Monday 18 July 2011

A better picture of what's happening with Bombardier...

Just had a couple of things to say about The Mirror’s story on Bombardier this morning which appeared to suffer from a heavy bit of top spin.

The story concerned a “leaked” document which the paper said showed David Cameron could have given the £1.4bn Thameslink deal to Bombardier instead of German-firm Siemens, thus avoiding job losses at the Derby train manufacturer.

Let’s deal with that word “leaked” first, which is only justified if The Mirror actually meant that the document was leaked to the internet where it has been publicly available here for at least a year, probably two.

Now the substance. The story correctly quotes a disclaimer printed in the invitation to tender (ITT) which states:

“The issue of this ITT in no way commits the Secretary of State to award the [Thameslink deal] to any person or party.

“The Secretary of State reserves the right to terminate the competition, to award the [Thameslink deal] without prior notice, to change the basis, the procedures and the timescales set out or referred to in this document or to reject any or all proposals and to terminate discussions with any or all bidders at any time.”

But there is a significant second piece of context, European Union law, which the story completely ignores. The disclaimer does say the Transport Secretary reserves the right to terminate the competition, but the Transport Secretary is also bound to act within the law.

It’s like saying that a person has the right to walk into the road, without pointing out that they will likely be hit by a car.

There are two courses of action that MPs campaigning on Bombardier’s behalf have put forward – one is that the Government should have taken account of social considerations like supporting employment when it took its decision on who should get the Thameslink deal earlier this year, the second is that the Government should terminate the competition and start again with one that puts Bombardier in a better winning position.

The first suggestion is untenable as demonstrated by the EU Commission document Buying Social: A Guide to Taking Account of Social Considerations in Public Procurement.

It shows the EU actually encourages governments to take account of such social factors, like employment opportunities, but that they must be published at the point the competition begins. It makes clear that if they are not included in tender documents at the start of the process they cannot be brought in at later stages – no such social considerations were included in the Thameslink deal when it was set up in 2007 by the previous government.

The second suggestion that the Government simply rip up the tendering process and start again is also tricky.

Business law expert Professor Chris Bovis from the University of Hull told me: "If they tore the contract apart the Government would become liable for compensation and for any losses incurred by Siemens."

Indeed the EU Commission also confirmed to me that firms who feel they are victim to discrimination in procurement process can use the EU Remedies Directive to extract compensation.

The only way the Government could perhaps tear up the existing tendering process, within the law, would be if they discovered there had been a serious misrepresentation by Siemens of its ability to deliver the product.

One avenue being explored here is whether Siemens’ failure to yet produce a “lightweight bogie” – the chassis that carries trains’ wheels – might negate its bid. It’s true that it was laid out in the original specifications that the carriages should have such a bogie, but it’s as of yet unclear whether this issue in itself annuls the firm’s bid.

It may also be that the Government does have the power to negotiate at this point that a chunk of Thameslink work, even half of it, be subcontracted back to Bombardier.

Whatever happens, printing a few sentences from a 90 page document and crying foul doesn’t necessarily help the efforts of people who are actually following feasible avenues as to how this thing might be turned around.

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