Thameslink rolling stock procurement process should be independently audited, say MPs

Following a report, the Transport Select Committee has written to the head of public spending watchdog the National Audit Office (NAO) asking him to look into the selection of Siemens as preferred bidder for 1,200 new carriages for the Thameslink rolling stock programme.

The decision met with public outcry after Bombardier, the Canadian owner of the UK's last train manufacturing plant in Derby, laid off nearly half of its 3,000 staff in July after losing its bid to manufacture rolling stock on the cross-London route.

The invitation to tender, published in 2008 by the then Labour Government, has been criticised for not taking socio-economic factors into consideration when awarding the contract. It also included a financing element, which the Committee said may have proved advantageous to Siemens as its parent company is a bank.

"It is hard to escape the conclusion that Siemens' A+ credit rating made a significant contribution to its success in winning the Thameslink procurement," the report said. "We are concerned that bundling train manufacture and financing together in procurement exercises will skew the market towards larger multinational firms, possibly at the expense of excellence in train design and domestic manufacturing."

Trains began running on the Thameslink route, which runs across London from Bedford to Brighton, in 1988. An expansion programme, originally known as Thameslink 2000, includes procurement of a "new generation of electric commuter trains", which will provide increased capacity and more frequent services from the end of 2018. The introduction of new rolling stock will also enable existing Thameslink trains to be redeployed on other parts of the network.

Under EU rules, member states cannot show domestic bias when awarding government-funded contracts. The procurement process can be based on price alone or on the broader basis of the 'most economically advantageous tender' (MEAT). The MEAT approach was used as the basis for the Thameslink procurement process, but was widely criticised for excluding socio-economic factors.

The Government is currently considering its public procurement process to focus more keenly on "how UK firms can benefit from major public sector procurements, without infringing the EU's legal framework", the report said. However the Government has said it has no intention of restarting the Thameslink procurement process due to the delays it considers this will lead to.

The MPs said that if the Government went on to sign a contract with Siemens after any official review, it should "publish the reasons" for favouring the German company to include the difference in cost between the two bids. Its investigation had been hindered by the fact that documents from both bidders remained commercially confidential, the Committee said.

"We could not evaluate whether the decision to choose Siemens was arrived at correctly because all of the bids were and remain confidential. We believe in the public interest an independent review must evaluate whether this massive contract was awarded correctly on the basis of the criteria in the original invitation to tender," said Louise Ellman, Committee chair, in a statement.

"We support the Government's intention to place a sharper focus on the UK's strategic interest in major public procurements and must hope that this new approach to procurement does not come too late for the Bombardier plant in Derby. It will be crucial for the Government to work closely with UK train makers so that together they can develop a financial partnership that will offer good value to the taxpayer whilst promoting long-term best value," she said.

A spokesman for the NAO told Out-Law.com that the Committee's recommendations were being considered and the NAO would issue a response in due course.