Rail contractors to see no UK favouritism

Rail construction contracts are likely to be exempted from requirements, published by the government yesterday, designed to give UK-based firms an advantage in winning work.

The rail Command Paper, published yesterday by transport secretary Justine Greening, said that bidders for rolling stock contracts would in future be judged in part on how they will benefit local employment and economies.

The move has been prompted by a furore over the procurement of the £1.4bn contract for Thameslink rolling stock, which was awarded to Siemens, leading to the closure of the Canadian rival Bombardier’s UK factory in Derby.

However, construction contractors for rail work, primarily procured by Network Rail, are not likely to be judged under the same criteria.

A spokesperson for Network Rail, which is currently reforming the way it procures major projects in order to encourage partnering arrangements and early contractor involvement, said the government had not formally asked it to include the local economy criteria in its procurement process.

The spokesperson said: “Our primary concern has to be to get best value for contracts, and we have not been asked by the government to do this. However, there may be opportunities on frameworks where we can use this as a criteria under our review of procurement.”

The Department for Transport’s Command Paper said rolling stock bidders would have to set out how they will “establish a local presence to manage the delivery of the contract” and detail which “elements of the contract” will be sourced in the UK.

However the department, which does not generally directly procure rail construction work, made no mention of how construction or civil engineering work should be procured in the paper.

Yesterday’s Command Paper broadly endorsed the wider programme of procurement reform set out by Network Rail, which is on course to find £1.8bn of efficiency savings by 2019.

However, the paper said the rail industry as a whole had to increase these efficiency savings to £3.5bn in order to deliver the agreed programme of infrastructure and service improvements without huge hikes in rail fares or government subsidy.

The paper also confirmed proposals to lengthen operator franchises for rail services, and continue the regional devolution of decision making over rail services.

Greening said: “Today’s Command Paper sets out our ambitions for Britain’s railways and the agenda for change that both the government and industry will follow in the months and years ahead.

“By reforming the industry, we will achieve substantial savings. Those savings will allow us to cut and then abolish above-inflation rises in average regulated fares … and it will ease the burden of the railway on the broader public purse.”

Network Rail chief executive, David Higgins, said: “Today’s Command Paper gives us a solid platform on which to continue to maximise performance while balancing it with our other objectives of increasing capacity, improving journey time and reducing cost. We look forward to the government’s next contribution to that debate in the high level output specification in July of this year.”