Branson denies contract loss led to concerns
By Rose Jacobs and Jim Pickard
2012-09-03 — /travelprnews.com/ — Sir Richard Branson has denied the assertion that he only raised concerns about the UK rail franchising process after losing the lucrative contract to run the West Coast main line.
In a letter to the FT, Sir Richard said the team at Virgin Rail – in which Virgin Group is the controlling partner alongside listed transport company Stagecoach – had been “in dialogue with the Department for Transport for more than two years”.
“In particular, we focused on the assessment and deliverability of risks involved in such long and volatile franchises,” he said. Those issues are at the heart of the company’s case for a judicial review of the franchise award, which Virgin submitted to the courts on Tuesday.
Sir Richard’s assertion contradicts statements by Justine Greening, transport secretary, that Virgin “raised no concerns with [the] process until it emerged that they had lost the bid”. While she has defended her decision to award the franchise to FirstGroup, which promised to pay the government at least £13bn for the right to run the line over the next 15 years, the planned contract signing has been delayed. Virgin’s bid offered £11bn.
“We have had a very fair, established, rigorous process that has been running now for 15 months,” Ms Greening told the Today programme on Tuesday.
Managers at Virgin say they met senior DfT officials in January and February to discuss their problems with the government’s approach to the West Coast contest, and that they had had numerous conversations about risk assessment over several years.
“If I had a pound for every time I’ve gone in to say this is wrong, I’d be a pretty rich man by now,” said one senior Virgin executive last week.
The DfT said on Friday: “Ongoing dialogue on the franchise specification is a normal feature of the tendering process . . . However, it is only in the last few weeks that one of the losing bidders has begun complaining that process itself was flawed.”It added: “We note that none of the other unsuccessful bidders are complaining about the process and that Stagecoach is actively involved in other ongoing franchise competitions based on the same process, without complaint.”
Sir Richard’s letter also accuses FirstGroup of putting forward an “undeliverable” bid. He points out that FirstGroup’s premium payments depend on the company doubling passenger numbers to 66m over the franchise, which would require highly efficient use of the trains even given the group’s capacity growth plans.
FirstGroup declined last week to answer questions from Virgin. “The DfT’s process examined and rigorously tested the bids in detail. We won the bid fair and square and we are not about to replay it in public for the benefit of the loser,” a spokesman said.
Sir Richard’s letter also accuses FirstGroup of putting forward an “undeliverable” bid. He points out that FirstGroup’s premium payments depend on the company doubling passenger numbers to 66m over the franchise, which would require highly efficient use of the trains even given the group’s capacity growth plans.
FirstGroup declined last week to answer questions from Virgin. “The DfT’s process examined and rigorously tested the bids in detail. We won the bid fair and square and we are not about to replay it in public for the benefit of the loser,” a spokesman said.
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