SNC Lavalin and the OLR, what exactly do they do?

[Bletchleyite]

It keeps coming up that SNC Lavalin provide some form of consultancy services to the Operator of Last Resort, i.e. the "nationalised" TOCs of LNER and Northern.

Can anyone clarify as to exactly what they do, and why it is bought in in this way rather than the DaFT recruiting suitable staff?

 

[dmncf]

I think the advantage of using a consultancy when an Operator of Last Resort team is needed is that a consultancy will have skilled staff that can be drawn on at short notice, by shifting staff from their many other projects. DfT isn't likely to have this kind of staffing flexibility in-house.

 

[bluenoxid]

Looks like it is off the back of their Interfleet acquisition.

 

[LNW-GW Joint]

It keeps coming up that SNC Lavalin provide some form of consultancy services to the Operator of Last Resort, i.e. the "nationalised" TOCs of LNER and Northern.
Can anyone clarify as to exactly what they do, and why it is bought in in this way rather than the DaFT recruiting suitable staff?

DfT advertised, in the McLoughlin/Osborne era, for an "OLR partner" after it disbanded its in-house DOR function which ran Southeastern for a while, and ICEC when NatEx handed the keys back.
SNC Lavelin (a Canadian company with global reach) had acquired Interfleet Technology in Derby, which was a BR MEBO, and had some high-powered consultants (mainly ex-BR/Railtrack/NR, with a specialism in new vehicle certification).
There are senior ex-NR/TOC directors on the staff.
So they got the contract, but at that point there were no TOCs involved - now there are 3.
There are probably time limits on all the contracts, and might not be needed under GBR.
The notion still is that OLR TOCs will be returned to the private sector at some point.

As I understand it, SNC Lavelin have a generic consultancy contract for the OLR function, and specific OLR contracts for each of their operational TOCs.
From what I can make out, the present OLR TOC contracts are very similar to the ERMA/NRC contracts let commercially by DfT.
Wales and Scotland have their own OLR arrangements for TfW and Scotrail, now that these operations have been taken in-house.

 

[Bletchleyite]

So to clarify are we saying that OLR TOCs are not in fact nationalised, but are more like management contracts to SNC Lavalin? Or are we saying that they are nationalised, but Lavalin is providing, under contract, consultancy services to their senior management? If the latter, what services are they? If the former, why is the term "nationalised" even used?

I suppose the decider is who owns the limited company that makes up the TOC and who employs the staff? SNCL or HMG?

 

[td97]

They play a technical advisory role, along with Arup and EY.
Easiest to outsource as DfT evidently do not have this skill in-house.
A quick Google revealed

Clarification of whether LNER is actually publicly owned. - a Freedom of Information request to London North Eastern Railway Limited

I have heard that LNER is publicly owned however i have also heard that it is being operated by Arup Group / Ernst & Young / SNC Lavalin Rail (which are all private companies) as well. So could you please confirm is it publicly owned like East Coast was or is it privately owned like other...

www.whatdotheyknow.com

 

[Watershed]

So to clarify are we saying that OLR TOCs are not in fact nationalised, but are more like management contracts to SNC Lavalin? Or are we saying that they are nationalised, but Lavalin is providing, under contract, consultancy services to their senior management? If the latter, what services are they? If the former, why is the term "nationalised" even used?

I suppose the decider is who owns the limited company that makes up the TOC and who employs the staff? SNCL or HMG?

Each of the DfT OLRs are legally owned by the SoS, albeit through several intermediate holding companies.

 

[100andthirty]

So to clarify are we saying that OLR TOCs are not in fact nationalised, but are more like management contracts to SNC Lavalin? Or are we saying that they are nationalised, but Lavalin is providing, under contract, consultancy services to their senior management? If the latter, what services are they? If the former, why is the term "nationalised" even used?

I suppose the decider is who owns the limited company that makes up the TOC and who employs the staff? SNCL or HMG?

The ownership of a company is separate from the employment model for those that run it. Some may be duty holders - e.g. Directors - some may be employees - e.g. the staff TUPE'd from the former franchises. Employees may be on a variety of different Ts and Cs depending on the nature of those they "enjoyed" whilst in their franchises. The OLR might not wish to resource all the skills it needs, hence the "OLR Partner" role. "Programme Partner" is a term used on many public sector projects where the client has insufficient skills to carry out the client role effectively and doesn't wish to employ people they would have to make redundant at the end of the project. I imagine the OLR Partner is similar, given OLR is supposed to be a temporary home pending re-letting the franchise although I accept that things have changed a bit.

