Bombardier train procurement row steams on…

Tuesday night's BBC news saw the decision to award the Thameslink train contract to Siemens, rather than Bombardier, featured strongly.  And we had three pretty unimpressive contributions. Here’s Vince Cable.

“We should stay within the European rules – we have no alternative – but operate like the French and Germans, trying to make sure that tenders are drawn up in a way that helps our own manufacturers...”

Well there’s a hostage to fortune if ever I heard one. Perhaps my next business will be helping non-UK bidders sue contracting authorities for running biased UK tenders. (Why don’t we see UK companies challenging decisions in France or Germany if this is the case, by the way? Might it be that the UK doesn’t actually make much they want to buy?)

Personally, I think there’s a strong and strengthening case for the UK withdrawing completely from the EU. And if we really think our ‘friends’ in Europe cheat on their procurement, isn’t that another good argument for getting out and taking our chances in the global economy, rather than sitting here going “it’s not fair”! But our political masters won’t let us have a chance to vote on that, will they? (And Cable’s party have been THE most pro-EU of course – they would have had us in the Euro, remember). When there are a few points to be scored by whingeing about EU procurement rules however, then there’s no hesitation to do that.

Then on the news we had Antonia Mochan of the European Commission who said “98.5% of UK procurement stays with UK companies”.

Well that’s clearly just not true. Look at any list of the top suppliers to Government – with non-UK firms like HP, Atos, Thales, Oracle, IBM, Microsoft, Siemens, Fujitsu, Steria near the very top of the list. What she might mean is that 98.5% goes to companies who have some UK based operations (offices, factories etc.) but a misleading comment nonetheless.

Finally we had John Denham for Labour saying if there was “a scintilla of doubt about what Siemens can produce, they can still re-open the contract ...what we need is some steely minded determination from Ministers, not the damp squib we’ve seen today”.

So Labour (who were in power when the tender evaluation process was agreed of course) would have over-turned the decision and risk being sued by Siemens?  I don’t think so.

But we still don’t know exactly why Bombardier lost. I’ve heard one theory that it is all to do with different specifications in the UK and the Continent, which means our producers miss out on some economies of scale. Whatever it is, I’d like to see a bit of fact- based analysis than what we’ve seen so far this week...

Voices (8)

  1. Christine Morton:

    Do the German trains come with German punctuality built-in? Oh, a commuter can dream…

  2. Final Furlong:

    We could also make the assumption that the unsuccessful bidder offered £30m less value.

    We could also make the assumption that German engineering is (still) superior to ours and the eval criteria reflected this. And we simply didn’t want to purchase – with our £3billion of tax payers money – a load of old crap.

  3. bitter and twisted:

    £300m divided by 1400 people is 214 grand each .

  4. Andrew F Smith:

    Taking a slightly different perspective, I understand that the contract is worth circa £3bn to Siemens. If we made an assumption that the unsuccessful supplier offered 10% less “value” (including cost factors) than the successful bidder, then I wonder what the public/ politicians’ reactions would have been to headlines covering how the UK taxpayer was being asked to needlessly spend an extra £300m from the public purse? I think we would have had bad headlines whatever the outcome.

  5. VegasChild:

    It’s not always easy to follow all this from over here – for a start is the UK in Europe or not? It’s hard for us to tell. But is this the story about a Canadian company losing a contract and laying off 1400 people in the UK and German company winning it and creating 2000 jobs in the UK? And that’s a really bad thing??

    What are the geographic boundaries that matter in choosing suppliers – local (Derby), county (Derbyshire) , national (England or UK), regional (Europe), global ?

    1. Christine Morton:

      Yes, the UK is in the European Union.

      The story is about losing jobs in the UK. As a member of the European Union, all public sector contracts are subject to the Public Contract Regulations 2006. One of the main regulations is that companies in other EU areas cannot be discriminated against in bidding for public sector work.

      This particular contract was tendered for, and the winners are in a different country than to who ran the contract last time. The people making the trains in the UK now lose their jobs (assuming they can’t transfer to the other contract – TUPE is a whole ‘nother area altogether).

      This, in turn, has become a nightmare for politicians who like to be seen to “protect jobs” but in this case, the procurers were simply following the EU rules and couldn’t legally discriminate against the German company. The politicians have the difficult job of explaining why the contract went as it did and are making it political, because the electorate only understands the inevitable job losses and not the finer details of the Regulations.

      Hope that helps.

      1. Rob:

        There are numerous ways to address this issue.

        The way we’ve address this (where I’m working) is to look at other related issues such bidders’ proposed approach to promoting the development of their local community, to target unemployment, to construct their own supply chain to target SMEs or the bidders’ proposals to deliver targets on sustainability. The only limitations on the use of such any socio-economic criteria is that they must be relevant and proportionate to the contract and be non-discriminatory. This is easy to establish.

        Siemens produced the strongest bid because it submitted the most economically advantageous tender – but had their evaluation criteria been addressing wider socio-economic issues, the outcome may have been very different.

  6. idon'tbelieveit:

    Spot on Peter! Doubtlessly thanks to the transparency clause that now exists in all government procurements, the full details will emerge in time…..

    On the general point – we need a strong and urgent review of our interpretation of EU procurement regulations – we need to stop being so risk averse in our interpretation of the regulations and be prepared to stand up for common sense – that requires political will and isn’t in the gift of the Civil Servant doing the procurement.

    For example, can you imagine any other sector or industry where the procurer is not allowed to take any account of the supplier’s past performance and that references can’t be taken because you can’t demonstrate how they would be objectively evaluated and scored? Unbelievable – but it’s the amongst the latest legal guidance from our lords and masters….and if it’s ignored and a challenge comes in it’s the Civil Servant that gets to stand in the dock…not the politicians and not the new CPO or MD of Government Procurement/Buying Solutions/OGC!!

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