LETTER TO GEORGE OSBORNE ABOUT THAMESLINK CONTRACT

I wrote to George Osborne before Christmas about him misleading the House over the Thameslink contract. This is my my response to his reply calling him to ensure the Government upholds the law on this issue.

Dear George

Thank you for your letter dated 14 December 2011.

I am disappointed, however, that your response contains numerous inaccuracies. I can only presume that you have been poorly briefed on this matter as I am sure you would not deliberately ignore the facts to score cheap party political points.

You refer to Lord Falconer’s comments that it was impossible for Bombardier to compete with Siemens. But when the Department for Transport, under the previous Labour administration, compiled the original tender document, it did so on behalf of the train company. As such, it would have been inappropriate to incorporate social benefits to the people of Derby and beyond.

Indeed, the notice initiating this process, published in the Official Journal of the European Union, clearly stated the procurement exercise was one being undertaken by Government on behalf of train operating companies. This view was reinforced by the Department for Transport’s written evidence to the Transport Select Committee. Presumably, as this was not started as a Government contract, the procurement exercise was undertaken in accordance with the procurement rules comprised within The Utilities Contracts Regulations 2006.

However, there was a significant modification to the contract, after the OJEU notice was published, converting it from an operator to a Government contract. You will appreciate the significance of this absolutely fundamental alteration. I was therefore delighted that you acknowledged in your letter that this is indeed a Government contract. You will understand that a Government contract could have taken into account the contract’s social effect on Derby and further afield.

This change to the contract should have led to the procurement exercise being re-advertised on the basis of it being a Government contract. Taking it forward using the competitive dialogue procedure of The Public Contracts Regulations 2006 could have resulted in an entirely different outcome. Notably, reasons would have had to be found for retaining Siemens in the procurement exercise, rather than for excluding it.

I know with certainty that this major flaw has been brought to the attention of the Prime Minister, the last Secretary of State for Transport, and the Business Secretary. It has been raised time and again by constituents and MPs representing the Derby area. In addition, questions have been put to the European Commission by members of the European Parliament.

You will also be aware that the Business Secretary has already accepted that the tender evaluation criterion was structured in such a way that the outcome was inevitable.

Yet your Government has repeatedly tried to transfer blame for this fiasco to the previous administration. However, the nineteen page document that resulted in Siemens being nominated as preferred bidder was first issued by the Department for Transport in November 2010. That was a full six months after the last General Election.

You go on to point the finger at the last Labour Government for the delays in this tendering process. But your account appears to have conveniently forgotten that the delays were in fact substantially caused by the effects of the rail privatisation undertaken by the last Conservative Government.

Your assertions about delays are therefore misleading and disingenuous. I struggle to see the logic behind your claim that retendering would put the whole project back by at least another two years. The Cabinet Office Minister has advised Government buyers that procurement exercises should be completed in a maximum of 120 days. If other organisations can procure trains in a few months, why should your Government take a minimum of two years? Just look how quickly the recently announced Southern Trains order for ‘Electrostars’ from Bombardier has moved forward. According to Justine Greening, her department played a crucial role in its rapid completion. So if the DfT can move quickly on new rolling stock for Southern Trains, why should Thameslink take significantly longer?

In your penultimate paragraph you state that planned reforms will in future give suppliers the confidence that they will be able to compete on a level playing field. Can I take this to be an undertaking that, despite what has been reported, you will ensure that never again will the procurement of new trains be based on either Government PFIs or other similar forms of bundled finance. As you will we aware, inferior credit ratings disadvantage British based suppliers against some of their competitors with manufacturing plants on mainland Europe?

In conclusion, it is apparent that this Government contract has not been undertaken in accordance with English Law and the Government is under an obligation to comply with the law. I trust you will therefore urge the Transport Secretary to terminate the process using the powers vested in her by the invitation to tender and start afresh.