The people rumoured to be behind the West Coast Franchise affair – and the Department of Transport’s brain drain

(We're also going to be publishing articles on our new Spend Matters search4 procurement website, mainly about people, skills, career and development issues. Our first has just been published - here's a taster!)

Today we’re going to name names. We’ll look at who (it is rumoured) have been suspended over the West Coast Franchise problems, and I’m also wondering whether the exodus of skill, experience and knowledge from the Department for Transport (DfT) following the 2010 election is partly to blame for the West Coast Rail Franchise problems.

Note I’m not blaming the new Government for this – as we’ll see, much was down to retirements. But there was a major re-organisation of DfT which appears to have spread the responsibility for Rail matters more widely than was previously the case. Rather than a single Rail Directorate, responsibility  seems to be spread across several areas. However, it is the loss of experienced staff that I’m really highlighting .

Robert Devereux had several years in the Department for Transport before he was promoted to Permanent Secretary in 2007. He left in late 2010... (YOU CAN READ THE REST HERE! - but here's our concluding sentence....)

But here’s a prediction. All three will be exonerated, and the true story will be more complex than is currently being presented....

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Voices (7)

  1. stephen ashcroft:

    Excellent article Peter and yes lessons must be learned. The following advice is offered to the Minister who may wish to obtain answers to certain quesitons (noting we are simply asking questions, not implying wrongdoing). As background please bear in mind the statement in Hansard Column 566W 18 September 2012, ‘As a result of a legal challenge which the Government intends to defend robustly, we have not yet signed the contract with First Group and therefore the competition remains live. We expect to sign the contract soon.’

    Q1. What role did the external advisers play in the process noting the wording in the Invitation to Tender dated 20 January 2012 relating to who was ‘acting for the Department in relation to the award of the InterCity West Coast franchise…. ?

    Q2. Were any other advisers retained, and particularly for the financial analysis, of the tender evaluation?

    Q3. Is a claim against any professional adviser’s Professional Indemnity Insurance being contemplated?

    Q4. Did any of the advisers limit their Limit of Liability on their PII?

    Q5. Who wrote the tender evaluation criteria and who signed off the evaluation model?

    Q6. Who tested the financial evaluation model with test data prior to it being applied on the actual tenders?

    Q7. Who were the members of the tender evaluation team? Were their roles specified in writing?

    Q8. Was there a tender evaluation guidance briefing document prepared and issued prior to receipt of the tenders?

    Q9. What tender evaluation clarification meetings were held with each of the bidders?

    Q10. What risk mitigation plans existed in the event that the procurement process collapsed?

    Q11. What is the total cost being paid by DfT for all external advisers?

    Q12. How, precisely were the external advisers selected?

    Q13. Were the external adviser’s fees subjected to Treasury negotiation as has happened with other suppliers/contractors?

    Q14. What impact will the West Coast debacle have on other Government procurements where there are continual allegations of poor decisions on contract award?

    Q15. What plans does Government have to up-skill ‘Project’ procurement teams?

    Q16. What specific training did the West Coast Franchise procurement team have?

    Q17. Do you realise that SME’s are effectively being shut out of Central Government advice by creating tender evaluation models that only the large organisations can win?

    Q18. Was there a procurement risk model for this procurement?

    There has been informed comment, including the Daily Telegraph on Thursday 4th October 2012 ‘The Great Whitehall Railway Disaster’. It includes ‘Worst of all, it seems to have taken only three weeks to uncover the fatal flaws, which suggests they were not hidden that deep, and should have been much easier to spot.’ This begs a very important question. What was the process for evaluation? Was it people doing evaluation in isolated cells with no other person(s) checking their work? Had the case gone to court we would have discovered all the answers but, of course, we anticipate that there will be a very selective release of actual events.

    Now consider another comment from the Daily Telegraph. ‘Private-sector bidders are nearly always more experienced and wily (sic) than the civil servants, who are not nearly as well paid as their opposite numbers.’ When the current Government came to power they made a great play on how they would want civil servants to experience the real world by being placed in private-sector organisations. BFL immediately wrote to the Minister offering that facility at no cost to the Government. The Minister did not reply but a civil servant sent a cursory reply and from that day to this there has been total silence! We suggest that it is not a pay issue it is business acumen and commercial competence that is the real issue.

    So, what next? We can only predict. Richard Branson will be offered an extension to the existing contract. He will agree providing it is for an extended period, say five years. Fares will continue to outstrip inflation and the Government will be inactive in tackling it. All the bid costs will be repaid and the current estimated figure of £40 million could be in grave error! Incidentally, when the bid costs are claimed who will conduct due diligence to prove their accuracy and veracity? The Government will be sued by First Group because of their deteriorating share price and lost profits. A settlement will be made out of court and taxpayers will never know the extent of the settlement. No action will be taken to tackle the larger issue of Government procurement and the unfairness of some contract awards. The large external adviser consultancies will continue to thrive and SME’s will continue to be disregarded, despite the competence they possess.

    1. Phoenix:

      An interesting and thorough analysis, save in one respect:

      “We suggest that it is not a pay issue it is business acumen and commercial competence that is the real issue.”

      There is absolutely no evidence to support that statement. Three people’s careers are on the line here. We do not have the facts to condemn them like this. Please don’t convict and punish them on the basis of the flimsy evidence so far uncovered. They are professional people – they deserve justice.

      1. Peter Smith:

        I agree – I said at the end of my full piece (on that my guess is the 3 will be largely exonerated. “Assumptions” about risk, inflation, passenger numbers are just that – assumptions. And hard to imagine it will come down to an arithmetic error in the spreadsheet. If however there is evidence of any deliberate anti-Branson bias then there could be trouble.
        But at the moment I’m with you Phoenix in the “Freedom for the West Coast Three” camp!

  2. Phoenix:

    Freedom for the West Coast Three!

  3. Steve:

    It is a shame that attention has jumped straight to ‘who can we blame’?, rather than ‘what can we learn’?

  4. Dave Orr:

    Here is the issue: SPIN! If only this were true (DfT Autumn 2007):

    “Rail franchising is now a very impressive process, which has demonstrated innovation, good market involvement, transparent and robust processes, and successful financial outcomes. Future developments should include more focus on service/quality
    improvements without losing the focus on value and propriety. Other DfT(C) major commercial projects are well managed”.

    This 2007 statement from the DfT is self-reinforcing the (then Nu Lab) Government policy on railways, but completely at odds with the real world we all inhabit (high fares, mystifying pricing structures, overcrowded trains, cheaper from Bristol to Glasgow by flying etc).

    If our rail franchising setup is so great, then looking around Europe, why does no-one else do it this way? Why is it reported that their fares are typically 30% lower elsewhere in Europe (fudning the Euro crisis may alter this!)?

  5. alec fraher:

    The PASC should be all over this (and the rest, especially health and social care) – how many inquiries are needed? oops sorry! we’re still painting by numbers – but even so, a game of dot to dot would be welcomed every now and then. oops sorry, again – its only a constitutional expectation that Gov’s can govern. Shame eh!

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