All very intetesting, but simply not how franchising works.
The Government says what they want. Prospective franchisees say how they will achieve that, and at what price. The Government chooses a winning bidder who most closely matches the spec.
Later down the line when the franchise starts things will, in some situations, change. And ironing out the finer details always takes time.
But it's not right to say that the bid is simply the opening salvo in a negotiation process. And especially not, as with Stagecoach, where a bidder has failed to meet the essential criteria.
Franchising is very much a one-off auction. It's an auction of the right to run a franchise. The Government are not buying in expertise or widgets, they are selling a trainset.
I suggest that it's time that you learnt what the franchising system is and what it is not and how it has changed out of all recognition since the mid-90s.
The Government is
not selling a trainset - it is awarding a time-limited contract to
operate trains. The ownership of the train set remains with the Government and the rolling stock leasing or train service delivery companies as the case maybe.
The Government has answered the 'make or buy' question by accepting that it itself does not have the necessary expertise to operate the trains. It has therefore elected to buy in the expertise.
It does this by issuing an Invitation to Tender (ITT) to interested parties outlining its requirements. Following this negotiations take place until terms and conditions acceptable to both parties are reached.
Nominally the Government's criteria are lowest subsidy or highest premium over the life of the contract on a Net Present Value basis and a rather flexible 'Value for Money' consideration. In turn the train operator gains a reasonably assured cash flow and an element of profit, now around 2% of turnover down from around 5% in the early days of franchising.
Even this 2% is vanishing as can be seen in the financial issues facing, among others, Greater Anglia, South West Railway, East Coast/VTEC and now Northern.
These experiences now show that the terms and conditions of the current form of franchise are not flexible enough to cope with changes in the global travel market or delays and overruns in infrastructure provision and that the DfT is incapable of adjusting the franchise agreement and unwilling to admit that another part of it (Network Rail) has been incorrectly instructed or funded.
The financial consequences of delays in the introduction of new trains is an issue that the TOCs have to carry themselves.
You make the error of thinking the requirement s are correct tin the first place. AS I understand it the argument is the governments requirements are not in line with procurement law. The government is not above the law nor is it all that uncommon for them to be wrong. That is what the court will decide. They obviously feel thy have a case to put.
Exactly, the ITT is often incorrect as the part of the DfT which prepares the ITT for the train operator has not checked with another part of the DfT (Network Rail) that the physical infrastructure is capable of supporting the outline train service plan in the ITT.
More important is the concept that all bidders have to be treated equally. In this case, as in the 2012 case of the West Coast franchise competition, the bidders feel that there have been irregularities in the way that the DfT has handled the evaluations of the bids. As I understand it the legal challenges are more concerned with procedure than whether the details in the ITT were correct. Specifically if the DfT was going to disallow non-compliant bids - mainly concerned with the pensions issues - these should have been been made clear at the start of the process and not a few days before the winning bid was announced so the bidders did not have to spend time and money on further negotiations on a bid which the DfT had already secretly rejected.
This is in addition to the rights and the wrongs of the pensions issues - which is another legal challenge.
