Posted 26th April 2012 | 8 Comments
Government urged to come clean over Siemens bid
MPs ARE URGING the Government to reveal its reasons for choosing Siemens as the builder of the £1.4 million Thameslink fleet in preference to Derby-based Bombardier.
The Government has, however, agreed to publish more details about its plans for future rolling stock orders.
The call for greater clarity has come from the House of Commons Transport Select Committee, following the Government's response to the Committee's report about rolling stock procurement.
The Committee had launched its inquiry in the wake of the major controversy sparked by the award of the Thameslink contract to Siemens last June, although at the moment the German multinational still only has 'preferred bidder' status.
The Transport Committee's chairman Louise Ellman said: "If the Government decides to contract with Siemens for the Thameslink trains we would like more information to be published about why their bid was preferred to Bombardier's. This is essential to restore public confidence in the Department for Transport's procurement process and we urge the Secretary of State to act."
Ms Ellman is also urging the Department to provide a 'steady flow of work opportunities' to support employment in the train-building sector, rather than occasional major orders.
The Government's response to the Committee's criticisms, published today, includes a partial admission that the Committee has a point about the 'start-stop' nature of new train procurement in recent years. It says there is 'scope for the DfT to ensure that there is a steadier flow of opportunities', although it warns that it may not be 'feasible or desirable' to smooth out the peaks and troughs altogether.
The official reply to the Committee also promises a clearer view of the prospects for future rolling stock orders, saying: 'The Department plans to publish in April a pipeline of potential rolling stock replacements, which will be informed by the Association of Train Operating Companies' view of its members' future rolling stock procurements.
'Future updates of this pipeline will reflect the industry's response to the opportunities they have taken to procure investment encouraged by the Coalition's policy of, where practicable, longer franchises.'
Ms Ellman, however, is yet to be convinced. She commented: "It remains to be seen how this will affect firms like Bombardier and the long term security of UK supply chains."
Reader Comments:
Views expressed in submitted comments are that of the author, and not necessarily shared by Railnews.
Jon Porter, CALNE
The assessment process has been outlined above. It was also outlined by the then Transport Secretary when he gave evidence to the Transport Sub-Committee. Those assessing the bid do it blindly, not knowing which company they are assessing. In addition those doing the technical assessment and those doing the financial assessment are in total ignorance of each others findings. In the Thameslink case the Tech. Assessment went into the DfT some time before the financial one. The Siemens train was streets ahead on technical matters.
John Gilbert, Cradley
Since Bombardier's withdrawal from the UK would put large numbers of people out of work, (quite apart from the fact that we should be quite capable of supporting train-building in the UK,) but also to take on board the, (alleged by some of your correspondents,) poor quality of Bombardier trains, then what is needed, should Siemens get more contracts, is for that company to undertake, in return for the contract, that the trains should be actually BUILT here - and in the north of England.
David, Seaford
If they wanted Bombardier to be the winner of this contract regardless of the inferior quality and more expensive maintenance, what was the point of the competition in the first place? They could have done the same as they used to do in the communist block by choosing “their” Bombardier, preventing all others from bidding and saving time for all involved without making a joke of themselves.
David Faircloth, Derby
It seems to me that those who have commented above haven't studied either the Thameslink invitation to tender or the evidence given to the Transport Select Committtee.
Tenders were valuated using a four stage progressive process, and this is split into two parts; the first part comprises the first three stages, and consider the technical aspects of each bid, project and programme management, the structure of the commercial proposal etc. These are scored, and those which "pass" move to stage four/part two of the process; the Alstom bid failed to pass through these three stages.
Stage four/part two is a totally separate calculation; Thameslink is a total train service provision deal with a life of thirty years - it is a PFI, quite common for hospitals and other government infrastructure projects but unusual for trains (although the IEP is also one). It might be that Bombardier trains are riddled with faults, that Siemens trains are far superior, that the "best" trains should be built, etc; but this isn't taken into account when selecting the preferred bidder.
Quite simply, the DfT decided that bidders who got through the first three stages could provide what they wanted, so this information is then "parked" and its back to square one; the bids which got through to the second part start from a common position , and the preferred bidder is the tenderer who's bid has the best net present value over the life of the project.
