First will not take over West Coast from December

[Lampshade]

Yes, I believe Rex is Latin for King.

Wow, GCSE R.E. came in handy hock:

 

[Xenophon PCDGS]

I see those of you at the back are paying attention for a change today...

The play by Thomas Findlay was actually called....."Elizabeth Rex"....so there is a precedent for my Icenic connection in my earlier posting.

Poetic licence can cover a multitude of sins.

 

[Oswyntail]

....Poetic licence can cover a multitude of sins.

But it would still fail Latin O-level :P

 

[Geezertronic]

True - I just can't see any evidence of why Virgin had a better bid than First, regardless of the "flawed" process - everyone now thinks that it was flawed (and First shouldn't have been awarded it under those rules) but nobody can tell me why Virgin should have won.

Whether Virgin had a better bid or not is irrelevant. Mistakes were made and admitted to before the JR, which in itself proves the process itself needs looking at. Whether First would win under the proper process is also irrelevant, as is whether First would have also asked for a JR because the outcome would have been the same

 

[Xenophon PCDGS]

But it would still fail Latin O-level :P

But pass the English Literature equivalent.....

Shall we return to the thread now for those wishing to further discuss the thread query itself....

 

[northwichcat]

But pass the English Literature equivalent.....

English Literature is about studying literature already written (when I did it I had to study To Kill A Mockingbird and The Merchant of Venice amongst other books) not writing your own.

Anyway, West Coast Trains...

 

[Xenophon PCDGS]

Whether Virgin had a better bid or not is irrelevant. Mistakes were made and admitted to before the JR, which in itself proves the process itself needs looking at. Whether First would win under the proper process is also irrelevant, as is whether First would have also asked for a JR because the outcome would have been the same

Retrospective soul-searching and re-examination of past matters, interesting as they may well be for those on the forum who wish to dissect the recent past WCML franchise bids to the n-th degree, may well be a rather professorial study worthy of such a matter, but the case remains that there are irreconcilable differences of opinion which will never be resolved, however hard that one party to an opinion wishes to convince the other party of the veracity of their own particular standpoint.
--- old post above --- --- new post below ---

English Literature is about studying literature already written (when I did it I had to study To Kill A Mockingbird and The Merchant of Venice amongst other books) not writing your own.

I was referring to the play by Thomas Findlay.

 

[YorkshireRider]

True - I just can't see any evidence of why Virgin had a better bid than First, regardless of the "flawed" process - everyone now thinks that it was flawed (and First shouldn't have been awarded it under those rules) but nobody can tell me why Virgin should have won.

I certainly wouldnt disagree with that, in fact it would have been intresting to see some of the ideas SNCF had in their bid, given their experience they may have had some intelligant investment ideas.

 

[RobShipway]

Retrospective soul-searching and re-examination of past matters, interesting as they may well be for those on the forum who wish to dissect the recent past WCML franchise bids to the n-th degree, may well be a rather professorial study worthy of such a matter, but the case remains that there are irreconcilable differences of opinion which will never be resolved, however hard that one party to an opinion wishes to convince the other party of the veracity of their own particular standpoint.
--- old post above --- --- new post below ---


I was referring to the play by Thomas Findlay.

It maybe something that either Modern Railways or Rail Magazine I have not doubt will try to dissect in a future release of their magazines.

 

[tbtc]

Whether Virgin had a better bid or not is irrelevant. Mistakes were made and admitted to before the JR, which in itself proves the process itself needs looking at. Whether First would win under the proper process is also irrelevant, as is whether First would have also asked for a JR because the outcome would have been the same

I know that mistakes were made and that the process wasn't ideal.

The point I'm trying to make is that (ignoring the appropriate size of "bond" etc) I can't see a reason why Virgin had a better bid.

So far nobody has convinced me why Virgin should have one, so for all the bluster about the Judicial Review, did Virgin have a better bid? I'm not convinced.
--- old post above --- --- new post below ---

I certainly wouldnt disagree with that, in fact it would have been intresting to see some of the ideas SNCF had in their bid, given their experience they may have had some intelligant investment ideas.

Agreed - given how similar Virgin and First were in terms of "extras", did SNCF have something different to offer? Maybe we'll never know?

 

[The Ham]

BBC have a news update on the bids:
http://www.bbc.co.uk/news/business-19851926

The BBC has learned more details of mistakes made by the Department for Transport that led to the collapse of First Group's bid for the West Coast mainline.

As well as forgetting to take inflation into account, officials were responsible for double-counting.

They also took short-cuts that were against the rules.

