Great Western rail procurement cancellation gets legal

The bidders for the UK's Great Western rail franchise are taking the government to court. The BBC says:

Four train companies have started legal proceedings against the government after it cancelled the bidding process for a rail franchise and then refused to pay compensation. Ministers ditched bids to run the Great Western rail franchise in January, saying they wanted a rethink. FirstGroup, Stagecoach, Arriva and National Express have gone to court in an effort to get their money back.

This followed the disastrous West Coast bidding process of course – in that case, the government has agreed to compensate the bidders, but has so far refused to do the same for the Great Western franchise.

The tender document for Great Western said this:   "Each bidder shall be responsible for all costs, expenses and liabilities incurred by it in connection with the Great Western franchise letting process, whether or not its bid and/or associated negotiations are ultimately successful or the process is subsequently varied in any way or terminated."

Now that is standard public contract language, and seems to be fairly clear in terms of where the risk lies. Bidders understand that they’re not going to be recompensed if the procurement stops for any reason, although in the case of West Coast, the government chose to do so given what had happened. But morally, things may be less clear, and practically, as the government needs the same firms to bid assuming the Great Western  tender re-opens, there may be some pressure to find an amicable settlement.

However, this would set an interesting and dangerous precedent. West Coast was unusual in that there was admitted government failure of process. But what about all the other competitions that don’t make it through to contract award because the needs change, or indeed errors are discovered?

I’ve heard of a couple of MOD tenders that were pulled mid-flight last year – not high profile, so didn’t really hit the news. What about Government Procurement Service  (GPS) and their IT procurement  (the Application Development, Delivery and Support Service framework), which was pulled because of problems with the sourcing process / technology? Then a decision was made not to run it again at all. So if you pay off the rail bidders here, might GPS have hundreds of  IT suppliers asking for their money back?

So there are wider and dangerous issues for public sector procurement generally here. Because of that, I expect government to fight tooth and nail against the claim, and I can’t see any likely agreement involving direct payment to the firms, unless of course the courts eventually force that.

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First Voice

  1. Flog:

    I’m sure the West Coast tender had the same clause and at the time I reflected that, regardless of the reasons for deciding to offer the compensation, this move by Government would open the flood gates to other claims where a contracting authority has decided to abandon (for whatever reason) a tender process. Being from N Ireland, as I write this, I can hear the sound of our legal teams drafting simliar claims

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