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Future of the British Train Building Industry

Volume 532: debated on Thursday 8 September 2011

The Petition of citizens of the United Kingdom,

Declares that they are concerned about the future of the British train building industry. Their concern is a consequence of the decision to appoint Siemens as the preferred bidder for the new fleet of trains for the Thameslink Programme.

The Petitioners therefore request that the House of Commons urges the Secretary of State for Transport to reverse this decision.

And the Petitioners remain, etc.—[Presented by Chris Williamson, Official Report,18 July 2011; Vol. 531, c. 761.]

[P000941]

Observations from the Secretary of State for Transport:

On 16 June 2011 the Department for Transport appointed Siemens plc with Cross London Trains (XLT) (a special purpose company comprising Siemens Project Ventures GmbH, Innisfree Ltd and 3i Infrastructure plc) as the preferred bidder for the provision of the new trains required for the Thameslink Programme.

I am fully aware of the disappointment caused by the decision to award only reserve bidder status to the consortium led by Bombardier but I am afraid it was clear that the Siemens bid offered better value for money for the taxpayer.

The competition to supply trains and maintenance services for the Thameslink programme was designed and launched in 2008 by the previous Government, in accordance with EU procurement procedures. In October 2009, my predecessor announced that the two remaining short-listed bidders were Siemens plc with XLT and Bombardier Transportation UK Ltd with Velocity.

The Department is required by law to treat all potential suppliers equally and in a non-discriminatory manner. Specifically, the Department is not able to specify the location of manufacturing facilities, nor UK job creation, as one of its evaluation criteria. To do so would be contrary to EU procurement requirements. The detailed evaluation criteria for the Thameslink rolling stock contract were set by the previous Government at the Invitation to Tender stage. They are available in their archives at www.bit.ly/inm30t.

The Department is required to comply with the processes and evaluation criteria set out in the bid documentation (and specified by the previous Administration). The result of the competition, when the bids were evaluated in accordance with the pre-announced criteria, was conclusive and the Department could not have lawfully appointed Bombardier as preferred bidder. Had it sought to do so, it would almost certainly have been subject to a legal challenge not merely for damages, but for aninjunction (under the EU Remedies Directive) preventing the award of the contract to Bombardier.

The only alternative action that I could have taken in relation to this procurement was to suspend the competition and reconsider the entire Thameslink project. At the very least, such a move would introduce significant delay to the project which, in the extreme case of a decision to re-specify the requirement and restart the bidding process, would be likely to extend to two or more years. This was never a credible option for three reasons:

1. Large amounts of public money have already been spent on infrastructure improvements for Thameslink (including the complete rebuilding of Blackfriars Station);

2. The additional capacity that Thameslink will provide is urgently needed by London commuters, and the 400+ rail vehicles that will be released for redeployment elsewhere are also urgently needed to address overcrowding. Without them, the planned electrification programme for the Great Western Mainline and for the Liverpool/Manchester area could not proceed.

3. Most importantly, there was no possible outcome, even following a project review and a decision to re-specify and re-tender, that could possibly have resulted in an early award of a contract to Bombardier and thus the prevention of some of the job losses incurred.

Of course any job losses at Bombardier are highly regrettable. Prior to the decision on preferred bidder status. Bombardier had advised the Department for Transport that it expected to make over 1,000 redundancies, regardless of the outcome of the Thameslink procurement, because several of its orders are about to reach completion. But whatever the reason for the redundancies, I want to try to help the company and its supply chain at this difficult time.

As a result of the review by Bombardier Transportation of its UK rail operations, the Business Secretary has set up an economic response task force. This is being headed by Margaret Gildea and its remit is to mitigate the economic impact of job losses at Bombardier, in its supply chain and in local communities. It is drawing on representatives from Derby City Council, Derby City College and the Skills Funding Agency. Jobcentre Plus will also deploy its Rapid Response Service to support workers that will be affected.

While I recognise that the Thameslink decision has come as a blow to Bombardier and its employees, the company has had a strong track record in winning orders in the past and there is every reason to expect that to continue in the future. In the comprehensive spending review we secured funding for the tube upgrades and one of the most extensive programmes of rail capacity improvements in modern history. Those two programmes will continue to offer significant opportunities for Bombardier and other supply chain and train manufacturing related businesses in the UK.

The Secretary of State for Business and I have also jointly written to the Prime Minister to recommend that we examine wider issues around the approach taken in the UK to the public procurement process, to compare our approach to that of other EU member states and to consider whether any changes in our procurement practices and the evaluation criteria specified in procurement tenders should be made.