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Government asks Virgin to run West Coast Main Line franchise for at least nine months


The Government's plans to contract Virgin Trains to run the West Coast Main Line franchise for at least nine months whilst it forms and then stages a new bidding competition for longer term arrangements "poses as many problems as it solves," an expert has said.

On Monday morning the Transport Secretary, Patrick McLoughlin, announced that the Department for Transport (DfT) was "commencing negotiations" with Virgin with the intention that the company continue to operate passenger services for the West Coast Main Line for between nine and 13 months from 9 December, the date at which Virgin's current contract for the franchise ends.

McLoughlin said that the temporary arrangements would enable services to continue whilst a new "competition is run for an interim franchise agreement" for the London-Scotland link. The interim franchise contract would run "until a new long term West Coast franchise is ready to commence," McLoughlin said. The BBC has reported that the interim agreement would last for a period of two years.

DfT previously announced that, following a tendering process, FirstGroup had been awarded preferred bidder status over Virgin for a new 15-year contract to operate the West Coast Main Line franchise from 9 December. However, earlier this month the DfT said that it had cancelled the competition for the new contract after discovering "significant technical flaws" in the way the procurement process was conducted by officials.

The Government has ordered two independent reviews; one into "what went wrong" with the West Cost franchise competition and a wider review of the DfT's rail franchise programme. Richard Brown, chairman of Eurostar, is due to report back by the end of December on whether changes are needed to the DfT's bidding and evaluation processes and the way it manages risk. An initial report into the West Coast decision itself is due by the end of this month.

Meanwhile, DfT has been working towards a plan to ensure the continuation of services beyond the end of the current contract.

However, infrastructure law specialist Patrick Twist of Pinsent Masons, the law firm behind Out-Law.com, said that what the Government has announced this morning may cause it trouble in the future.

"The Department for Transport has got itself into a hole over the West Coast Main Line franchise but the wiseacre’s advice to stop digging won’t help," Twist said. "The problem is that there is no easy way out of the hole and this morning’s announcement poses as many problems as it solves."

"First, it is not obvious that the short term 9-13 month contract, which is now being proposed to be entered with Virgin, should not be open to competition under procurement law," he added. "The Department may have taken soundings and formed the view that if it is limited to thirteen months and is followed by an interim franchise contract which is open to competition, then other potential bidders will not challenge this decision."

However, Twist said that the interim franchise contract "is itself likely to be controversial."

"First Group, and others, may argue that it is of such a short duration that Virgin Rail , as the incumbent operator, has a disproportionate advantage in bidding for it. Though the interim contract is ostensibly being competed, they may say that there it is not the level playing field required by procurement law," the expert said. "Directly Operated Railways (DOR) remains in the background as a potential ladder out of the hole. However the use of DOR would inevitably mean an unwelcome two changes of operator with all the disruption that would necessitate. Even that route is not completely without issues of procurement law."

In a statement the Transport Secretary again apologised for the cancellation of the original West Coast Main Line franchise competition and said his priority was now to "fix the problem", with ensuring passenger services continue post 9 December the "first step" in that process.

"I believe Virgin remaining as operator for a short period of time is the best way to do this and my officials and I will be working flat out to make this happen," McLoughlin said.

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