Quality rating was ahead of rivals First and Keolis/Eurostar

 

An artist’s impression of an IEP train in Virgin branding

 

Stagecoach/Virgin trounced its rivals for the new East Coast franchise, with a bid that was a clear winner on quality as well as price.

Information released to Passenger Transport by the Department for Transport shows Stagecoach/Virgin will make premium payments worth £2.55bn in real terms over the eight-year contract – approximately £700m more than either FirstGroup or Keolis/Eurostar offered. The actual payments will total £3.3bn – £900m ahead (PT098).

In addition, Stagecoach was well ahead on quality. The quality rating awarded to Stagecoach’s bid suggests the DfT had “good confidence” in the majority of Stagecoach’s plans. Some gained extra credit for providing “excellent confidence” or exceeding the DfT’s requirements for the new franchise. The rating of First’s and Keolis/Eurostar’s bids indicates that the DfT had mostly “good confidence” overall in their proposals, but also “minor concerns” over whether some of their plans would meet requirements.

The second and third placed bids were close with £55m between the prices bid and virtually no difference in quality score. Industry sources speculated that First was the most likely runner up.

The winners of all three contracts awarded under the DfT’s new franchising regime have been ranked top for both quality and price. The DfT believes this provides some evidence that investing in quality can pay back through higher revenue and lower costs.

 

This article appears inside the latest issue of Passenger Transport.

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