FT article:
Virgin Rail has launched a legal challenge to the governments decision this month to award the companys rival FirstGroup with the contract to run the intercity West Coast rail line, heaping new pressure on embattled transport secretary Justine Greening.
Virgin, the incumbent on the London to Glasgow line, is questioning whether the Department for Transports evaluation procedure properly weighed the risk associated with each bid.
The request for a judicial review caps almost two weeks of uproar over the decision, during which Sir Richard Branson whose Virgin Group is the controlling partner in the Virgin Rail joint venture accused the government of insanity for choosing what many see as an extremely aggressive bid.
MPs and others have also raised concerns that the quality of service will fall if FirstGroup whose Great Western franchise is poorly rated by passengers compared with the West Coast line takes over. Louise Ellman, chair of the transport select committee, wrote to Ms Greening last week urging her to delay the signing of the contract.
By the start of this week, more than 135,000 people had signed a petition asking for the decision to be reconsidered, in a rare example of the public swinging behind a single company.
The row is creating fresh headaches for Ms Greening, the transport secretary, who is already caught in the political crossfire over whether or not to expand Heathrow airport.
The government and FirstGroup are due to sign the West Coast contract at midnight on Tuesday night, well ahead of a December start date for the franchise. But Virgins move could delay that.
Virgin expects a high court judge to decide within the coming month whether the case is worth hearing. Lawyers for the Branson business spent the Bank Holiday weekend going through whether or not they had a potential case against the government.
Patrick Twist, a partner at the law firm Pinsent Masons, said the case was not a shoo-in. [Sir Richard] will need to show that there was something wrong with the process or that the department could not reasonably have come to the decision it did. That will be a very high hurdle to leap
The company says its bid promised higher premium payments to the government in the early years of the franchise, while FirstGroups overall offer was 15 per cent higher thanks to steeper payments in the later years.
We question whether FirstGroups bid has been correctly risk adjusted by the Department given all of its supposed incremental value is delivered after 2022, said Virgin.
A spokesman added: Were looking for an evaluation procedure that can say money in 12 years time is only worth, say, 20 per cent of money in a years time.
The group also argues that the money FirstGroup had promised the government should it default on the contract about £235m goes no where near covering the level of risk.
The company said on Tuesday: We have tried for three weeks to get clarity over the Department for Transports decision and to have a number of key questions answered. On each occasion we have been refused information. We are left with no choice but to commence court proceedings.
Virgin Rail is 49 per cent owned by Stagecoach. It is unclear whether the partners will bid for further franchises together following the West Coast loss.