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09.07.14

DfT criticised by auditors over Thameslink and IEP procurement

Auditors have stated that the Department for Transport (DfT) did not handle the relationships with bidders well during the procurements of rolling stock for Thameslink in London and the Great Western element of Intercity Express.

Analysing the Department’s contracts for the two large procurements of rolling stock, the National Audit Office (NAO) said the deals met the DfT’s broad objectives of reducing long-term costs, but it must handle the procurement process better in the future.

The NAO stated that the DfT kept bidders informed about progress following the appointment of the preferred bidder, but this was primarily through the media, Parliament and public meetings rather than communicating directly with them.

On Intercity Express, NAO stated that it considers that the Department could have done more to explain to the unsuccessful bidder the features of the Agility Trains’ revised bid which led the Department to proceed with that bid. “In our view, this increased the risk of legal challenge,” said the report from the NAO.

The Auditors also stated that they were not able to conclude fully on the value for money on either project until the new trains were in service and benefits were being realised. It added that ensuring value for money was dependent on the “Department and train operators managing the contracts and the wider programmes effectively, and assumptions, such as passenger demand forecasts, holding true”.

They also stated that they were concerned that in the case of Intercity Express, the Department decided to proceed with a revised bid without competition, which means that the DfT’s view that no other manufacturer could offer better value for money was untested.

In light of these findings, it has been recommended that the DfT should act to ensure that the industry understands its policy on the procurement of trains and that its actions are seen to be consistent with the stated policy in the future.

Amyas Morse, head of the NAO, said: “At the moment there is a gap between the Department's stated desire to play only a strategic role in the rail industry and how it is acting. It needs to ensure that the industry understands its policy on the procurement of trains and produce a detailed integrated plan bringing together infrastructure, rolling stock and franchising strategy.”

It has also been suggested to improve procurement planning going forward, the DfT should understand what the project will involve before fixing the timetable and starting the competition; and  it should increase and maintain competitive pressure in future procurements.

Responding to the report, rail minister Stephen Hammond said: “The InterCity Express and Thameslink deals represent great value for money for the taxpayer, delivering the services that passengers need and expect by providing more seats on faster more reliable, quieter and greener trains.

“Both programmes are essential in providing a much-needed increase in capacity on these key routes, as well as supporting growth, employment and connectivity across the country.”

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