Rail operator Stagecoach has called for an independent review of the Department for Transport’s latest rail franchise award after details of its bid for the East Midlands contract were sent to rival operator Abellio.
DfT announced earlier this month that the East Midlands franchise, which has been run by Stagecoach since 2007, would be transferred to Abellio from August 2019. The department also announced that Stagecoach had been barred from winning the West Coast and South Eastern franchises, after submitting “non-compliant bids”.
Following these decisions, it was revealed that documents containing details of Stagecoach’s bid for the East Midlands route had inadvertently been emailed to Abellio by an official at Network Rail.
The Times reported that the email included details of Stagecoach’s train service and performance plans and was inadvertently sent to its rival a fortnight before bids were due to be submitted.
DfT said an independent IT expert it commissioned to undertake an investigation following the leak had concluded that the email attachments containing the details had not been opened.
However, Stagecoach said there needed to be a full inquiry into the process.
A spokesperson for the firm said: “We are extremely concerned at what is a serious breach of the integrity of the procurement process and the failure of the Department for Transport to investigate it either promptly or adequately. We do not consider the matter closed and we believe there should be a fresh independent investigation into the confidentiality breach.”
DfT insisted that “Abellio did not access information relating to any other bidders that affected their bid” and that “[there] was no effect whatsoever on the outcome”.
The department added that Stagecoach had “disqualified [itself] from the process by lodging non-compliant bids” for the three franchises.
It is understood that the opertor's bids were deemed not to have met the funding requirements for the Railway Pension Scheme. The pension pot faces a funding gap estimated at as much as £7.5bn, and the government had asked bidders to set out “the costs involved and assumptions made in relation to pension contribution rates, both employer and employee”.
A DfT spokesperson said earlier this month that Stagecoach had submitted “non-compliant” bids not only for the East Midlands franchise but also for South Eastern and the West Coast Partnership, which is expected to be the launch contract for high-speed railway HS2.
The spokesperson said the company had proposed “significant changes to the commercial terms” for all three of the franchises, “leading to bids which proposed a significantly different deal to the ones on offer”.
"It is regrettable that they submitted non-compliant bids for all current competitions which breached established rules and, in doing so, they are responsible for their own disqualification,” they added.
Stagecoach said it had been told by DfT that its bids had been discarded because they did not meet the tender rules, “principally in respect of pensions risk”.
It said bidders had been asked to bear the full, long-term funding risk for parts of the Railways Pensions Scheme, which is facing a multi-billion pound deficit.
When the decision was announced, Stagecoach chief executive Martin Griffiths said he was “extremely concerned at both the DfT's decision and its timing”.
He added: “The department has had full knowledge of these bids for a lengthy period and we are seeking an urgent meeting to discuss our significant concerns."
This is not the first time that Stagecoach and DfT have been at loggerheads over a franchise award. In 2012, the department decided to award the West Coast franchise to operator First Group, but this decision was then challenged by Stagecoach and its partner Virgin Trains, which questioned the viability of First’s bid. It had sought a judicial review of the decision. This led then-transport secretary Patrick McLoughlin to scrap the contract, admitting that DfT had made ‘unacceptable mistakes’, after which Virgin was awarded a series of extensions.