Posted 15th April 2019 | 2 Comments

Stagecoach demands ‘full and transparent explanation’ over pensions ruling

THE decision by the DfT to reject three franchise bids from Stagecoach Group on the grounds that its proposals were ‘non-compliant’ may have triggered a legal battle.

Stagecoach was told that its attempts to reduce the risks it would face over staff pensions were unacceptable, and its bids for East Midlands, South Eastern and West Coast Partnership were accordingly ruled out officially on 10 April. Simultaneously, Abellio was awarded the East Midlands contract, subject to the usual ten-day ‘standstill’ period.

Virgin Trains, which has been in partnership with Stagecoach on the West Coast Main Line since October 1998, has warned that the Virgin brand could disappear from the rail network as soon as November. Virgin had been bidding with Stagecoach and French operator SNCF for the new West Coast Partnership, which is due to start in April 2020. Virgin founder Sir Richard Branson has said he is ‘devastated’.

A spokesman for Stagecoach said: ‘We can confirm we have written to the Department for Transport seeking answers to the numerous legitimate questions many people have about their decision.

“We expect a prompt, full and transparent response to help restore public confidence in the integrity of the government’s procurement process, which has been badly shaken by this and other recent events.’

It is reported that both Stagecoach and Virgin could also launch a formal court challenge to the DfT’s decision, unless there is an official rethink.

At the moment, the DfT is staying firm. Last week a spokesman for the Department said: ‘Stagecoach is an experienced bidder and fully aware of the rules of franchise competitions. It is regrettable that they submitted non-compliant bids which breached established rules and, in doing so, they are responsible for their own disqualification.’

Meanwhile, Stagecoach is also understood to have asked that the ten-day standstill period for the award of East Midlands to Abellio be extended by a further 14 days, This would delay confirmation until the first week of May.

Reader Comments:

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

  • David, Darlington

    It would seem there is a pattern here, when Virgin loses a franchise to someone else they seek a judicial review, in the hope of delaying or stopping the franchise process and then obtaining an extension of their former franchises, there was no judicial review when they decided to walk away from their East Coast franchise rather than pay out further funds. Stagecoach/Virgin should just accept that they cannot make the rules of the franchise agreement to suit their shareholders pockets, they bid for the franchise knowing what was expected the same as every other competitor.

  • Jez Milton, Manchester

    DfT have some very good lawyers at their disposal. The decision on non-compliance will not have been taken lightly.

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