West Coast Franchise

West Coast Franchise – Questions for the Minister

Almost everyone is familiar with the Minister’s announcement about the West Coast Railway Franchise. It is interesting to see the commentaries emanating from all sources – being wise after the event. Readers of our briefings (see Brian Farrington Ltd news August 29^th 2012) will recall that instantly the decision was originally announced we pointed out that it had RISK STAMPED ALL OVER IT.

We now offer advice to the Minister who may wish to obtain answers to the following (noting we are simply asking questions, not implying wrongdoing). As background our readers may wish to bear in mind the statement in Hansard Column 566W 18 September 2012, ‘As a result of a legal challenge which the Government intends to defend robustly, we have not yet signed the contract with First Group and therefore the competition remains live. We expect to sign the contract soon.’

Q1. What role did the external advisers, Eversheds LLP and WS Atkins Plc play in the process noting the wording in the Invitation to Tender dated 20 January 2012 “Eversheds LLP and WS Atkins Plc are acting for the Department in relation to the award of the InterCity West Coast franchise…. (our emphasis)?

Q2. Were any other advisers retained, and particularly for the financial analysis, of the tender evaluation?

Q3. Is a claim against any professional adviser’s Professional Indemnity Insurance being contemplated?

Q4. Did any of the advisers limit their Limit of Liability on their PII?

Q5. Who wrote the tender evaluation criteria and who signed off the evaluation model?

Q6. Who tested the financial evaluation model with test data prior to it being applied on the actual tenders?

Q7. Who were the members of the tender evaluation team? Were their roles specified in writing?

Q8. Was there a tender evaluation guidance briefing document prepared and issued prior to receipt of the tenders?

Q9. What tender evaluation clarification meetings were held with each of the bidders?

Q10. What risk mitigation plans existed in the event that the procurement process collapsed?

Q11. What is the total cost being paid by DfT for all external advisers?

Q12. How, precisely were the external advisers selected?

Q13. Were the external adviser’s fees subjected to Treasury negotiation as has happened with other suppliers/contractors?

Q14. What impact will the West Coast debacle have on other Government procurements where there are continual allegations of poor decisions on contract award?

Q15. What plans does Government have to up-skill ‘Project’ procurement teams?

Q16. What specific training did the West Coast Franchise procurement team have?

Q17. Do you realise that SME’s are effectively being shut out of Central Government advice by creating tender evaluation models that only the large organisations can win?

Q18. Was there a procurement risk model for this procurement?

There has been informed comment, including the Daily Telegraph on Thursday 4^th October 2012 ‘The Great Whitehall Railway Disaster’. It includes ‘Worst of all, it seems to have taken only three weeks to uncover the fatal flaws, which suggests they were not hidden that deep, and should have been much easier to spot.’ This begs a very important question. What was the process for evaluation? Was it people doing evaluation in isolated cells with no other person(s) checking their work? Had the case gone to court we would have discovered all the answers but, of course, we anticipate that there will be a very selective release of actual events.

Now consider another comment from the Daily Telegraph. ‘Private-sector bidders are nearly always more experienced and wily (sic) than the civil servants, who are not nearly as well paid as their opposite numbers.’ When the current Government came to power they made a great play on how they would want civil servants to experience the real world by being placed in private-sector organisations. BFL immediately wrote to the Minister offering that facility at no cost to the Government. The Minister did not reply but a civil servant sent a cursory reply and from that day to this there has been total silence! We suggest that it is not a pay issue it is business acumen and commercial competence that is the real issue.

So, what next? We can only predict. Richard Branson will be offered an extension to the existing contract. He will agree providing it is for an extended period, say five years. Fares will continue to outstrip inflation and the Government will be inactive in tackling it. All the bid costs will be repaid and the current estimated figure of £40 million could be in grave error! Incidentally, when the bid costs are claimed who will conduct due diligence to prove their accuracy and veracity? The Government will be sued by First Group because of their deteriorating share price and lost profits. A settlement will be made out of court and taxpayers will never know the extent of the settlement. No action will be taken to tackle the larger issue of Government procurement and the unfairness of some contract awards. The large external adviser consultancies will continue to thrive and SME’s will continue to be disregarded, despite the competence they possess.

WATCH THIS SPACE!

This briefing has been forwarded to the Minister for DfT.

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