 

[htafc]

It keeps coming up that SNC Lavalin provide some form of consultancy services to the Operator of Last Resort, i.e. the "nationalised" TOCs of LNER and Northern.

And southeastern!

 

[Clarence Yard]

The OLR TOCs are “nationalised” in the sense they are owned by the DfT, rather than by a private company or foreign operator.

How it works is that the TOC effectively becomes a subsidiary of DOR. DOR (The DfT) appoint two non exec directors to the TOC Board, both usually sourced through SNC-L, and one of those two directors chairs the company. If any of the existing Exec team needs replacing, they will make it happen. The Exec team are usually permanent TOC employees.

What this isn’t is the DfT running the company direct - they don’t have the staff to do that. By keeping that senior representation at Board level, they are effectively “minding the store” for the DfT by being involved in all the key decisions that the TOC needs to make.

As stated above, there is very little difference between “nationalised” and ERMA/NRC TOCs nowadays, it’s just the ownership that is different and the fact that the “private” TOCS now just earn a fee for running the TOC on behalf of the DfT, rather than (hopefully) earning a profit when they were franchises.

 

[RochdalePioneers]

All franchises have *always* been nationalised. The government has never sold a TOC, merely issued an exclusive fixed-term operating license for it to a private operator.

 

[Bald Rick]

So to clarify are we saying that OLR TOCs are not in fact nationalised, but are more like management contracts to SNC Lavalin? Or are we saying that they are nationalised, but Lavalin is providing, under contract, consultancy services to their senior management?

The latter.

SNC Lavalin (which also has Atkins in its stable) is simply providing consultancy services in the form of individuals ‘body shopped’ into the OLR Management team.

This will be done because as originally envisaged, OLR management was intended to be short term between a failed franchise and a new one being let.

 

[Bletchleyite]

The latter.

SNC Lavalin (which also has Atkins in its stable) is simply providing consultancy services in the form of individuals ‘body shopped’ into the OLR Management team.

This will be done because as originally envisaged, OLR management was intended to be short term between a failed franchise and a new one being let.

Thanks, this is the clearest explanation I have seen. So in essence they are acting as an employment agency of kinds, I guess. Essentially exactly how my employment mostly works, though for my IT rather than railway management skills.

 

[Scott1]

Isn't SNC Lavlin the one that had the bigger scandal last year? Bribes or some such?

 

[northwichcat]

Isn't SNC Lavlin the one that had the bigger scandal last year? Bribes or some such?

Following a 2017 public consultation process, the Government of Canada moved forward with the establishment of a "made-in-Canada version of a deferred prosecution agreement (DPA) regime", called the "Remediation Agreement Regime",[100] which was introduced in the March budget and came into effect in June 2018.[Notes 10] By 2019, SNC-Lavalin, still facing criminal charges in regard to several contracts, began investigating the possibility of a DPA under the newly introduced Remediation Agreement Regime, as early as April 2018.[101][100][51] On February 10, 2019, the Toronto Star reported that Opposition Leader Andrew Scheer met with SNC-Lavalin CEO Neil Bruce on May 29, 2018 to discuss the remediation agreement.[102] The director of public prosecutions informed SNC-Lavalin on October 9, that its DPA option was rejected because "is not appropriate in this case".[103] According to the National Post, "If the company is convicted it would be barred from bidding on federal contracts for 10 years, potentially costing it billions in forgone revenue."[103] In response, the company's share prices dropped, leaving it vulnerable to a hostile takeover. According to the Montreal Gazette, Quebec Premier François Legault said that SNC-Lavalin was one of ten publicly-traded companies headquartered in Quebec that the province considers to be "strategic" and therefore in need of protection from a takeover that would force the company to leave the province.[104]

