HS2 operation to be a ‘management contract’
The government has announced that operation of HS2 is to be part of a non-competitive ‘integrated’ long distance West Coast contract (in much the same way HS1 domestic services were bundled into the ‘Integrated Kent Franchise’).
This should come as no surprise. On a level playing field, competing against a commercial Inter City West Coast operator, a separate HS2 operator would likely go out of business (because of its much higher cost base).
[gov.uk, 4 Nov 2016]
West Coast Partnership
This franchise brings together the operation of the InterCity West Coast (ICWC) franchise services and the design, mobilisation and initial operation of High Speed 2 (HS2) passenger services.
The ICWC franchise provides passenger services between London (Euston), the West Midlands, north-west England, North Wales and Scotland. Its services call at major towns and cities including London, Birmingham, Liverpool, Manchester, Edinburgh and Glasgow.
HS2 shadow operations
The specification for the ‘shadow operator’ element of the franchise will be developed more fully in the expression of interest (EoI), prospectus and invitation to tender (ITT), but is currently expected to include activities such as:
- identifying the markets across the West Coast corridor (both high speed and conventional passenger services) and developing the products and the passenger proposition for those markets
- engaging with the HS2 design and build programme to ensure the franchise operator’s and passengers’ requirements are fully considered
- innovating and exploiting emerging technologies to deliver a step change in passenger experience and the delivery of services on WCP
- leading industry consultations on services and developing service patterns (both high speed and conventional services) for the period after high speed services commence
- developing implementation plans for HS2 rolling stock and infrastructure and recruitment and training in respect of the period after high speed services commence
- collaborating with Network Rail and HS2 Ltd to develop an organisational model for the delivery of services on HS2
- this will more closely align the incentives between the management of infrastructure and the operation of train services enabling them to jointly focus on delivering a service in the best interests of passengers and taxpayers
- this could pave the way for the future establishment of an integrated railway
- developing transitional plans for the conventional network
- having responsibility for HS2 mobilisation activities such as
- testing and acceptance of rolling stock
- staff recruitment
- obtaining regulatory approvals and contracts for operations
- testing infrastructure to support HS2
- the phased introduction and testing of HS2 services
It is envisaged the franchise operator will then operate both the West Coast and high speed services as an integrated operation in order to provide operational stability and a trading history in advance of the department retendering the services.
The franchise operator will therefore need to be capable of operating high speed rail services to deliver the full benefits of the HS2 scheme.
Structure and duration of franchise
It is currently anticipated that the ICWC services will be operated until the commencement of HS2 on a partial revenue risk basis. On commencement of HS2 services it is anticipated that the franchise operator would provide integrated ICWC and HS2 services for a further period of approximately 4 years on an incentivised management contract basis.
It is recognised that the role of the ‘shadow operator’ will evolve over time and, as such, flexibility will be built in to the contract to manage this. This is likely to involve some form of review mechanism to enable refinement of the role over time.
‘High speed rail’, meaning: ‘in excess of 250 km/h’.
Additional information about the WCP competition
The franchise EoI for the WCP competition will contain a number of mandatory further technical questions. The questions will include a test of participants’ ability and competence to:
exploit new technology and drive innovation to develop new products and services for customers
deliver the shadow operator role
plan, design, develop, operate and mobilise high speed rail services, ie speeds in excess of 250 kmh
Applicants should note that due to the unique nature of the WCP proposition, the department is considering the potential for a franchise specific approach to the operation of the ‘temporary visa’ mechanism as currently set out in the Passport process document. In the event that a franchise specific approach is adopted, details will be set out in the ‘WCP franchise EoI process document’.
Due to the unique nature of the WCP proposition the department anticipates that bid vehicles will need to draw upon a wider range of participants and skills than would usually be the case in a rail franchise competition. Participants are encouraged to form bid vehicles in a manner which will enable them to deliver as strongly as possible all the constituent elements of the WCP franchise as described above. The department reserves the right to refine further its requirements in relation to the nature of the contributions to be made by the participants in a bidding vehicle.
How “the new West Coast Partnership franchise will provide a strong private sector partner”, is open to question. How many genuinely-private-sector high speed rail operators are in existence?