Government cancels West Coast Mainline contract over “technical flaws”
FirstGroup’s contract to run the West Coast Mainline train service has been suspended by the government over what it is calling “significant technical flaws” in the bidding process.
The bidding process will now be re-run, and three civil servants have been suspended in the face of the humiliating decision. The decision will cost tax payers up to £40 million as all four of the companies who bid must have the money they paid in preparation refunded to them.
Virgin – the train operator who currently runs the service – looks set to see a revival, and officials from the company will be meeting transport secretary Patrick McLoughlin to discuss possible options after Virgin boss Sir Richard Branson voiced his upset at the initial decision.
Today, however, Mr Branson wrote on his blog: “I am pleased to say that the DfT has looked at all of the facts and found significant flaws in the way its officials handled the process. They have basically acknowledged that what we had been saying is correct.”
FirstGroup have today seen nearly £200 million wiped off their stock value after the U-turn was announced.
Mr McLoughlin said today: “I have had to cancel the competition for the running of the West Coast franchise because of deeply regrettable and completely unacceptable mistakes made by my department in the way it managed the process.”
Two independent reviews have now been ordered: one to discover exactly what went wrong with the West Coast bid specifically, and one to evaluate rail franchising programmes in general.