Common Procurement Protocol

Remember the McNulty Report? No reason why you should, because everyone else seems to have forgotten about it. Actually, perhaps that’s not fair.

Thought Leadership

Remember the McNulty Report? No reason why you should, because everyone else seems to have forgotten about it. Actually, perhaps that’s not fair. DfT now has a Rail Executive, the Rail Delivery Group now exists, Future Railway and the Technical Strategy Leadership Group are now thought-leading divisions within RSSB, tasked with shaping the railway of tomorrow and Network Rail is now officially state owned and therefore recognised as being a centrally funded part of Government.

The problem with all of this (and this was apparent very soon after privatisation began in 1993), is that the more organisations that are involved in something, the more difficult it becomes to get anything done.
Rolling stock procurement is a prime example of this. OPRAF, then the SRA and now DfT have approached train procurement in a variety of ways, starting with “let the market decide”, then tight specification, on to central procurement and now back to “let the market decide”. In general, the outcome has been pretty similar in each case, with procurement being time consuming and expensive. I believe that the costs involved in the procurement of the IEP rolling stock would have easily funded the development and build of a prototype, enabling the state to go out to the market with a “build to print” tender, which would have saved the tax payer a great deal of money in the long run.

But, alas, that’s not the way we do things. The current trend (take the EGIP / ScotRail procurement as a classic example of the currently favoured procurement model) is to roll fleet replacement / growth into a franchise competition. This means that not only does the transport authority (in this case, Transport Scotland) not know who the train manufacturer/s will be throughout the procurement, but they don’t know who the operator will be either. For ScotRail, this meant that every franchise bidder (five), went out to tender to all the usual suspect manufacturers (five), asking them to bid for new trains against their own interpretation of Transport Scotland’s vision for the future railway in Scotland, tinged with their own clever ways to save money, maximise revenue, optimise operating efficiency, streamline train maintenance etc.
For the manufacturers, this proved to be extremely challenging, since every franchise bidder came forward with their own corporate procurement process, with inherently different requirements in terms of information to be provided as part of the bid. What should have been a relatively simple enquiry for one batch of EMUs, became a logistical and clerical square dance for the manufacturers, involving the manipulation of largely the same information into five different tenders, to be submitted at different times and in different ways.

Poor multi-national corporate entities, I hear you cry. But the reality is that these bid costs have to go somewhere and ultimately, they are added to the cost of the train, which at the end of the day, is paid for by passengers and tax payers – you and me.

After all this, a financial deal has to be struck, with someone raising their head above the parapet to put up the money on terms that the transport authority and the operator can accept. At least with the present model, the financier does not necessarily need to be a classic ROSCO, since the manufacturer is generally capable of performing all the ancillary functions that the ROSCOS were established to do, apart from provide the cash (some manufacturers are even willing to organise this). In the case of Thameslink, this negotiation added more than a year to the procurement process and the more complex the procurement, the longer it’s likely to take, during which time there is the risk of technical standards changing and manufacturers’ prices drifting.
So, how could this all be done differently? Well, rolling in train procurement with franchise replacement makes sense, but things would be made far easier for both the franchise bidders and the manufacturers if a standardised procurement model could be created, so that the franchise bidders all ask for the same information in the same way, with the only variances being the train specification, the number of vehicles required and the proposed maintenance strategy.

So who should develop such a model? Well, getting competing organisations to agree anything is always a challenge, but ATOC is the organisation that represents the TOC owning groups and RIA is the organisation that represents the manufacturers. Perhaps an exploratory meeting between ATOC and RIA could be held, to discuss and formulate a way forward?
The manufacturers have had recent visibility of the full spectrum of requirements that the operators have been requesting, so they are probably best placed to develop such a package – but that would be to pre-judge the ATOC / RIA view on life.

Oh and by the way, things are about to get more complicated. The TPE / Northern franchise competitions are upon us and the bidders are likely to go out with a shopping list that may well include two different types of EMU and a DMU. So if something is going to change, it needs to happen PDQ.

David Shipley,
November 2014.