DfT suspends three officials after West Coast franchise competition axed

Three officials at the Department for Transport have been suspended in the wake of the Government's decision to cancel the competition to run the West Coast rail franchise, it has emerged.

A spokesman for the Department said the suspensions would continue “while the full facts are established” and that no further details would be issued at this time.

Transport Secretary Patrick McLoughlin yesterday announced that the competition – awarded to FirstGroup at the expense of the incumbent, Virgin Trains – had been cancelled.

This followed the discovery of “significant technical flaws in the way the franchise process was conducted”, particularly in relation to the way the level of risk was evaluated.

“Mistakes were made in the way in which inflation and passenger numbers were taken into account, and how much money bidders were then asked to guarantee as a result,” the DfT said.

“The Department cannot be confident that these flaws would not have changed the outcome of the competition or that any of the four bidders would not have chosen to submit different offers.”

These flaws were revealed during evidence gathering for the High Court judicial review challenge launched by Virgin. The Secretary of State had been expected to serve evidence in response to the challenge.

The decision meant that the DfT would not be awarding the contract on 9 December and would not be contesting the judicial review.

The Department has told the four bidding companies that it will reimburse their bid costs.

McLoughlin has ordered two independent reviews. These will cover:

• What went wrong with the competition and the lessons to be learned;
• The wider DfT rail franchise programme.

The minister has also asked officials to examine the operations of the West Coast service after 9 December, “taking into account procurement and competition law”.

All outstanding franchise competitions – relating to Great Western, Essex Thameside and Thameslink – have been “paused”, pending the outcome of the reviews.

The Transport Secretary said: “I have had to cancel the competition for the running of the West Coast franchise because of deeply regrettable and completely unacceptable mistakes made by my department in the way it managed the process.

“A detailed examination by my officials into what happened has revealed these flaws and means it is no longer possible to award a new franchise on the basis of the competition that was held. I have ordered two independent reviews to look urgently and thoroughly into the matter so that we know what exactly happened and how we can make sure our rail franchise programme is fit for purpose.”

Philip Rutnam, permanent secretary at the DfT, said: “The errors exposed by our investigation are deeply concerning. They show a lack of good process and a lack of proper quality assurance.

“I am determined to identify exactly what went wrong and why, and to put these things right so that we never find ourselves in this position again.”

A fresh competition for the West Coast franchise will be started “as soon as the lessons of this episode are learned”, the DfT added.