Posted 11th December 2012 | 5 Comments

Thameslink order still on course 'for New Year'

AS THE Christmas holidays approach, an announcement is still awaited about the Thameslink rolling stock competition, in which Derby-based Bombardier lost out to Siemens.

Siemens was named preferred bidder in June 2011, but the frequently-predicted confirmation has been repeatedly postponed.

However, the Government is still insisting that it is on course to finally sign the £1.4bn deal for some 1,100 vehicles within weeks, and has denied that its handling of the Thameslink contract has been affected in any way by the collapse of the West Coast franchise competition.

In a series of written answers in the House of Commons yesterday, transport minister Simon Burns said: "The original date for awarding the contract, as indicated in the Invitation to Tender document of 27 November 2008, was March 2010. We expect the contract to be complete early in the new year.

"We remain confident of reaching financial close with Siemens. If it were not possible to reach financial close with Siemens, we would not automatically award the Thameslink rolling stock contract to Bombardier. However, Bombardier remain reserve bidder.

"The Thameslink rolling stock is a very significant investment. Given the size of the transaction detailed discussions to conclude the commercial documentation have taken place, with the Department protecting its commercial position accordingly."

The answers came in response to several questions from Derby North MP Chris Williamson.

Reader Comments:

Views expressed in submitted comments are that of the author, and not necessarily shared by Railnews.

  • John Gilbert, Cradley, Herefordshire

    Just to add to my earlier comment, this business is like trying to puncture a free-floating balloon adrift in a fog - both as regards us trying to follow it all, and, I suspect, the politicians and civil servatnts as well! . I suppose the Government does know what is going on? Frankly they give every indication of not so doing. In the meantime time is passing.

  • MikeB, Liverpool

    This has become a case of "seeing is believing" - i.e. when the first Desiro City or even Electrostar is delivered to Thameslink and the first refurbished Class 319 is handed over to Northern. Until then, I remain sceptical about the whole deal.

  • David Faircloth, Derby

    This is a mess and reflects badly on government.

    Firstly, the contract is being let by the Secretary of State for Transport, and he is what is called a "contracting authority" in the procurement regulations government must use; by law, when undertaking public procurement exercises, "contracting authorities" must not award contracts to "economic operators" found guilty of certain listed offences, unless there are "overriding requirements in the general interest" so to do.

    Thameslink is a total train service provision deal; the contract will not actually be awarded to Siemens, but to a special purpose company called Cross London Trains. Therefore, you have with Thameslink (and IEP before it) a very unusual situation where the company which pre-qualified, was invited to tender, and subsequently tendered, will not be the company to whom the contract will be awarded. So as soon as the DfT knew who the members of the special purpose companies were, it should have considered their eligibility; by its own admission, it has not done this.

    This has been pointed out to the DfT, but it has declined to take note; in its opinion, it has done nothing wrong, even though numerous experts have indicated otherwise.

    The second major flaw relates to the tender evaluation process; this is a complex four stage progressive process, but it is not continuous. The first three stages evaluate the technical proposal, confirm that proper project management procedures are in place, that the funding proposal is deliverable, etc; all bids which pass through these three stages (Bombardier and Siemens, but not Alstom) are then evaluated separately using formulae described in the invitation to tender and supporting documents.

    Experts who understood these formulae explained to the Transport Select Committee in September 2011 that what had been crafted by the DfT relied too heavily on credit ratings; consequently, when calculating the net present value of each bid, Siemens had a head start over Bombardier. They valued this at about five hundred million pounds.

    The law says that no one tenderer shall be given an unfair commercial advantage over another; the DfT have indicated in correspondence that they do not see giving one tenderer such an advantage is unfair. But quite frankly, unless Siemens had "messed-up" big time with its tender, there was just no way Bombardier (or anyone else) could have won Thameslink; no wonder Vince Cable acknowledged that the end result was inevitable.

    Thameslink is not about who supplies the best train, etc; the Bombardier train tendered could have been the "best thing since sliced bread" and the Siemens one absolute rubbish, but that wouldn't have mattered. As long as the train offered met the DfT's minimum requirements, the tender went into stage 4, and credit ratings were then key in determining the winner.

    Is this fair? I personally don't think so.

    We also now have some idea just how much more it costs to procure trains using the PFI method; calculations published elsewhere in the railway press have shown that IEP will cost over 100% more than if it had been procured through a ROSCO with a separate performance related maintenance contract, and if these figures are carried over to Thameslink the additional cost of funding the two projects approaches £1bn per year. And as the users of IEP and Thameslink trains are already receiving support from government, this additional cost will fall on those of us who pay taxes here in the UK.

    This brings in a moral question; in times of austerity, is it right for government to deliberately increase the burden on taxpayers when cheaper ways of procuring/funding these new trains is available?

  • Steve, Kuwait City

    I'm surprised it's not all 'confidential' like the West Coast was! It's not any bit our railway anymore, apart from when it's time to foot the bill...

  • John Gilbert, Cradley, Herefordshire

    "The Government is still insisting that it is on course to sign finally" Well, they would say that wouldn't they?