it makes no difference how many predecessors had come and gone, it's whoever ultimately gave the green light who must be held accountable, and in this particular instance it was Ms Greening who, mysteriously, was only in situ a mere 11 months before being shuttled away to the far less important post she now holds. Wonder why?
Greening was moved over Heathrow, not this.
I think the point in this case is that the procedure is one that has been carried by the Civil Service through from one government to the next, and that the procedure itself was put in place by the previous government.
Both governments should have spotted the problem, neither government did. But I would say, without any particular political axe to grind, that the government that was incumbent when the problem was introduced should carry the most responsibility.
And this is the same problem, the exact same problem, that blew up on the East Coast line. Why didn't Labour spot the problems in 2009, instead of Adonis defending the process? Why did the Tory-led coalition continue to implement the same flawed procedure? Why did it take them being taken to court for them to realise the problem that was under all their noses the whole time. I don't recall Labour, during the time since Virgin losing the franchise, saying that a big mistake had been made. They've only claimed that a mistake has been made since McLoughlin said a mistake has been made. And McLoughlin himself only noticed it because Branson was taking them to court.
When Branson lost the East Coast bid in 2007, he wasn't the incumbent and therefore had less to lose. This time, with more to lose and especially given the experience of the East Coast line, he took it a lot more seriously and pointed out the errors that have been there for all to see for a long time.
I think the point in this case is that the procedure is one that has been carried by the Civil Service through from one government to the next, and that the procedure itself was put in place by the previous government.
Both governments should have spotted the problem, neither government did. But I would say, without any particular political axe to grind, that the government that was incumbent when the problem was introduced should carry the most responsibility.
And this is the same problem, the exact same problem, that blew up on the East Coast line. Why didn't Labour spot the problems in 2009, instead of Adonis defending the process? Why did the Tory-led coalition continue to implement the same flawed procedure? Why did it take them being taken to court for them to realise the problem that was under all their noses the whole time. I don't recall Labour, during the time since Virgin losing the franchise, saying that a big mistake had been made. They've only claimed that a mistake has been made since McLoughlin said a mistake has been made. And McLoughlin himself only noticed it because Branson was taking them to court.
When Branson lost the East Coast bid in 2007, he wasn't the incumbent and therefore had less to lose. This time, with more to lose and especially given the experience of the East Coast line, he took it a lot more seriously and pointed out the errors that have been there for all to see for a long time.
In my view Lazygun and Ellipsis are closest to the mark in understanding this.
In assessing these types of bids, it is never a simple case of saying Virgin's bid is X, First Group is Y, so First Group is the lower of the two. That would be very simple. There is a financial bid that takes that form but there is also a technical bid that explains how the company will provide the service. It is then the job of the DfT assessment team to consider the RISKS associated with each aspect of the bidder's offer. There is then a methodology for assessing the cost of these risks, which is then applied to each bidder, increasing the effective cost of their submission.
The issue is likely to be that First Groups' bid is more risky because they understand less about what constraints exist - because they haven't been running the contract for the last Z years. It is the job of the DfT contracts people to make sure these risks get pinned back onto the contract, because if they don't, the costs associated further down the line during the contract delivery phase get picked up by the DfT.
What has probably happened here is that a second pass assessment of the risks has shown this part of the assessment hasn't been done very thoroughly, and the risks assumed with First Group's bid have been understated. Include these and their bid now looks more costly than Virgin's.
There is also an issue because this 'costing of risks' is not a definitive process - there is a methodology OK but it depends on opinions of experts.
In assessing these types of bids, it is never a simple case of saying Virgin's bid is X, First Group is Y, so First Group is the lower of the two. That would be very simple. There is a financial bid that takes that form but there is also a technical bid that explains how the company will provide the service. It is then the job of the DfT assessment team to consider the RISKS associated with each aspect of the bidder's offer. There is then a methodology for assessing the cost of these risks, which is then applied to each bidder, increasing the effective cost of their submission.
The issue is likely to be that First Groups' bid is more risky because they understand less about what constraints exist - because they haven't been running the contract for the last Z years. It is the job of the DfT contracts people to make sure these risks get pinned back onto the contract, because if they don't, the costs associated further down the line during the contract delivery phase get picked up by the DfT.
