Bombardier report: Credit rating 'settled rail deal'
- 16 December 2011
- From the section Derby
A superior credit rating helped German firm Siemens beat trainmaker Bombardier to a £1.4bn government contract, a Transport Select Committee report says.
Derby-based Bombardier was told in June it had lost the deal to build 1,200 Thameslink carriages.
The government said the German firm's bid offered better value for taxpayers, but campaigners have called for a U-turn in favour of the British firm.
The committee's report called for a full National Audit Office review.
Canadian-owned Bombardier announced it was cutting 1,400 jobs after Siemens was named as the preferred bidder for the lucrative contract.
Critics said the government's procurement process had failed to take into account the wider social and economic impact of awarding the deal to the German firm.
In September the Transport Select Committee, chaired by Labour MP Louise Ellman, heard evidence from company bosses and the then Transport Secretary Phillip Hammond.
Its report on the hearing states: "It is hard to escape the conclusion that Siemens' A+ credit rating made a significant contribution to its success in winning the Thameslink procurement."
Bombardier was reported to have a B++ credit rating.
The committee has now written to the National Audit Office to recommend it holds a full review into the deal.
Ms Ellman said: "We could not evaluate whether the decision to choose Siemens was arrived at correctly because all of the bids were and remain confidential.
"We believe that in the public interest an independent review must evaluate whether this massive contract was awarded correctly on the basis of the criteria in the original invitation to tender."
MPs also concluded the bundling together of train manufacture and financing in large procurement exercises would skew the market towards larger multinational firms, possibly at the expense of excellence in train design and domestic manufacturing.
'Veil of secrecy'
The report called for the government to release more information about its decision.
It said: "If the government proceeds to sign a contract with Siemens we recommend that it publish the reasons for favouring Siemens over Bombardier and the difference in the cost of the two bids."
In October, the National Audit Office told campaigners it had decided against a full review of the deal but had not ruled out examining the deal at a later date.
It said it would consider the committee's recommendations.
Unite union general secretary Len McCluskey said: "The select committee's report is a damning indictment of the government.
"The Thameslink contract has been shrouded in a veil of secrecy.
"It will be a national scandal if the transport secretary refuses to put the Thameslink contract on hold to allow a full inquiry."
A Department for Transport spokesman said: "We welcome the committee's report, which moves on from the process set up by the last government and endorses the coalition's decision to look again at how procurement can be improved.
"The committee recognises that the procurement process started by Labour was too narrowly drawn to take account of socio-economic factors, and could not have been reopened by the current government."