Paused following the collapse of the flawed West Coast competition, the rail franchising programme is now unlikely to resume until September 2013

The resumption of the rail franchising programme is unlikely to restart until September 2013, senior industry figures predicted this week, and even that timeline could be challenging to achieve.

The issues of culture and competence in the Department for Transport highlighted by new transport secretary Patrick McLoughlin’s decision to cancel the award of the West Coast franchise to FirstGroup, following a legal challenge from Virgin, are seen as so extensive that complete reform of the system may be the most feasible option.

It is understood that the DfT’s internal investigation into mistakes and misunderstandings made by civil servants when evaluating the West Coast bids is going far beyond the initial findings relating to financial and risk assessment processes. The widening of the investigation includes examining why erroneous information was given to bidders, the quality and consistency of guidance and clarification provided to bidders, and the way bidders’ operational and customer service plans were assessed, in addition to the financial evaluations.

“It’s a pretty damning situation, and has resulted in complete ministerial lack of confidence in the DfT’s ability to evaluate franchise bids,” one industry source commented. “Patrick McLoughlin felt the issues were sufficiently deep that there was a significant risk of future franchise decisions being challenged in the courts as well. That is why he decided he had no choice but to halt the franchising programme. It was bad enough when it was just civil servants having a lack of trust in operators. Now we have distrust between ministers and civil servants as well. It couldn’t be in a worse place.”

The DfT-commissioned review into the franchising system led by Eurostar chairman Richard Brown is now seen in the industry as having a free hand to make extensive reforms following the publication of terms of reference on October 15.

Senior industry figures contacted by Passenger Transport have unanimously called for extensive changes to deliver a more productive relationship with government and more effective services for passengers. They include tailored approaches to intercity, regional and commuter franchises to reflect the very different circumstances in which they operate. Creating a system which puts greater weight on investment, innovation and the quality of bidders’ proposals when awarding franchises rather than focusing excessively on price was also viewed as a key priority.

A streamlined investigation and implementation, rather than usual all-embracing government consultation, is seen as a pre-requisite for franchising to resume by the end of next year, given the scale of the task.

“The review needs to be done by the most experienced, knowledgeable and senior people in the industry – those with real clout – and supported by a strong secretary of state who is prepared to accept that he has to cull bureaucracy and process, and deal decisively with mistrust and vested interests in all areas,” one senior executive commented. “The last thing the industry needs is another prolonged McNulty style exercise.”

 

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