1.5 Before inviting bids from companies interested in providing franchise services, the Department must first set out the services required for each franchise. It does so through a series of documents called service specifications.
1.6 Service specifications are developed by the Department following wide consultation with stakeholders generally seeking improvements to passenger services. For example, as well as widely consulting with all possible stakeholders in the region covered by Stagecoach South West Trains, the Department held regular three-weekly tri-partite meetings with two major stakeholders, Network Rail and Transport for London. Most potential improvements are agreed only if they pass a cost benefit analysis, although some of the security and safety measures proposed may be adopted even if they show net costs. Additional services must also pass an assessment by Network Rail that they will not interfere unduly with other operations. It is also possible for Passenger Transport Executives, and other bodies such as County Councils, to choose to fund local services even if they fail the Department's cost benefit and affordability tests (see 1.10 overleaf).
1.7 In setting service specification, there is always a balance between providing a clear statement of what is required, and leaving scope for bidders to innovate. In these eight franchises, there has been some industry criticism that the Department takes an overly prescriptive approach. Bidders are able to innovate within the constraints of the specification if no extra cost for the taxpayer is involved. In the South Western franchise, for example, the winning bidder proposed changing some rolling stock to carriages with more seats in each row as a response to the original service specification. This has increased the number of seats provided on some longer distance routes and created more standing room on suburban services.