What has probably happened here is that a second pass assessment of the risks has shown this part of the assessment hasn't been done very thoroughly, and the risks assumed with First Group's bid have been understated. Include these and their bid now looks more costly than Virgin's.
There is also an issue because this 'costing of risks' is not a definitive process - there is a methodology OK but it depends on opinions of experts.
It appears I (and earlier reports) was mistaken:
http://www.bbc.co.uk/news/business-19810845
The Department for Transport was using an entirely new model for evaluating bids, a spokesperson told the BBC. The mistakes appear to have been down to errors made in the inputting of the data, rather than with the model itself, he says.
The department declined to give any further details on the specifics of any miscalculation. But it has suspended three officials who may face further disciplinary action once an investigation has been completed.
It has announced two independent reviews into the fiasco. The first will be an "urgent examination into the lessons learned" from awarding the West Coast franchise, which will report by the end of October. The second will look at the way in which rail franchises are awarded in general, which will report by the end of the year.
Some commentators have argued that such actions would be unlikely had the mistake arisen simply from an error in data entry.
http://www.bbc.co.uk/news/business-19810845
The Department for Transport was using an entirely new model for evaluating bids, a spokesperson told the BBC. The mistakes appear to have been down to errors made in the inputting of the data, rather than with the model itself, he says.
The department declined to give any further details on the specifics of any miscalculation. But it has suspended three officials who may face further disciplinary action once an investigation has been completed.
It has announced two independent reviews into the fiasco. The first will be an "urgent examination into the lessons learned" from awarding the West Coast franchise, which will report by the end of October. The second will look at the way in which rail franchises are awarded in general, which will report by the end of the year.
Some commentators have argued that such actions would be unlikely had the mistake arisen simply from an error in data entry.
Here are a couple of quotes from the above link…
“The Department for Transport was using an entirely new model for evaluating bids” …and… “There is no question of looking back at previous franchises, because the mistakes occurred while inputting data into the new model which has not been used before.”
If accurate, the above would seem to preclude any connection at all with any franchise assessment or award involving Labour, as has been claimed earlier here.
The question, therefore, must be, “Who’s to blame for the fiasco?” Is the answer really "Three civil servants" or is this merely another example of "doing a Hunt"?
You'd imagine when a totally new assessment system was being used, ministers would be vastly more vigilant about ensuring its oversight, wouldn't you?
“The Department for Transport was using an entirely new model for evaluating bids” …and… “There is no question of looking back at previous franchises, because the mistakes occurred while inputting data into the new model which has not been used before.”
If accurate, the above would seem to preclude any connection at all with any franchise assessment or award involving Labour, as has been claimed earlier here.
The question, therefore, must be, “Who’s to blame for the fiasco?” Is the answer really "Three civil servants" or is this merely another example of "doing a Hunt"?
You'd imagine when a totally new assessment system was being used, ministers would be vastly more vigilant about ensuring its oversight, wouldn't you?
> If accurate, the above would seem to preclude any connection at all with any franchise assessment or award involving Labour, as has been claimed earlier here.
That's right. The similarities with the East Coast franchise fiasco are purely coincidental!
> The question, therefore, must be, “Who’s to blame for the fiasco?” Is the answer really "Three civil servants" or is this merely another example of "doing a Hunt"?
Having just seen the C4 news report, I get the idea that this is will go a lot further than those three civil servants. We shall see ...
That's right. The similarities with the East Coast franchise fiasco are purely coincidental!
> The question, therefore, must be, “Who’s to blame for the fiasco?” Is the answer really "Three civil servants" or is this merely another example of "doing a Hunt"?
Having just seen the C4 news report, I get the idea that this is will go a lot further than those three civil servants. We shall see ...
“There is no question of looking back at previous franchises” is what your own link had to say, Ellipsis, and now - sarcastically, I presume - “The similarities with the East Coast franchise fiasco are purely coincidental!” is what you have to say. They don’t quite hang together, do they? But what the hey! I’ll leave it at that.
Oh dear QM. I admitted I was wrong and I posted a link to new information which was helpful to your cause. Are you so politically jaded that you cannot see when somebody is not playing politics? And instead see sarcasm?
If so then I'm sure, without a hint of sarcasm, that you thought the East Coast franchise was a great success in comparison to this fiasco ...
If so then I'm sure, without a hint of sarcasm, that you thought the East Coast franchise was a great success in comparison to this fiasco ...
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