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Government 'lost' key calculations on West Coast bid
THE Government lost or failed to save key calculations underpinning its decision to award the West Coast rail franchise to FirstGroup, a report commissioned by the Department for Transport shows.
The study from accountants PriceWaterhouseCoopers highlights crucial flaws in the handling of the bid that led to last week's decision by Transport Secretary Patrick McLoughlin to pull the contract.
They include the absence or loss of vital computations showing how civil servants arrived at their decision and the failure to examine the risks around GDP forecasts for the final three years of the contract.
The DfT appointed PwC in late September to re-run the numbers on the rival West Coast bids after Virgin Rail, the losing incumbent operator, applied for a judicial review of the process.
Heavily redacted copies of PwC’s report were handed to the bidders earlier this week as the Government provided initial feedback on a decision that has left the taxpayer with a bill of at least £40m to reimburse bid fees and seen the suspension of three civil servants.
One insider said: “It looks like they ran the numbers and didn’t save the results. PwC tried to repeat the outputs and it couldn’t.”
It is unclear whether officials failed to save results, lost key calculations or deleted some of the workings behind their decision.
The report also shows the “GDP resilience model” was not properly applied for the last three years of the contract, while the DfT made errors confusing real and nominal inflation.
It is in the final three years to the end of 2028 when there is a ramp-up in payments to the taxpayer from FirstGroup’s £13.3bn bid.
Last week Mr McLoughlin admitted “mistakes were made in the way in which inflation and passenger numbers were taken into account, and how much money bidders were then asked to guarantee as a result”.
The PwC report shows revenue forecasts were not correlated with how many passengers could actually fit on the trains.
A DfT spokesman said: “We are not going to give a running commentary on what went wrong.”
A FirstGroup spokesman said: “The DfT has provided us with information and we are working through it.” Both PwC and Virgin declined to comment.