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‘Vulnerable and unprepared’ TfL duped into £900m Tube disaster

A fatal mixture of poor commercial expertise, lack of IT procurement skills and ill-informed senior management led to the collapse of Transport for London’s (TfL’s) sub-surface upgrade programme (SSUP) contract with Bombardier, creating “nothing short of a disaster” for the capital.

According to the London Assembly’s Budget and Performance Committee report, a culmination of nearly three years’ work, the council says the failed contract put the SSUP five years behind schedule and hiked costs by almost £900m over the original budget.

This follows a review by TfL’s auditor, KPMG, which found the body’s procurement process was “not well thought out”, with the selection criteria and the award criteria “fundamentally different” and offering no opportunity to “follow up on any concerns identified at the first stage later in the process”.

London Underground awarded the contract to Bombardier in June 2011, but decided to terminate it just two years later, paying a final settlement of £85m – of which £67m is estimated to have been “wasted expenditure”. It then re-let the contract to Thales last year, at which point the “full implications of the failed Bombardier contract came to light”.

“The programme is now not expected to be completed until 2023 – five years late. Furthermore, TfL has increased the budget for the ATC element of the programme by £886m,” the Assembly report said.

“Delays and cost increases will have significant consequences for both passengers and TfL’s capital programme. The broader economy will also suffer, with TfL estimating damage in the hundreds of millions.”

On one side, TfL believes that it was Bombardier’s “shameful performance” that ultimately caused the contract to fold, with mayor Boris Johnson MP even saying the company “totally stuffed it up”. The transport body also claimed it was duped by Bombardier “from the outset about its expertise and experience”.

But TfL’s own strategy for delivering the signalling programme was also fundamentally wrong, the report found: “TfL relied on Bombardier to provide an end-to-end solution. The market is not mature enough to take this approach now and it certainly was not five years ago.”

It also highlighted a culture that permeated TfL’s management which was “only interested in presenting good news”, with its executives still claiming in 2014 that the project could be delivered by 2018 despite experts suggesting this was impossible.

“The fact that TfL has now confirmed that the programme is running five years late suggests that TfL’s senior management team was ill-informed, in denial, or unprepared to provide the public with its honest view of the state of the programme,” the report added.

John Biggs AM, chairman of the Assembly’s Budget and Performance Committee, concluded that neither TfL nor Bombardier’s management teams were “up to the task of managing the programme”, the result of which means Londoners will “pay the price in travel delays and inefficiencies”.

“What is most remarkable about this affair is that no-one in TfL has been held to account, and the mayor, who chairs its board, serenely and indifferently acts as if a £900m increase to the budget isn’t an issue,” Biggs added.

“In government, heads – political or official – would roll after such financial mismanagement.  At TfL the key players have been promoted and nobody was to blame. It is a scandal.”

A TfL spokesman insisted that work on the SSUP upgrade was “well underway”, adding: “It was essential that decisive action was taken to end the old Bombardier contract as soon as it became clear that it would not deliver for London.

“As the assembly acknowledges, we have implemented the central recommendations from KPMG's independent review.”

Bombardier spokesman Marc Laforge also told the Financial Post that the contract was ended “jointly and amicably”, with significant design work already completed despite “several lengthy discussions during the design phase due to the increased complexity of the project”.

“Though we do not agree with the judgements made in the report, we continue to have amicable relations with UK customers, building on a long and successful history of cooperation and a significant presence in the UK market,” he said.


T Jones   15/03/2016 at 14:49

Proper planning and preparation prevents poor performance - always

Matt Whyndham   18/03/2016 at 12:34

Hmm, perhaps a case of the system complexity being more than the comprehension of the owner or the contractor were able to (or willing to) acknowledge? While it's a nice thing to say in classrooms, "proper planning" isn't always straightforward to do. In many cases, London's transport systems being one, it simply isn't possible to create a complete plan in a reasonable time. The client needs to have procurement process that can deal with high technical uncertainty, which doesn't appear to have been the case here.

Andrew G   28/03/2016 at 22:03

The tube disaster that could of cost TfL £900m or the tax payers that much could of been catastrophic not just London Underground but also other organisations that would of been affected by it.

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