The power to disappoint
In its report ‘Procuring new trains‘ (Dec 2014), the House of Commons Public Accounts Committee stated that the Department for Transport’s involvement in the Great Western / East Coast intercity and Thameslink train contracts has demonstrated “yet again” the Department’s “limited capacity and capability to manage large scale procurements”.
[Public Accounts Committee]
[…] The Department has stated that it in tends to leave some operational decisions to the market and to intervene in others. But it has not set out when these different approaches will apply, which is confusing for the industry. The Department’s decision to buy the trains itself has constrained the options available to future train operating companies as they will be required to use these trains to run their services. It is open to question as to whether the negotiations with preferred bidders provided best value. It is surprising, to say the least, that Agility reduced their [IEP train] price by 38% after Sir Andrew Foster reviewed the issue. By buying the trains directly the Department has taken on the risk of passenger demand forecasts being wrong. If demand proves to be lower than forecast taxpayers would have to cover the costs of any financial shortfall. These two major projects also demonstrate yet again that the Department has limited capacity and capability to manage large scale procurements, and that it remains overly reliant on consultants. Whilst we welcome Hitachi’s decision on Intercity Express to invest in the UK, it is extremely disappointing that Siemens will not also be manufacturing the Thameslink carriages in the UK, when the £2.8 billion contract is funded by the UK taxpayer and farepayer.
Both the Department and HS2 Ltd are dependent on consultants for development of the high speed rail scheme. However, the scope for improving HS2 by developing in-house capability, or hiring better consultants, must be constrained by the scheme’s inherent limitations and politically-driven remit.