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The high cost of poorly managed public procurement tenders

Posted 3 October 2012 | Feed Icon | 0 Comments

What a mess! £40 milllion of tax payers' money is now going to be wasted on compensating the four bidders for the West Coast main line franchise bidding process, now that the contract award to FirstGroup has been scrapped. And that's before one considers the procurement cost of re-running the tender process at the Dept of Transport and the reputational damage inflicted on the UK government and civil service. And that's assuming that Virgin Trains (who are the incumbent) don't pursue their court case. It is certainly a huge embarassment to the government.

We understand that three civil servants have been suspended as a direct consequence of the debacle. Of course if it is found (and there has been no hint of this so far in the media reports) that there has been any degree of bribery or fraud involved then it won't just be their jobs on the line.

This story demonstrates how crucial it is that procurement staff have the right level of training and management support/monitoring to mitigate the risk of the whole contract award process being halted. Given the high value and risk involved in the train franchise system, it is unbelievable that major issues have been discovered post award. The EU procurement regulations and processes are well defined and should have been well understood and consistently applied. I wonder whether the errors would actually have come to light had Virgin Trains not legally challenged the contract award decision.

We'll watch what comes to light with great interest.

by M Roper | 3 October 2012

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