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Thameslink deal under scrutiny as government considers options Thameslink deal under scrutiny as government considers options
(about 2 hours later)
The department for transport has raised concerns over another controversial government procurement deal after admitting that it is "assessing options" if Siemens fails to finalise the £1.4bn Thameslink trains contract. The Department for Transport has raised doubts over a controversial government procurement deal after admitting it is "assessing options" if Siemens fails to finalise the £1.4bn Thameslink trains contract.
Transport minister Simon Burns hoped to close the deal in the new year but indicated that alternatives are being considered amid calls from trade unions and MPs for the order to be given to the Bombardier train factory in Derby. The transport minister, Simon Burns, hoped to close the deal in the new year, but indicated that alternatives are being considered amid calls from trade unions and MPs for the order to be given to the Bombardier train factory in Derby. The situation was compared with the west coast franchise debacle on Tuesday.
Responding to a parliamentary question from Chris Williamson, the MP for Derby North, Burns said: "I am aware of the consequences of failing to conclude the procurement and as you would expect, my department is closely monitoring progress, including assessing options were it not possible to secure financial close." Responding to a parliamentary question from Chris Williamson, MP for Derby North, Burns said: "I am aware of the consequences of failing to conclude the procurement and as you would expect, my department is closely monitoring progress, including assessing options were it not possible to secure financial close."
A DfT spokesperson said it was "normal" to assess contingency plans in case negotiations fail. "While for reasons of commercial confidentiality it is not appropriate to comment on the details of any contingency options Bombardier have always been the reserve bidder." A DfT spokesperson said it was "normal" to assess contingency plans in case negotiations fail. "While for reasons of commercial confidentiality it is not appropriate to comment on the details of any contingency options, Bombardier have always been the reserve bidder."
A spokeperson for Bombardier said it was the reserve bidder but had no further comment to make. It is understood that the DfT has not formally approached Bombardier as part of its assessment process. A spokesperson for Bombardier said it was the reserve bidder, but had no further comment to make. It is understood that the DfT has not formally approached Bombardier as part of its assessment process.
Williamson, who has campaigned for the Bombardier factory to be awarded the contract, said the statement undermined a recent assertion by the transport secretary, Patrick McLoughlin, that the Thameslink deal will be cleared in the new year. Williamson, who has campaigned for the Bombardier factory to be awarded the contract, said the statement undermined a recent assertion by the transport secretary, Patrick McLoughlin, that the Thameslink deal will be cleared in the new year. "In spite of Patrick McLoughlin's denials, it looks like the DfT is actively considering alternative options after all," said Williamson. "This continual prevarication has got to stop. It's time for government ministers to put the national interest first and now award the Thameslink contract to Bombardier."
"In spite of Patrick McLoughlin's denials, it looks like the DfT is actively considering alternative options after all," said Williamson. "This continual prevarication has got to stop. It's time for government ministers to put the national interest first and now award the Thameslink contract to Bombardier."
McLoughlin will be questioned about the Thameslink contract by MPs on Wednesday, when he appears in front of the transport select committee to answer questions about the abandonment of the west coast rail franchise. The chair of the committee, Louise Ellman, is to ask McLoughlin whether the fiasco will delay completion of the Thameslink contract because of concerns over DfT procurement processes.McLoughlin will be questioned about the Thameslink contract by MPs on Wednesday, when he appears in front of the transport select committee to answer questions about the abandonment of the west coast rail franchise. The chair of the committee, Louise Ellman, is to ask McLoughlin whether the fiasco will delay completion of the Thameslink contract because of concerns over DfT procurement processes.
In a letter to McLoughlin this month, she said: "What are the reasons for the delay in completing the Thameslink rolling stock procurement - and when do you expect this to be concluded?" In a letter to McLoughlin this month, Ellman said: "What are the reasons for the delay in completing the Thameslink rolling stock procurement – and when do you expect this to be concluded?"
Bombardier, Britain's only active train factory, has already cut 1,000 jobs in the wake of the decision last year to make Siemens preferred bidder for Thameslink. If there is no reversal on Thameslink, Bombardier's hopes will be pinned on the £1bn Crossrail trains contract, which received formal bids this week, including an offer from the Derby site. Bombardier, Britain's only active train factory, has already cut 1,000 jobs following the decision last year to make Siemens preferred bidder for Thameslink. If there is no reversal on Thameslink, Bombardier's hopes will rest on the £1bn Crossrail trains contract, which received formal bids this week, including one from the Derby site.
The Thameslink deal is structured as a private finance initiative, with the Siemens consortium raising debt to finance construction of carriages at the Krefeld plant near Düsseldorf. The consortium, whose other members are investment funds Innisfree and 3i Infrastructure, are equity investors in the project but they are largely financing it through debt. It is this "financial close" that was referred to by Burns in his parliamentary answer. The Thameslink deal is structured as a private finance initiative, with the Siemens consortium raising debt to finance construction of carriages at the Krefeld plant near Düsseldorf. The consortium, whose other members are investment funds Innisfree and 3i Infrastructure, are equity investors in the project, but they are largely financing it through debt. It is this "financial close" that was referred to by Burns in his parliamentary answer.
Siemens is close to completing the commercial contracts that underpin the order, which set performance obligations, compensation payments and grounds for termination. The project then moves to the financing contracts, or financial close, which must be approved by individual banks' finance committees. Once the finance is agreed the trains are built by Siemens and then leased to the Thameslink route operator, whose regular fee to the consortium pays off the debt and equity invested by the consortium. Siemens is close to completing the commercial contracts that underpin the order, which set performance obligations, compensation payments and grounds for termination. The project then moves to the financing contracts, or financial close, which must be approved by individual banks' finance committees. Once the finance is agreed the trains are built by Siemens and then leased to the Thameslink route operator, whose regular fee to the consortium pays off the debt and equity invested by it.
The general secretary of the RMT trade union, Bob Crow, urged the DfT to switch the contract to Bombardier, the runner-up to Siemens when the German manufacturer was declared preferred bidder in 2011.The general secretary of the RMT trade union, Bob Crow, urged the DfT to switch the contract to Bombardier, the runner-up to Siemens when the German manufacturer was declared preferred bidder in 2011.
"The game is clearly up for the Siemens/Thameslink deal which is riddled with the same contamination and incompetence as the West Coast main line fiasco. The Government should now be forced to hand this work over to Bombardier in Derby saving thousands of key manufacturing jobs and calling a halt to this 18 months of shame." "The game is clearly up for the Siemens/Thameslink deal, which is riddled with the same contamination and incompetence as the west coast mainline fiasco. The government should now be forced to hand this work over to Bombardier in Derby, saving thousands of key manufacturing jobs and calling a halt to this 18 months of shame."