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‘Innovative bids’ required for East Coast franchise

The three shortlisted companies bidding for the East Coast franchise – Virgin/Stagecoach, Keolis/Eustar and FirstGroup – will have to come up with “innovative bids” if they are to land the final contract, according to rail minister Stephen Hammond.

East Coast is the first InterCity franchise to be let since the launch of the Department for Transport’s (DfT’s) new franchising schedule last March.

Campaigners are angry that the state-owned Directly Operated Railways (DOR), which has run East Coast services since 2009, is being replaced by a private company.

As revealed in January, the shortlisted bidders are Inter City Railways Limited (Stagecoach Transport Holdings Limited and Virgin Holdings Limited); Keolis/Eurostar East Coast Limited (Keolis (UK) Limited and Eurostar International Limited); and East Coast Trains Ltd (First Group plc).

The InterCity East Coast franchise comprises services connecting London with Yorkshire, the north east and Scotland, using the East Coast Main Line (ECML) and routes within Scotland. The franchise  invitation to tender (ITT) includes four new destinations – Huddersfield, Middlesbrough, Scarborough and Sunderland via Newcastle – and a potential new route to Harrogate via York.

The bidders will have to explain how they will enhance the multi-billion pound investment project and what improvements in passenger services will be delivered if they win. They have to explain how they will ensure a smooth transition with no disruption, how they will integrate the new IEP fleet into operational services, how they will deliver faster and more frequent services to and from King’s Cross by May 2020, and improved services to other destinations.  

Rail minister Stephen Hammond said that franchising has been a force for good for the UK’s railways, “delivering record growth to an industry that was once in decline”.

He added that the time is now right to find a long-term partner for the East Coast franchise, who can “use their private sector expertise and knowledge to build on the significant investment planned for the route”.

It is anticipated the successful bidder will be announced in November. The new franchise will start in March 2015 and run for eight years with the possibility of a one-year extension.

As part of the long-term project, services along the ECML are set to be transformed over the coming years through £240m worth of investments which will improve reliability and boost capacity for passengers and freight traffic. The route will also benefit from the government’s £5.8bn Intercity Express Programme, which is set to deliver a new fleet of state-of-the-art trains which will cut journey times and boost the customer experience.

The DfT also explained how the new ITT differs from the previous one following the recommendations of the July 2013 Brown Review. They are technical in nature:

  • The Bid submission requirements detailed in Section 5 (Detailed Bid Submission Requirements – Delivery Plans) are focused on the evidence needed to differentiate between Bidders and their proposed outcomes;
  • Elements of the Specification related to Bidder competence, standard industry processes or requirements already set out in the Franchise Signature Documents are not included within the ITT;
  • The capital requirements for the Franchise have been reviewed and are set out clearly in Section 6 (Detailed Bid submission requirements – Financial) together with the bond backing required. This means that Bidders will be able to determine the capital requirements in advance of Bid submission;
  • Bid evaluation, as set out in Section 7 (Evaluation criteria and methodology), now explicitly takes into account the quality of Bids, in terms of whether they meet the Specification, the benefits that will be delivered, and their robustness and resilience. The scoring of each Sub-Plan is linked, in Section 5 (Detailed Bid Submission Requirements – Delivery Plans), to the Specification
  • Bid evaluation also includes a Financial Robustness Test as described in Section 7 (Evaluation criteria and methodology).

The three bidders have until 19 June to prepare their bids to the exacting requirements of the DfT, which specifies everything down to the font and spacing used.

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