1 Since the privatisation of the railways in the mid-1990s it has been government policy for passenger rail services to be run by private sector companies on franchises that serve specified parts of the country for a specified length of time. Since the abolition of the Strategic Rail Authority in 2006, the Department for Transport (the Department) has been responsible for awarding rail franchises in England and Wales to the private sector, usually after a competitive procurement process.
2 In October 2012, the Department cancelled its competition for the InterCity West Coast franchise, having discovered errors in the procurement process, including its evaluation tool, while preparing to defend itself against legal proceedings from one of the bidders. The Department also paused three further franchise competitions. Subsequently, Sam Laidlaw led an inquiry into the events that led to the cancellation of the InterCity West Coast competition, and we and the Committee of Public Accounts published reports that drew out wider lessons for the Department to learn and apply to protect value for money. These reports highlighted a number of weaknesses in areas including:
• clarity of objectives and transparency of information;
• timetables for franchise competitions;
• senior level oversight, governance and assurance; and
• commercial and project management capacity and capability.
In addition, Richard Brown led a review that looked at franchising more widely.
3 In March 2013, the Department published a revised programme of 15 competitions to run passenger rail franchises staggered over an eight-year period. It also included 12 short-term, single tender actions ('direct awards') to maintain the provision of train services while facilitating the staggering of competitions. Since the launch of the programme the Department has awarded three franchises through competitions and has made ten direct awards.