The Department for Transport (DfT) has cancelled the competition to run trains on the West Coast Main Line following the discovery of ‘significant technical flaws’ in the way the franchise process was conducted.
All other outstanding franchise competitions (Great Western, Essex Thameside and Thameslink) have been put on hold pending two independent reviews.
Evidence of significant flaws in the DfT’s approach emerged while undertaking evidence gathering in preparation for legal proceedings in the High Court, brought about by Virgin Trains after it lost the bid for the franchise to rival FirstGroup in August.
It is believed that these flaws stem from the way the level of risk in the bids was evaluated. Mistakes were made in the way in which inflation and passenger numbers were taken into account and how much money bidders were then asked to guarantee as a result.
In a statement, DfT permanent secretary Philip Rutnam said: ‘The errors exposed by our investigation are deeply concerning. They show a lack of good process and a lack of proper quality assurance.’
Two independent reviews will be undertaken urgently: the first into what went wrong with the West Coast competition and the lessons to be learned and the second into the wider DfT rail franchise programme, both overseen by leading business figures.
The estimated cost of reimbursing the four companies that entered into the bidding process will be around £40m. There are also around 15 rail franchises due to be decided before the next general election that could be in doubt.
FirstGroup, the winner of the original bid, said in a statement: ‘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.’
Meanwhile, the National Union of Rail, Maritime and Transport Workers (RMT) said: ‘You can bet your life that the same basic mistakes made by the government and its officials on the West Coast tender have been made on other franchises.’