On February 8, 2019, The Globe and Mail reported that sources close to the government said that the Prime Minister's Office allegedly had attempted to influence Jody Wilson-Raybould's decision concerning SNC-Lavalin's request for a DPA, while she was Minister of Justice and Attorney General. When asked about the allegations, Justin Trudeau said that the story in the Globe was false and that he had never "directed" Wilson-Raybould concerning the case.[105] Wilson-Raybould refused to comment on the matter citing solicitor-client privilege.[106] Under pressure from the Conservative Party of Canada and the New Democratic Party (NDP), on February 11, 2019, the conflict of interest and ethics commissioner launched an inquiry into allegations of political interference and a possible violation of the Conflict of Interest Act in the SNC-Lavalin case.[107][51]

On February 18, 2019, Gerald Butts, Trudeau's principal secretary, resigned and denied that he or anyone else in the Prime Minister's Office attempted to influence Wilson-Raybould.[108]

On February 27, 2019, Wilson-Raybould spoke about the SNC-Lavalin controversy at a hearing of the House of Commons justice committee. In her first substantial public statement on the matter, she testified that she was inappropriately pressured to prevent the Montreal-based company from being prosecuted in a bribery case.[109]

On 14 August 2019, Mario Dion, conflict of interest and ethics commissioner, released a report that said Trudeau contravened section 9 of the Conflict of Interest Act by improperly pressuring Wilson-Raybould.[110][111][112][113] The report details lobbying efforts by SNC-Lavalin to influence prosecution since at least February 2016, including the lobbying efforts to enact DPA legislation. The commissioner has also found that Trudeau acted improperly when using his position of authority over Wilson-Raybould in an effort to have her overrule the director of public prosecution’s decision not to negotiate a deal with SNC-Lavalin that would see the company avoid criminal prosecution over charges of corruption and fraud stemming from an RCMP investigation. The report analyses SNC-Lavalin's interests and finds that the lobbying effort advanced private interests of the company, rather than public interests. The report's analysis section discusses the topics of prosecutorial independence and Shawcross doctrine (dual role of Attorney General) to draw the conclusion that the influence was improper and a violation of Conflict of Interest Act.[110]

AtkinsRéalis - Wikipedia

en.wikipedia.org

The Globe and Mail is roughly the equivalent of The Guardian in Canada.

 

[Deepgreen]

It keeps coming up that SNC Lavalin provide some form of consultancy services to the Operator of Last Resort, i.e. the "nationalised" TOCs of LNER and Northern.

Can anyone clarify as to exactly what they do, and why it is bought in in this way rather than the DaFT recruiting suitable staff?

As an aside, the title of the OLR must really do wonders for staff morale!

 

[Bletchleyite]

As an aside, the title of the OLR must really do wonders for staff morale!

I don't know about Northern, but I think LNER operate the ECML as well as or better than BR, and certainly better than any previous operator, so they must themselves feel good about it whatever it's technically called!

 

[northwichcat]

As an aside, the title of the OLR must really do wonders for staff morale!

It's much better to be working for a rail company under the control of the OLR, than a company that's in administration which could be liquidated if the administrators can't find a buyer. While rail operators are private, the employees do have the protection of automatic transfer to the new company if the existing operator fails. Very few industries get that level of protection. It's something ASLEF, the RMT and TSSA should all be grateful for, especially considering they didn't even have to fight for it, the government just handed them it on a plate.

 

[Bletchleyite]

It's much better to be working for a rail company under the control of the OLR, than a company that's in administration which could be liquidated if the administrators can't find a buyer. While rail operators are private, the employees do have the protection of automatic transfer to the new company if the existing operator fails. Very few industries get that level of protection. It's something ASLEF, the RMT and TSSA should all be grateful for, especially considering they didn't even have to fight for it, the government just handed them it on a plate.

TUPE, apparently, is an EU directive but gold plated by the UK as we have a habit of doing. The gold plating in this case offers protection in case of a contract handover rather than just a business takeover, which Germany's implementation doesn't, as a result of which regional rail staff keep having to get new jobs.

I have mixed views on it as it also makes it hard to get rid of bad cultures e.g. that in Avanti.

 

[LNW-GW Joint]

I don't know about Northern, but I think LNER operate the ECML as well as or better than them, and certainly better than any previous operator, so they must themselves feel good about it whatever it's technically called!

But there's no commercial hazard with OLR TOCs, just the bottomless pit of public money.
I don't doubt the OLR management are doing well without the stress of a franchise and shareholders, but ultimately the DfT isn't getting the returns it expected from the franchises.
And that means the expected surplus from LNER is not feeding round to the loss-making TOCs.
But then the whole system has changed with Covid and EMA/ERMA/NRC operation.
It remains to be seen if DfT will try and return TOCs like LNER to private sector operation.
Currently the tide still seems to be flowing the other way...