The system used to decide the contract was extremely complex, but the mistakes that killed it were simple.

Failing to include inflation assessing the level of risk in the bid is not such a problem when you are looking six months ahead.

But it is a disaster if you are trying to predict the economy in 2025.
Fatal flaw

The computer models they used were specificifally designed by the Department for Transport to deal with a whole bundle of franchise contracts due for renewal in the next few years.

This was the first big test.

We also now know that the fatal flaw wasn't discovered until last week - it then took until Tuesday of this week to unearth its true horror.

The fact that human error played such a part casts a shadow over previous franchise bids, although they would have been decided using a different computer model.

It will be some months before a review decides whether the whole system needs to be changed.

 

[Ferret]

Human error, or anti-Branson bias? And is any anti-Branson bias justified? Some would argue that it is. So many questions, and such a shambles. Time for DOR to take over, maybe permanently.

 

[Oswyntail]

Interesting (if surprisingly informal) quote from the BBC.
If DfT were relying on computer analysis of bids, and inflation was left out, surely it would also be left out of the assessment of the Virgin bid. Unless, of course, the system allowed for the bid to specify its own assumptions about inflation.

 

[Metrailway]

The Telegraph reports that the DfT was given an independent report which highlighted flaws in the bid process five days before the DfT awarded the contract to First Group.

Europa report alerted Government to West Coast flaws
The Department for Transport was handed an independent report highlighting the flaws in the West Coast rail franchise bid process five days before it awarded the contract to FirstGroup.

The report from corporate finance advisers Europa Partners was commissioned by Virgin Rail as it grew increasingly concerned over how the DfT was evaluating risk.

This was the key issue behind Wednesday’s humiliating axing of the contract, with new Transport Secretary Patrick McLoughlin pointing to “significant flaws” in the DfT’s approach that “stem from the way the level of risk in the bids was evaluated”.

The Europa report was handed to the DfT on Aug 10, five days before his predecessor Justine Greening awarded the West Coast contract to a £13.3bn bid from FirstGroup.

Rupert Darwall, a consultant to Europa, said: “The language was very clear that this was a flawed process and it set out how to address those flaws. It was a document designed to help.”

The Europa report raises fresh questions over the DfT’s handling of the bid, which Mr McLoughlin admitted was “inconsistent” in his phone call to Virgin founder Sir Richard Branson. He is understood to have told Sir Richard that one bidder seemed to have had superior access to information, though he later suggested only that some bidders’ emails were answered where others were not.

Virgin Rail, which is 49pc-owned by Stagecoach, is now in urgent talks with the DfT over a contract extension on the West Coast, while the Government reviews a chaotic bid that has also led to the suspension of bids for the Great Western, Essex Thameside and Thameslink franchises.

The Government is examining whether to extend Virgin’s contract, which expires on Dec 9, or transfer the franchise to the state-backed Directly Operated Railways, which runs the East Coast service.

Sir Richard said: “We believe the only sensible option is for us to keep it.” He noted all four franchises would require extensions and, calling for the same rules on each, said DOR “can’t run them all”.

The fall-out from the West Coast bid escalated on Thursday, with four Derbyshire MPs writing to Mr McLoughlin to call for a “pause” in the procurement of the £1.4bn Thameslink train contract, controversially awarded to Siemens rather than Bombardier. They pointed to concerns over “the assessment of risk”.

A DfT spokesman said officials had examined the Europa report, adding their analysis “at that time did not identify the specific technical errors that have since emerged”.

 

[LNW-GW Joint]

The point I'm trying to make is that (ignoring the appropriate size of "bond" etc) I can't see a reason why Virgin had a better bid.
So far nobody has convinced me why Virgin should have one, so for all the bluster about the Judicial Review, did Virgin have a better bid? I'm not convinced.
--- old post above --- --- new post below ---
Agreed - given how similar Virgin and First were in terms of "extras", did SNCF have something different to offer? Maybe we'll never know?

I don't think it was ever a beauty contest between Virgin and First options.
The initial cut was made on the premiums for the baseline service without options.
First supposedly won this hands down, so DfT then only discussed the options on top of the baseline offered by First.
We don't know if they offered more which were declined by DfT.

I don't think anybody knows yet what impact the "errors" had on the bid numbers, just that they were sufficiently dodgy to destroy DfT's defence in the judicial review.

 

[Oswyntail]

The Telegraph reports that the DfT was given an independent report which highlighted flaws in the bid process five days before the DfT awarded the contract to First Group.

The report from corporate finance advisers Europa Partners was commissioned by Virgin Rail as it grew increasingly concerned over how the DfT was evaluating risk.

