Flaws in the calculation of risk, inconsistencies in the treatment of bidders and a lack of transparency have all been highlighted as contributing factors to the cancellation of the West Coast franchise competition.
The comments were made public today (October 29) in a 19-page initial report into the failed West Coast competition process.
Sam Laidlaw, the senior business figure and DfT non-executive director leading the independent review, said: “In the limited time available this is necessarily only a preliminary report. What is clear however is that in seeking to run a complex and novel franchising competition process, an accumulation of significant errors, described in the report, resulted in a flawed process.
“These errors appear to have been caused by factors including inadequate planning and preparation, a complex organisational structure and a weak governance and quality assurance framework. The full causes and the lessons to be learnt will be addressed in the final report of my independent Inquiry to be published at the end of November.
“Firm judgments should not be made based upon what are provisional findings or wider conclusions drawn at this stage.”
Transport Secretary Patrick McLoughlin said in a statement to the House of Commons: “I stress that today’s findings are precisely that – an interim report. There is more work to do. These findings are clearly a first stage.
“As Mr Laidlaw explains, they set out what went wrong, and from that basis he will now carry out further investigations into why this happened.
“To be blunt, these initial findings make uncomfortable reading but they provide a necessary and welcome further step in sorting this out.
“The Government will need to see the full and finished report before it can comment in detail on any conclusions.
“This is crucial because of the independent nature of the Laidlaw Inquiry and the need for the Government not to pre-judge its eventual findings.
“But it is clear that the inquiry has identified a number of issues which confirm that my decision to cancel the franchise competition was necessary. These include; a lack of transparency in the bidding process, the fact that published guidance was not complied with when bids were being processed, inconsistencies in the treatment of bidders, and confirmation of technical flaws in the model used to calculate the amount of risk capital bidders were asked to provide to guard against the risk of default.”