Government cancels decision to award rail franchise for West Coast Main Line to FirstGroup

[whole diary]

[ellendune]

So Laidlaw has finally been published and is unequivocal about where the blame lies: within the DfT^» (Department for Transport - about).  I believe the removal of so many committed and experienced railway men and women (some of whom transferred in from the Strategic Rail Authority when it was disbanded) in the cull of the civil service at the beginning of this government's tenure could not have helped in maintaining continuity and knowledge essential to running the franchise process.  Civil service practice seems to be against staying in one sphere for long so long-term experience is missing.  I have no idea about the background of the three civil servants removed when the ordure and spinning machine first collided in October, but I do know that some of those given their marching orders previously (redundant they were told) had considerable experience in the administration of railways and cared about the service provided.  Sometimes we only know the value of what we have lost when it's too late.

(I am not a redundant or any other kind of civil servant!)

Here here - nor am I

[Chris from Nailsea]

From the BBC^» (British Broadcasting Corporation - home page):

West Coast Mainline deal failure criticised

A report into the collapse of the ^5bn West Coast Mainline franchise deal has blamed a "damning failure" by the Department for Transport (DfT^» (Department for Transport - about)).

The Laidlaw report was published hours after the government announced Virgin Trains will run the service for another 23 months - until 9 November 2014.

FirstGroup was told it had won the bid in August. The government scrapped that decision in October because of numerical mistakes - at a cost of at least ^40m.

The mistakes came to light after bidder Virgin Trains, which had run the West Coast Mainline since 1997, launched a legal challenge against the decision.

Three senior civil servants at the DfT, who were suspended after the scrapping of the bid, can now return to work. One of the officials, Kate Mingay, launched a legal action against the department last week, saying her role had been "inaccurately" portrayed.

The independent inquiry into the collapsed tendering process was led by Sam Laidlaw, chief executive of Centrica, the owner of British Gas. He said on Thursday his report had revealed "a lack of transparency, inadequate planning and preparation, as well as a complex and confusing organisational structure with weak quality assurance and insufficient governance oversight".

Transport Secretary Patrick McLoughlin, revealing the report's findings to MPs^▸ (Member of Parliament) in the Commons, said it made "extremely uncomfortable reading" for his department. He said there was a "damning failure" by the DfT which had to be put right. The report had found "serious problems" and "unacceptable flaws", he said.

But Mr McLoughlin cited Mr Laidlaw's findings that ministers had been given inaccurate reports and they had awarded the contract without being told about flaws in the bidding process.

The transport secretary said the investigation by Mr Laidlaw - who will give evidence to the House of Commons Transport Select Committee on 18 December - found department officials "wrongly calculated the amount of risk capital bidders would have to offer to guarantee their franchise proposals".

"These incorrect figures varied in ways which were wrong," he said.

In his report, Mr Laidlaw also noted constant changes of permanent secretary at the DfT and said resources were "excessively stretched due to the government's spending review and the competing pressures of other projects".

Mr Laidlaw's initial findings, revealed in October, talked of officials not following their own guidelines, not treating the bidders equally, failing to include inflation in their figures and ignoring warnings of possible problems months before the deal capsized.

BBC transport correspondent Richard Westcott said that, while Mr Laidlaw's final report had not named names, another completed inquiry by Eurostar chairman Richard Brown - the results of which are yet to be made public - would do just that.

A spokesman for FirstGroup said the report reiterated that it was not at fault and it hoped Mr Brown's review would "provide certainty and confidence in the future of rail franchising".

"It is especially disappointing that passengers and taxpayers will not see the benefits that our successful bid would have delivered," he added.

Virgin Rail Group chief executive Tony Collins said the firm would provide an "even better service" on the West Coast Mainline now that it had been allowed to run the service for another 23 months.

TSSA^» (Transport Salaried Staffs' Association - about) rail union leader Manuel Cortes said the "long-running Whitehall farce that is rail franchising just gets more ludicrous by the day".

"So we have spent ^40m of taxpayers' money on a franchise which has stayed with Sir Richard Branson anyway," he added.

But rail customer watchdog Passenger Focus welcomed the Virgin Trains development saying passengers would "welcome the stability this deal will bring".

And Association of Train Operating Companies chief executive Michael Roberts said passengers and the rail industry would now have clarity about the next two years on the West Coast line and urged ministers and officials to "get the programme of franchising back on course".

Shadow transport secretary Maria Eagle said the Laidlaw inquiry had delivered "a damning verdict on the government's shambolic and incompetent handling of rail franchising since the election".

And Rail, Maritime and Transport union general secretary Bob Crow said that, "because of the shocking ineptitude right at the top of this rotten government, Sir Richard Branson has muscled his way into a monopoly provider position".