 

[43066]

As an aside, the title of the OLR must really do wonders for staff morale!

I doubt it makes much difference to be honest. Quite honestly the disruption and associated aggro, risk of abuse and assault at a failing operator will be far worse from that point of view.

It's much better to be working for a rail company under the control of the OLR, than a company that's in administration which could be liquidated if the administrators can't find a buyer. While rail operators are private, the employees do have the protection of automatic transfer to the new company if the existing operator fails. Very few industries get that level of protection. It's something ASLEF, the RMT and TSSA should all be grateful for, especially considering they didn't even have to fight for it, the government just handed them it on a plate.

TUPE applies to most private sector business takeovers, irrespective of industry. The additional protection on the railway isn’t down to TUPE per se, rather it’s because of the reality that the railway will be kept running by the government, irrespective of whether the current operator can make it work or not.

 

[thenorthern]

With Ernst & Young I am told that the reason they are in the consortium is because most franchises that fail do so because of financial reasons and having a professional services company is there to stabilise the finances. With SNC Lavalin I assume it's to cover the engineering and transport operation part.

 

[trainstrainstr]

SNC Lavalin were involved in ScotRail's transition. A mobilisation lead contacted another TOC to ask about resources for data protection and FOI. E.G How many people do you employ to do these tasks.

 

[Clarence Yard]

No, Ernst and Young provide professional finance services to the DfT. Arup tend to provide professional operational services to the DfT. SNC-L do similar for engineering.

As I stated above, the involvement of SNC-L in an OLR TOC is to provide senior resources to sit on the TOC Board - these companies do not get involved in the day to day operations or TOC exec decisions. They operate mainly on the DfT side so they get involved in evaluations, re-negotiations or mobilisations, as part of the DfT team.

 

[Joe Paxton]

So to clarify are we saying that OLR TOCs are not in fact nationalised, but are more like management contracts to SNC Lavalin? Or are we saying that they are nationalised, but Lavalin is providing, under contract, consultancy services to their senior management? If the latter, what services are they? If the former, why is the term "nationalised" even used?

I suppose the decider is who owns the limited company that makes up the TOC and who employs the staff? SNCL or HMG?

Reading this I thought, as ever when there are such debates, define "nationalised".

 

[Nicholas Lewis]

But there's no commercial hazard with OLR TOCs, just the bottomless pit of public money.
I don't doubt the OLR management are doing well without the stress of a franchise and shareholders, but ultimately the DfT isn't getting the returns it expected from the franchises.
And that means the expected surplus from LNER is not feeding round to the loss-making TOCs.
But then the whole system has changed with Covid and EMA/ERMA/NRC operation.
It remains to be seen if DfT will try and return TOCs like LNER to private sector operation.
Currently the tide still seems to be flowing the other way...

LNER were still receiving considerable financial support from DfT whence they last released data on operator support although they haven't provided an update on spending for some months so im sure support will have dropped back as travel has picked up but doubt its yet providing a contribution. Northern is one of the most expensive in terms of support / passenger carried but even in its pre OLR incarnation it required the most support but at least Arriva don't earn a margin from it anymore.

According to LNER Ltd 2021 accounts the directors costs were 1.036m highest paid director, of 6, earned 248k but Gisby and one other are paid from OLR Holdings Ltd. You can't determine if any are SNC employees.

Edit: DfT have released figures today for expenditure in April 22 and LNER was in receipt of £7.3m so thats an annualised run rate of £80+m although im sure they will be broadly cost neutral and maybe generating some modest income through the summer months

Another interesting stat released by DfT is what operators have paid out on delay repay in 2021/22 with LNER by far and away the highest at £11.2m. I know ECML has its issues but so does every operator but guess they are more helpful in giving refunds.

 

[Clarence Yard]

No, neither Robin Gisby nor Richard Harrison are SNC-L employees. Richard Harrison had to give up his role as an SNC-L Associate when he became an OLR director.

I believe Robin Gisby still advises SNC-L in a consultative capacity as well as continuing to chair the various OLR TOCs, as a non-executive director on each TOC board. He is/was on the board of other, non railway, organisations as well.