And that is all we need to hear about THAT!

 

[Geezertronic]

And that is all we need to hear about THAT!

Well maybe they had a point didn't they and VT were correct to comission a report?

 

[tbtc]

Well maybe they had a point didn't they and VT were correct to comission a report?

...and yet this Virgin sponsored report is now being described as "independent" by a supposedly serious newspaper?

Fair enough, Virgin had a point, but the Telegraph is being disingenuous at best here. Maybe they find it hard to actually write stories when they can't just copy and paste a press release from the Taxpayers Alliance?

 

[Aictos]

There are times when a thread needs some light-hearted relief from the bitterness and acrimony that began to surface, prior to the forum clean-up earlier today on this thread....and this is surely one of these.

I quite agree, some people really need to learn to relax sometimes!

 

[HH]

I am amazed that Europa could write such a report. As I've noted before, bidders (well at least some bidders, maybe Virgin got more), were not given details of DfT's risk model, just a generalised approach. While it wasn't the normal way that companies would approach risk, I wouldn't have said there was enough detail to base a report on. After all DfT had been risk adjusting bids for some time, and this appeared to be a variant of that process.

If Virgin/Europa had determined from the little information available that this approach was undeniably flawed, and they are proved right, then massive kudos are due to all the people involved. Still, I remain to be convinced...

As well as forgetting to take inflation into account, officials were responsible for double-counting.

They also took short-cuts that were against the rules.

The financial model is done in "Real Prices"; I'm guessing that they used these Real numbers, rather than the "Nominal" ones. This would mean that numbers at the end of the franchise were significantly understated. As an example in year 15, if RPI was 3% per year, then the Nominal number would be 56% larger.

A bit of a howler, but a surprisingly common mistake to make. Still it should be picked up when the numbers are checked.

We have no details about the double counting, but it's very similar. Even if the person doing it makes such an error (and two such errors is pretty damning), the person checking it (i.e. their boss) should pick it up.

As for taking short-cuts, I'm just shocked. If your numbers men (normally the guardians of process) don't follow procedures, then what the hell are the rest doing?

Either there is a "root and branch" problem at DfT, or the staff running this model just didn't understand it, i.e. they were incompetent or undertrained; probably both.

 

[eastdyke]

I am amazed that Europa could write such a report. As I've noted before, bidders (well at least some bidders, maybe Virgin got more), were not given details of DfT's risk model, just a generalised approach. While it wasn't the normal way that companies would approach risk, I wouldn't have said there was enough detail to base a report on. After all DfT had been risk adjusting bids for some time, and this appeared to be a variant of that process.

If Virgin/Europa had determined from the little information available that this approach was undeniably flawed, and they are proved right, then massive kudos are due to all the people involved. Still, I remain to be convinced...


The financial model is done in "Real Prices"; I'm guessing that they used these Real numbers, rather than the "Nominal" ones. This would mean that numbers at the end of the franchise were significantly understated. As an example in year 15, if RPI was 3% per year, then the Nominal number would be 56% larger.

A bit of a howler, but a surprisingly common mistake to make. Still it should be picked up when the numbers are checked.

We have no details about the double counting, but it's very similar. Even if the person doing it makes such an error (and two such errors is pretty damning), the person checking it (i.e. their boss) should pick it up.

As for taking short-cuts, I'm just shocked. If your numbers men (normally the guardians of process) don't follow procedures, then what the hell are the rest doing?

Either there is a "root and branch" problem at DfT, or the staff running this model just didn't understand it, i.e. they were incompetent or undertrained; probably both.

Or even that this is not so 'highly unlikely' at all:

... Well unless someone at DfT did something that they shouldn't, but I think that highly unlikely. ...

 

[Realfish]

From the Guido Fawkes Blog:

Not sure where he's picked this up from:


It’s all kicking off tonight over at Transport as the suspended civil servant Kate Mingay, the Director of Commercial and Technical Services, has gone very rogue and is denying everything:


“While it has been widely reported in the context of the award of the franchise for the West Coast Mainline that I have been suspended, my role has been inaccurately portrayed mainly due to statements and other comment made by the Department for Transport itself. I would like to make it clear that:

• I did not have lead responsibility for this project;

• Neither I nor any member of my team had any responsibility for the economic modelling for this project, or for any Department for Transport project;

• Nor did I have any responsibility for the financial modelling in respect of this project;

I have not been involved in briefing Department for Transport ministers or other government ministers in respect of this project.

I will of course cooperate fully with all ongoing and future investigatory processes in relation to this matter, but wanted to correct the completely inaccurate portrayal of my role immediately.”