The Public and Commercial Services union, meanwhile, which represents one of the three suspended civil servants, said the report confirmed the issues involved in the bid were "very complex". It said it was "disgraceful, but not out of character for this Tory-led government, how quick ministers were to try to pin the blame on civil servants".

[Kernow Otter]

So where does that leave the Greater Western tender process, still in the sidings or back on track?

[Southern Stag]

Presumably on hold awaiting the findings of the Brown review which is looking into the franchising system in general.

[TonyK]

DfT^» (Department for Transport - about) now estimate the cost of the shambles at ^48.9 million. The cost of making the several hundred civil servants redundant now doesn't look like money well spent. I was surprised to hear that, apparently, no one single person was in charge of the whole process. With a project of such huge financial and political importance, I would have expected one high-level civil servant to have the job of signing off the final report to the Minister (and putting his nuts in the cracker if male).

[chuffed]

Four Track Now ! really does have an eye-wateringly turn of phrase at times.....

[Chris from Nailsea]

Ah ... he's from plain-speaking 'up North' ... 

[Chris from Nailsea]

From the National Audit Office press release:

Lessons from cancelling the Intercity West Coast franchise competition

The Department for Transport competition to let the Intercity West Coast franchise lacked management oversight and the governance of the project was confused, according to the National Audit Office. The spending watchdog has concluded that the full cost to the taxpayer is unknown but likely to be significant, with at least ^1.9 million in staff and adviser costs, ^2.7 million in legal costs and ^4.3 million on external advisers for the reviews that it has commissioned.

The report identifies five essential safeguards against poor decision making in major projects. These are necessary to enable officials to assure Ministers and Parliament that decisions are sound and are value for money. However, in the case of the Intercity West Coast competition, none of these lines of defence operated effectively.

The refranchising process was a major endeavour, with considerable complexity and uncertainty. Nevertheless, the objectives of the Department for Transport were insufficiently clear during the franchise competition. The Department delayed the issuing of the invitation to tender by eight months because it had not finalized how it would implement recent policy changes, such as operators being responsible for stations. There was also confusion among Department staff about some aspects of the process.

The subordinated loan facility was a particular area of confusion. A subordinated loan is capital provided by the parent company which guarantees franchise payments will be made to the Department should the franchisee get less passenger revenue than expected. However, there were significant errors in the tool the Department used to calculate how big a loan it would require bidders to have. The model had been designed to inform internal discussions and received no extra quality assurance once the Department decided to use it to calculate the loan, a key commercial decision.

The competition lacked strong project management and there was no clear route for the project team to get approval for major issues in the project. No one person oversaw the whole process or could see patterns of emerging problems. In addition, there has been considerable turnover in senior positions in the Department. It has had four permanent secretaries in two years and changes of Directors General.

Amyas Morse, head of the National Audit Office, said today: ^Cancelling a major rail franchise competition at such a late stage is a clear sign of serious problems. The result is likely to be a significant cost to the taxpayer. The failure of essential safeguards raises questions about the Department^s broader management approach, as well as this specific matter.

^It is commendable that, once it uncovered the problems on the franchise, the Department sought to be open about what happened and to investigate further. Among the lessons to be learnt is that staff with line-management responsibilities should be clear that assurance processes are not a substitute for proper supervision and management controls.^

[TonyK]

Four Track Now ! really does have an eye-wateringly turn of phrase at times.....

Ah ... he's from plain-speaking 'up North' ... 

 

Ta chuck! At work, I call a spade a multi-purpose horticultural non-mechanical soil inversion implement, tha' knows. But when th'tie comes off, I tell it th'way I see it, 'owever myopically. Na' then, where's th'whippet gone while I've bin educatin' th'soft southerners?

[Chris from Nailsea]

From the London Evening Standard:

West Coast Rail fiasco probe 'cost ^3.2m'

An inquiry into the collapse of the West Coast mainline franchise deal cost taxpayers ^3.5 million, the Government has said.

Businessman Sam Laidlaw's review of the botched decision to award the contract to First Group, which was later scrapped pending a High Court appeal, took seven weeks.

His investigation found "serious problems" and "unacceptable flaws" with the way the Department for Transport granted the contract before it was forced to overturn its decision and ask Sir Richard Branson's Virgin Rail to continue running services on the London to Edinburgh route until November 2014.

It also emerged that Mr Laidlaw was not given full access to emails about the bids.

The flawed franchising process was estimated to have cost taxpayers at least ^40 million before the announcement of the cost of the official investigation.

