UK: Crossrail delays train manufacturing contract

[John Ashworth]

Crossrail delays competition for £16bn train manufacturing contract

The move reduces the chances of a repeat of the Bombardier row, where its Derby factory missed out to a German rival for the £1.4bn Thameslink contract

Dan Milmo, industrial editor
guardian.co.uk, Monday 29 August 2011 19.16 BST

Britain's next train manufacturing contract could be awarded to a UK-based business after the £16bn Crossrail project delayed a competition to build new carriages.

The move reduces the chances of a repeat of the Bombardier row, where the company's Derby factory missed out to a German rival for a £1.4bn government contract. As a consequence of the delay, the Crossrail tender will include recommendations from a government review of public procurement that was announced in the wake of the Bombardier decision.

Crossrail said the primary reason for pushing the award of the carriage contract from late 2013 to 2014 was to save costs, but said it would also allow "the conclusions of the government's review of public procurement to be taken into account". Under European Union rules member states are forbidden from showing domestic bias in selecting the winners of government-funded contracts, which exposed the UK government to sharp criticism when the £1.4bn contract for carriages on the London Thameslink route went to Siemens of Germany rather than Bombardier, whose Derby factory is the UK's last remaining train manufacturing plant.

In a carefully worded statement, Crossrail indicated that a UK-based business will be in a stronger position for the new contract than it was in the Thameslink contest. "The review of public procurement is examining whether the UK is making best use of the application of EU procurement rules, as well as the degree to which the government can set out requirements and evaluation criteria with a sharper focus on the UK's strategic interest and how the government can support businesses and ensure that when they compete for work they are doing it on an equal footing with their competitors."

Bombardier has announced plans to cut more than 1,400 jobs in Derby after Siemens was selected as preferred bidder in the Thameslink process. The Canadian-owned group is conducting a review of its UK businesses that could result in the closure of the Derby plant, with the loss of a further 1,600 jobs.Bombardier said: "The fact that the Crossrail rolling stock procurement is to be rescheduled is welcome news in the light of recent events. The rescheduling will give time to ensure that the ITT [invitation to tender] will allow the results of the government's review of procurement to be included." The Crossrail contract is for 60 trains, which will operate on the UK rail network from May 2017 before being put into service on Crossrail when the route, which runs between Heathrow and Canary Wharf, opens around 2019.

A source close to the Unite trade union, which represents workers at the Derby plant, said: "Putting the UK's strategic interests first gives hope that jobs and skills are at last the priority." One industry source said a UK-based manufacturer's chances of winning the Crossrail contract would be enhanced further if the tender emphasised socio-economic factors including the effect on regional economies and reducing the focus on bid financing, with the latter factor apparently playing a major role in Siemens's success with Thameslink. The producer of the Thameslink trains is still expected to have a strong chance of winning the Crossrail order, because both routes are expected to require similar rolling stock.

There are no signs, however, that the government will back down from the Thameslink decision. In a recent letter to Chris Williamson, Labour MP for Derby North, David Cameron refused to start the process again or meet a delegation from Derby on the issue. Cameron wrote: "I am afraid that neither I nor the secretary of state for transport can … justify stopping the procurement process to re-invite tenders. This would cause substantial delays to the programme and moreover, would not help Bombardier which, even if it were successful at re-tender, would still not have the work for several more years."

According to a recent poll, Labour could win back the South Derbyshire constituency because voters have been angered by the government's refusal to reconsider.