Very odd.

 

[HH]

Or even that this is not so 'highly unlikely' at all:

I agree it is looking like some people at DfT maybe did do things that they ought not to have done, but that's a long, long way from the person forgetting inflation doing it deliberately.

 

[fgwrich]

From the Guido Fawkes Blog:

Not sure where he's picked this up from:


It’s all kicking off tonight over at Transport as the suspended civil servant Kate Mingay, the Director of Commercial and Technical Services, has gone very rogue and is denying everything:


“While it has been widely reported in the context of the award of the franchise for the West Coast Mainline that I have been suspended, my role has been inaccurately portrayed mainly due to statements and other comment made by the Department for Transport itself. I would like to make it clear that:

• I did not have lead responsibility for this project;

• Neither I nor any member of my team had any responsibility for the economic modelling for this project, or for any Department for Transport project;

• Nor did I have any responsibility for the financial modelling in respect of this project;

I have not been involved in briefing Department for Transport ministers or other government ministers in respect of this project.

I will of course cooperate fully with all ongoing and future investigatory processes in relation to this matter, but wanted to correct the completely inaccurate portrayal of my role immediately.”

Very odd.

Why do i sense this is going to result in a DfT Sponsered Parce the Parcel of blame? Typical DfT, couldn't even wait till Christmas for the games. :roll:

 

[Pen Mill]

We won't ever know precisely why the deal was pulled just as precisely as we won't ever know how this magical, mythical £600 million loan figure was calculated.

I think what's happened is that a golden opportunity landed itself on McLoughlin's plate to wipe the slate clean without any need to recuperate the situation.In hindsight , it was his only sensible option.

I've seen it innumerable times that the "old guard" always cocked things up and it usually gives the new regime valuable "wasn't us" breathing space.

What amazes me is thatCameron hasn't got a runny yolk sliding down his chin because if there ever was a more deserving scapegoat , there you have it ! and what does he have to say ? why hasn't he been "press" ganged ?

 

[Whistler40145]

Sounds like they are trying to wriggle out of this.

It needs nipping in the bud very quickly.

 

[HH]

From the Guido Fawkes Blog...

Very odd.

I gather that KM is not very popular at DfT...

 

[John55]

After all DfT had been risk adjusting bids for some time, and this appeared to be a variant of that process.

If Virgin/Europa had determined from the little information available that this approach was undeniably flawed, and they are proved right, then massive kudos are due to all the people involved. Still, I remain to be convinced...

Doesn't the first sentence tell us that the bidders for franchises are all now familiar with the DfTs approach to risk assessment?

If the approach to risk assessment was a variant of a well understood model I don't see why you think it is so difficult to come up with an independent model which replicates the DfT one.

In my years in industry where a small numbers of suppliers were bidding against each other to small numbers of government agencies pretty much everyone knew what everyone else wanted and/or was offering because everyone was able to study everyone else's bids and the questions and answers over years in great detail. It isn't difficult when you know so much about each other.

 

[jon0844]

...and yet this Virgin sponsored report is now being described as "independent" by a supposedly serious newspaper?

Was it written by Andrew Gilligan by any chance? And if so, did he also get in a good argument against HS2.. perhaps by arguing that if Virgin keeps the ICWC deal then HS2 is no longer required.

 

[HH]

Doesn't the first sentence tell us that the bidders for franchises are all now familiar with the DfTs approach to risk assessment?

Approach, yes. I've been trying to explain why that doesn't help. Read this BBC article as well: http://www.bbc.co.uk/news/business-19810845

If the approach to risk assessment was a variant of a well understood model I don't see why you think it is so difficult to come up with an independent model which replicates the DfT one.

It's not a well understood model, it's a well understood approach. As it says on the BBC site: "A consultant who has worked with the Department for Transport on franchise bids in the past explains that there are three main areas where mistakes could have been made. When evaluating bids, the government will look at various individual forecasts, such as passenger numbers, and decide whether they are realistic. If not, it will make an adjustment and feed the revised figure into its own computer model."
Knowing the approach is not enough, by a long means, to allow you to replicate their calculation.

In my years in industry where a small numbers of suppliers were bidding against each other to small numbers of government agencies pretty much everyone knew what everyone else wanted and/or was offering because everyone was able to study everyone else's bids and the questions and answers over years in great detail. It isn't difficult when you know so much about each other.

We do not get to study one another's bids in Rail. Far more details have emerged about ICWC than any previous franchise, and yet, what do we know about the bids of SNCF and Abellio?