Friday 1 February 2013

Franchises Delayed

The Government has been forced to scrap a long running competition for a new contract to run services at First Great Western and delay others for Southern, First Capital Connect and C2C for more than two years.
They say if agreement can not be reached with existing operators they will step in and run services themselves.
It is claimed the move could cost taxpayers millions of pounds and delay improvements a new operating franchise would bring for passengers.
Ministers say they have been left with no option but to start the process for a new Great Western franchise again after the row at West Coast. An investigation revealed the way Government officials were calculating finances was flawed. Other contracts for Southern, First Capital Connect and C2C are delayed.
The department will now commence negotiations with current operators, First Great Western, First Capital Connect and c2c, to negotiate new short-term franchises while longer-term options can be explored.
Franchising decisions include:
The competition for the Essex Thameside franchise will be resumed with a revised invitation to tender for a 15-year franchise issued to existing short-listed bidders over the summer. Negotiations will commence with current train operator c2c for an interim contract of up to 2 years.
The Great Western franchise competition will be terminated. The current franchise will now run until October after the department exercised its contractual right to extend the current contract with First Great Western by 28 weeks. Negotiations for an additional two-year contract will commence with the operator, while longer-term proposals will be set out in the spring.
The Thameslink, Southern and Great Northern franchise competition will be resumed with the department working towards awarding a 7-year contract.
The current Thameslink/Great Northern franchise operated by First Capital Connect ends in September but allows for a 28-week extension, which the department intends to exercise. Negotiations will commence for a further contract of up to 2 years as part of the finalisation of the wider franchise programme.
In parallel with negotiations with existing operators to continue running their services, directly operated railways will also be undertaking the minimum necessary preparations to take over services in case terms cannot be agreed.
Transport Secretary Patrick McLoughlin said:
These plans mark an important step on the way to restarting the franchising programme, and while I am determined this should happen as quickly as possible we do need time to get this right.
We have had to take some tough decisions regarding franchising, and while they may provide a challenge in the short term, I believe the lessons we have learnt will help deliver a more robust system in the future benefiting fare payers and taxpayers alike.
As always our priority is to ensure these changes will not impact on services or our commitment to improving the railways. Our latest step towards delivering a high-speed rail network which will link many of our major cities by a new fleet of state-of-the-art trains is testament to how we are delivering on that commitment.
First Great Western run trains on the lines from London to Reading, Oxford, Banbury, Swindon, Newbury and between Reading and Gatwick and Basingstoke. The also operate between Wales and Portsmouth on the line through Salisbury and Southampton.
They had been due to end an existing franchise in March.
The move comes just months after the scrapping of award of the West Coast rail franchise to First Group - the parent company of FGW - after protests from Virgin, which faced losing the right to run West Coast trains from London to the West Midlands, the North West and Scotland, led to the discovery of serious flaws in the way the Department for Transport (DfT) had assessed the competing bids.
Virgin was awarded a two-year extension to its West Coast operating agreement last month.
MPs on the House of Commons transport select committee have condemned the DfT over its part in the collapse of the West Coast franchise award, which landed taxpayers with a £48m bill for compensation and other costs.They said it had embarked on an "ambitious, perhaps unachievable" reform in the way it awarded franchises in haste, and claimed that ministers and senior officials were lied to.
Their report added that money which could have been spent on transport projects had instead gone to consultants, lawyers and review teams, on work which achieved nothing, and compensated train operators for the DfT's "incompetence".
A DfT spokesman said: "Following the collapse of the West Coast refranchising programme, the Department for Transport was subject to two independent inquiries and an internal HR investigation. These have now concluded but the disciplinary process is ongoing.
"Independent experts concluded the collapse of the West Coast franchise programme was caused by a number of failures, including inadequate planning and weak governance structure but not systematic failings in the Department. The examination of emails from key officials found no evidence that this was anything other than simple human error.
"We are putting in place measures that will prevent this embarrassing episode from happening again."