Belfast Telegraph

Wednesday 27 August 2014

Award of train contract reviewed

Bombardier lost out on a six billion pound contract to Siemens of Germany

A Government spending watchdog should review the process whereby Germany, not Britain, won a lucrative train building order, a report by MPs has said.

Amid controversy, Derby-based company Bombardier, which announced 1,400 job losses last summer, lost out to Siemens of Germany as preferred bidder for a train carriage contract for the £6 billion Thameslink rail project.

In its report, the House of Commons Transport Committee said it would be in the public interest for the procurement process to be independently reviewed.

The committee has written to the head of the National Audit Office - the Comptroller and Auditor General - to ask him to undertake the review and to report to Parliament before summer 2012.

Launching the report, the committee's chairman Louise Ellman (Lab, Liverpool Riverside) said: "We could not evaluate whether the decision to choose Siemens was arrived at correctly because all of the bids were and remain confidential. We believe that in the public interest an independent review must evaluate whether this massive contract was awarded correctly on the basis of the criteria in the original invitation to tender."

The report said: "It is hard to escape the conclusion that Siemens' A plus credit rating made a significant contribution to its success in winning the Thameslink procurement. We are concerned that bundling train manufacture and financing together in procurement exercises will skew the market towards larger multinational firms, possibly at the expense of excellence in train design and domestic manufacturing.

"We recommend that the Government work with the railway industry to establish how train manufacturers can create finance partnerships which offer good value to the taxpayer while promoting long-term best value."

The report said there was now widespread agreement that the criteria used in the procurement were too narrowly drawn in excluding socio-economic factors.

The report said the Government must do more to ensure that UK-based companies in, or supplying, the train building sector enjoy a steadier flow of business opportunities including new projects before the next major train procurement.

A Department for Transport spokesman said: "We welcome the committee's report, which moves on from the process set up by the last government and endorses the coalition's decision to look again at how procurement can be improved. The committee recognises that the procurement process started by Labour was too narrowly drawn to take account of socio-economic factors, and could not have been reopened by the current Government."

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