The Intercity Express Programme project was initiated in 2005, with the Procuring Authority's business case showing that, at that point in time, trains were only just providing sufficient capacity to meet demand, and that existing trains were approaching the end of their expected service life. Major investment was required to ensure that high capacity, reliable services would be able to be provided over the medium- to long-term. The Procuring Authority ran a procurement process for a new fleet of trains for the two regions, and given its scale, the project was split into two parts, both of which reached commercial close in July 2012. The two lines are:

1.  The Great Western Main Line, covering the region to the west of London. These works included 57 trains, the development of two depots and the refurbishment of one depot. It reached financial close in July 2012.

2.  The East Coast Main Line, covering the intercity routes from London along the east coast of the UK. These works included 65 trains, two refurbished depots and one new-build depot, and it reached financial close in April 2014.

The decision to pursue a public-private partnership (PPP) model to procure the required rolling stock was taken due to the size of the undertaking and a desire to drive value for money for the public sector. The common procurement route for trains in the UK is for private train leasing companies (referred to in the UK as Rolling Stock Operators, or ROSCOs) to procure and then lease new rolling stock to the Train Operators. However, with 122 new trains to be brought into service (consisting of 866 individual carriages) as part of this project, with a total capital value close to £5.7 billion, this was judged to be too large to follow this common route. The size of the deal also influenced the rationale for delaying financial close of the East Coast trains, as there may not have been sufficient capacity in the financial markets to complete both parts of the project simultaneously.

Some of the challenges of the project were anticipated before commercial close. The PPP contract included the concept of 'contemplated variations', which allowed the Procuring Authority to request variations should certain circumstances arise. These challenges included the following:

•  The government was required to play a key role in managing the interests of various stakeholders. The UK rail network is operated by private Train Operators who bid to run a section of the network (a "franchise") for a period of time, generally seven years. The two main lines of the project (Great Western and East Coast) are run by separate franchises and were operated by different Train Operators during the design and manufacturing phase. The Procuring Authority needed to play a substantial role in managing these stakeholders in the development of detailed specifications during the design phase to agree a uniform base specification.

•  The operation of the electric trains on the Great Western Main Line was dependent on the electrification of the line itself. When the PPP contract was being finalised, the plan was to electrify the line from London to Cardiff in Wales, which is approximately 145 miles (232km). Electrification of the line is the responsibility of Network Rail, who is the owner and manager of UK rail infrastructure. There was a risk that this work may be delayed, and the materialisation of this risk is described below under the heading "Key Events".

The contractual arrangement for the project is based on two agreements. The first agreement is the Master Availability and Reliability Agreement (referred to here as the PPP contract) between the Procuring Authority and the Project Company. It includes the guarantee that the Procuring Authority will require the Train Operators to enter into a contract with the Project Company and provide availability payments for the rolling stock throughout the life of the contract. The second agreement is the Train Availability and Reliability Agreement (the Interface Agreement) directly between the Train Operators and the Project Company. The Interface Agreement defines the requirements for maintaining and making the trains available to the Train Operators for use on the network, as well as the corresponding availability payment obligations due to the Project Company. Delivery and maintenance of the rolling stock is passed down under a supply and maintenance contract from the Project Company to Hitachi Rail Europe, who is also the majority equity investor in the Project Company.