Transport Minister Simon Burns admitted that the total bill could be even higher. "The costs of the Laidlaw Inquiry are yet to be finalised as not all of the invoices have been received. The department's best estimate of the final costs of the Laidlaw Inquiry is ^3.55 million," he said.

Mr Burns also revealed that Mr Laidlaw did not see all correspondence surrounding the ^5 billion deal. "There was insufficient time for a full email capture and review to be carried out by the Laidlaw Inquiry team due to time pressures," Mr Burns said in written answers to Parliamentary questions tabled by shadow transport secretary Maria Eagle.

"However, the inquiry team did review a number of emails made available by the department, including emails captured for the purpose of the department's human resources' investigation. In his report, Sam Laidlaw states that he is satisfied that he was provided with a proper evidential basis for making the findings set out in his report."

[JayMac]

Shuffling of the deckchairs at the DfT^» (Department for Transport - about) has seen a high ranking Sir Humphrey fall on his sword.

From the The Telegraph:

Transport chief Peter Strachan quits after rail bid blunder

The West Coast rail bid fiasco has claimed its biggest civil service casualty with the departure from the Department for Transport of Peter Strachan, its head of major projects.

Mr Strachan, who was one of the senior officers responsible for the bid, left as part of a restructuring that also saw Kate Mingay moved to a different job and a new division created to oversee future rail franchise competitions.

Ms Mingay was one of the three officials temporarily suspended on October 3 after Transport Secretary Patrick McLoughlin pulled the auction for the London-to-Scotland line after finding "unacceptable mistakes" in the DfT's handling of the bid.

Questions had been raised over Mr Strachan's position after the department's permanent secretary Philip Rutnam announced earlier this month that the DfT was seeking to appoint a new director general of rail, combining both "policy" and "delivery" of rail projects. That covered some of Mr Strachan's current job.

Clare Moriarty, currently director general, corporate at the DfT, will head up the new rail franchising division from the new year.

Mr Strachan's major projects wing employed 193 staff and had a budget for 2012/13 of ^3.88bn, according to a DfT organisational chart published earlier this year.

Mr Strachan also played a pivotal role in liaising with the train operators, though he raised eyebrows in the industry when he pre-empted the report by Centrica boss Sam Laidlaw into the West Coast shambles by sending bidders detailed accounts of his own version of events.

Letters running to more than 10 pages sent to FirstGroup and Virgin Rail put the June 27 meeting of the Contract Awards Committee at the centre of events and complained of "stark inconsistencies" in the accounts of officials.

The meeting, chaired by Ms Mingay, determined the size of the subordinated loan facility (SLF) ^ the amount bidders pledged against the risk of them walking out on the contract ^ with "winning" bidder FirstGroup putting up ^190m.

Mr Strachan wrote in his letter: "As a result of our investigations, it became apparent that the Department departed from its stated procedures ... in establishing the level of the SLF. The amount of SLF sought from at least some bidders was substantially too low as a result."

While many of his findings were backed by the Laidlaw investigation, his motivation for writing a letter that largely exonerated himself from any blame was questioned in the industry. A DfT spokesman said the letter had been written as a "matter of courtesy" to bidders.

Ms Mingay, who went to the High Court following her suspension in an attempt to be reinstated, was the DfT's director, commercial and technical services. She is understood to have been moved to the Crossrail project team.
A DfT spokesman said: "As a consequence of restructuring, Peter Strachan has decided to move on from the DfT. We wish Peter all the best in his next role."

A short biography of the new Director General, Corporate at the DfT, Claire Moriarty can be read here:

https://www.gov.uk/government/people/clare-moriarty#biography

[ellendune]

So the new head of rail franchising has lots of experience at the Department of Health.  That should be very useful.  Obviously an expert of the rail industry.  I thought this merry-go-round was part of the problem.

[Electric train]

So the new head of rail franchising has lots of experience at the Department of Health.  That should be very useful.  Obviously an expert of the rail industry.  I thought this merry-go-round was part of the problem.

It seems that D(a)fT see it more important that one of the key roles is roads and still regard the Railways as playing with train sets

^corporate functions - finance, HR^▸ (Human Resources), property, corporate procurement, IT, communications, shared services
^change management
^corporate governance
^internal audit
^performance management of DfT^» (Department for Transport - about)^s motoring agencies

No mention of performance management of contract award, would seem just a mandarin reshuffle

[TonyK]

Shuffling of the deckchairs at the DfT^» (Department for Transport - about) has seen a high ranking Sir Humphrey fall on his sword.

Grabbed a parachute, more like.

[TerminalJunkie]

A new bidder has emerged for West Coast: http://www.theregister.co.uk/2013/01/09/bigjigs_bid/