THE WELSH Government has asked the Department for Transport to cover any costs that arise from DfT’s decision to delay the Wales and Borders franchise procurement. It argues bidders could threaten to withdraw from the procurement and that Arriva Trains Wales may need to be retained beyond the October 2018 expiry date of its 15-year franchise.
In 2014, the UK Government agreed to devolve powers by 2017 for the Welsh Government to procure the next franchise. However, the powers have not yet been devolved. An ‘agency agreement’ authorised Cardiff Bay to proceed with the first stage of procurement, which included a process of ‘competitive dialogue’ with the four bidders. Separate authorisation from DfT is needed before the Welsh Government can invite tenders.
In July, Welsh infrastructure secretary Ken Skates said DfT proposed to defer the tender date to 26 September, with the general election having affected DfT officials’ ability to take decisions. The Welsh Government would have been ready to issue tender documents on 18 August, he said. With Christmas and other factors taken into consideration, there would be a material delay of two months. The original timetable envisaged contract award in January.
In a letter to Transport Secretary Chris Grayling, copied to Assembly Members, Mr Skates expressed concern at the potential loss of European Union funding for Valley Lines modernisation, because the programme for drawing down structural funds ‘is already tight and is contingent on the appointment of our Operator and Development Partner (ODP) to start design and mobilisation works’. He said he would consider commissioning some of this work from a third party, in parallel with the ODP franchise procurement, but this would incur between £1 and £2 million of additional expenditure.
A ‘sustained’ extension to ATW’s franchise would cost the Welsh Government ‘tens of millions of pounds’, and Mr Skates asked Mr Grayling how the UK Government would reimburse this. The franchise can be extended by up to seven reporting periods, at Mr Grayling’s discretion.
Mr Skates estimated a further £1.5 million cost could be incurred as a result of the delay because the teams and advisers assisting the bidders and government in the procurement process would ‘need to be paid to effectively stand still’.
He also wrote: ‘More worrying still is the looming deadline for Persons with Reduced Mobility compliance. All of our bidders have reinforced the importance of an early award decision to allow rolling stock to be ordered to allow them to comply with your January 2020 deadline.’
Any further slippage beyond 26 September ‘will significantly magnify the above risks and will be completely unacceptable,’ added Mr Skates.
Bidders for the 15-year ODP contract are Abellio, Arriva, MTR Corporation, and Keolis with Amey. The Welsh Government wishes to transfer the core Valley Lines, north of Cardiff Central, from Network Rail to enable the ODP to modernise and operate the infrastructure. On 6 April, a Welsh Government official said this transfer needed to be resolved within weeks to provide sufficient clarity for the bidders. Mr Skates revealed in the Welsh Assembly in July that discussions were ongoing regarding the transfer.