So credit ratings are key; those who are able to calculate the difference these make to the two remaining bids indicated that Siemens superior credit rating gave it a commercial advantage of hundreds of millions of pounds over Bombardier (the concensus seems to be that Siemens had a benefit of between five hundred and seven hundred million pounds over Bombardier, taken over the project's life). This is why Siemens won Thameslink; pure and simple. There is no way that a difference of such magnitude can be overcome.
Older readers will remember that Bombardier bought ADtranx from DaimlerChrysler at the start of this century, and that Siemens also acquired the Krefeld facility in 1999 (it was formerly DUEWAG); if these acquisitions had been the other way round - ie., if Bombardier had bought DUEWAG and Siemens ADtranz - and the Krefeld built 'Desiro City' had been tendered as a Bombardier product and the 'Adventra' as a Siemens one, the Derby-built 'Adventra' would have been selected as the preferred bidder.
This is all public domain information, so I don't understand why the Transport Select Committee has asked the DfT to "come clean" over the Siemens bid; just by studying the invitation to tender and the evidence given to it, it is clear why the Siemens' bid "won".
But I am disappointed with the Select Committee in that it hasn't asked "why?"
Why was the tender evaluation process structured in the way it was so that - as Vince Cable declared - the end result was inevitable (unless Siemens "mucked-up" with the technical bid and they failed to get through stages 1-3, as Alstom did)?
As it is contrary to EU procurement law to give a tenderer an unfair commercial advantage, why did the DfT think it OK to give Siemens an advantage of between £500m and £700m?
If this isn't seen as being unfair, what is?
Typically trains here in the UK are procured by TOCs, but Thameslink was procured by the DfT; EU procurement law places certain obligations on State Ministries when procuring goods, so why weren't these followed by the DfT on Thameslink?
The invitation to tender gives the Secretary of State for Transport many powers to terminate the process, not to award a contract, etc; so as, clearly, the tender evaluation process was flawed, why did Philip Hammond decide not to use the powers vested in him and re-start the tendering process (Thameslink trains are not required until the December 2018 timetable change)?
Thameslink is a very complex exercise, and the above is just a very brief summary. But the bottom line is that, in the DfT, we have a government department which is not fit for purpose when procuring trains as there are also procedural/procurement law errors with the way the IEP has been taken forward.
Steve, Nottingham
"essentially just clobbered together and build for the Victorian era"
How do you mean exactly? You think they used Aluminium carbodies and IGBTs driving asyncronous motors in Victorian era?
"and the Canadians built trains like Americans build automobiles, BIG SQUARE and BOXEY "
This is irrelevant. Bombardier trins are designed in Derby, not Canada. Canada has nothing to do witht he design of the trains.
Harjinder Singh, Sint-Truiden, Limburg, Belgium
The question of course is are we going for quality or for the most beneficial deal for the UK.
Then there are the EU rules, which sometimes seem to lead to the cheapest bid, rather than the best quality.
One thing is clear to me, siemens has a good record for quality rail products, as we now see here in Belgium with the new 1800 Siemens engines, but the Bombardier TRAXX 2800 also have a record.
These are never easy decisions, but I think any decision should put the quality of the EMUs first.
Harjinder Singh
Michael, London
Siemens won the contract for Thameslink because their trains are engineered for the 21st century, not like Bombardier - trains essentially just clobbered together and build for the Victorian era.
Ride on a Siemens train, it is a train that will be still running in 40 years, Ride on a Bombardier and it is a train that should never have been built.
When Bombardier get their act together and build trains that WE the public want to ride in, they might get new contracts.
Additionally all this harping on and on and on and on about Bombardier being a UK train company - FACT - they are a Canadian/German train manufacturer, and the Canadians built trains like Americans build automobiles, BIG SQUARE and BOXEY - totally wasting space, room, weight, etc.
Personally as a person who has been on both these two company flag ship products in the past month, I hope that Siemens get not on the Thameslink they already have but also the Crossrail, the GWR, ECML, MML, WCML, and the new HS2 trains. One manufacturer with a standard construction (except the guage window of the larger HS2 trainsets) will make maintance and repairs cheaper in the long term.
Dean, Bedford
How about MP's actually accepting that they chose the best trains for the job?
The more pertinent questions about procurement should be related to IEP. Bombardier trains are riddled with faults, every fleet manager knows this, why should passengers, ie me, have to put up with trains that constantly fail and have air-con that can't react to passenger numbers?