Unions demand answers to the £1.5 billion train ‘scandal’
16 August 2011
Bombardier unions Unite and RMT, have written (see notes to
editors) to the secretary of state for transport, Philip Hammond,
to demand comprehensive answers to why the Tory-led government
excluded Bombardier from a £1.5 billion train building contract for
Thameslink trains.
The two unions are seeking clarification from the government as to
why it has apparently chosen a consortium led by Siemens based on
its ability to raise capital above its capability to produce,
manufacture and maintain the trains over the 30 year life of
the contract.
Furthermore, the unions have demanded confirmation that the
government has awarded preferred bidder status to a consortium that
has not yet developed and approved a crucial component called a
"bogie" (wheel axle for trains). If it is the case that
Siemens has not yet produced an approved ‘bogie’ why was Siemens'
consortium awarded preferred bidder status?
Diana Holland and Bob Crow write: "We also understand, and find it
remarkable if this is correct, that Siemens has not yet even
developed a ‘bogie’ or wheel axle for the trains it will
supply. Indeed, it appears that Siemens has actually approached
Bombardier and asked it to supply this ‘bogie’. It took Bombardier
over 10 years to develop its ‘Flexx Eco bogie’ which is lighter
than any other ‘bogie’ on the market and is therefore considerably
better for the environment than other models currently available.
It will simply not be possible for Siemens to produce a comparable
‘bogie’ in a two year timeframe."
Unite assistant general secretary, Diana Holland, said: "Was the
government's decision more about raising cash rather than building
trains, and if Siemens has not yet developed a crucial component,
how can the government guarantee the trains will arrive on time?
Bombardier's workforce, and the public deserve answers.
"To date all we've had from the government is a catalogue of
excuses rather that a compelling case for choosing Siemens over
Bombardier.
"The government's decision to exclude Bombardier from the
Thameslink contract is a national scandal. 3,000 jobs are at risk,
plus the future of train manufacturing in this country. The
government's decision is a social and economic bombshell for Derby
and the East Midlands.
RMT general secretary Bob Crow said: “The more that emerges about
the Thameslink contract stitch-up the murkier it gets, but the
bottom line is that a government that says it wants to create jobs
is actively trying to destroy them in Derby.
“It is extraordinary that the government ignored the most basic
piece of engineering in awarding the Thameslink contract to
Siemens, underlining that the decision is fundamentally flawed and
should be reversed.
“Ministers need to stop using pathetic excuses to wriggle out of
providing information on the tendering process and come clean with
frank and open answers on a decision that threatens to kill off
train-making in Britain.”
ENDS
Contact: Unite, Ciaran Naidoo on 07768 931 315 and RMT Derek
Kotz on 0207 529 8803 or 07939 595 092
Notes to editors
Mr P Hammond MP
Secretary of
State for Transport
Great Minister House
76 Marsham Street
London
SW1P 4DR
Dear Mr Hammond MP
Award of Thameslink contract “preferred bidder” status to Siemens
plc
We write further to our recent meeting in relation to the UK
government’s, and specifically the Department of Transport’s,
recent decision to award Siemens plc (“Siemens)” “preferred bidder”
status for the £1.5 billion train building contract, for the new
fleet of trains required for the Thameslink Programme. This letter
is drafted jointly by Unite the Union (“Unite”) and the Rail
Maritime and Transport Workers Union (the “RMT”).
Unite, as you are no doubt aware, is a trade union representing 1.5
million workers across the United Kingdom and Ireland and is the
union with the largest membership of those employees currently
employed at Bombardier Transportation UK Limited’s (Bombardier)
Derby site.
The RMT is a trade union representing more than 80,000 members in
almost every sector of the transport industry. It is the second
largest union at Bombardier’s Derby site.
As a result of the decision to grant Siemens “preferred bidder”
status, you will no doubt appreciate that a significant number of
our members currently stand to lose their jobs. We understand that
it is proposed to make 179 jobs redundant from a shop-floor
workforce of 480 and 446 redundancies in total from a workforce
totalling some 3000 employees. We also note 983 temporary contract
staff will be affected. Consultation in respect of these
redundancies has already begun.
In addition, it is also imperative to consider the detrimental
impact this decision will have on the city of Derby where many
other workers now stand to lose their livelihoods. This is
happening at a very difficult time, in a very poor economic
climate, and the re-employment prospects of workers in Derby is not
high.
As the Centre for Research on Socio-Cultural change has made clear
Bombardier has been allowed to suffer both public and private
sector neglect. The lack of national rail investment in the 1980s
and clumsy privatisation of the network in the 1990s has left train
builders exposed to the erratic flow of orders. However,
notwithstanding the historical problems of Bombardier, we write
this letter specifically in relation to the Thameslink contract
which could sustain the future of Bombardier and its Derby
plant.
The number of potential redundancies arising from the decision to
grant Siemens plc “preferential bidder” status and have the trains
built overseas, is unacceptable and not something we are prepared
to let happen without doing all that we can for our membership, by
whatever means are available to us.
As we make clear above, Bombardier had been relying on obtaining
this contract to sustain its own future and specifically the future
of the Derby plant. By the end of 2011, the only on-going work
Bombardier will be continuing to undertake will be for the supply
of metro cars for London Underground’s SubSurface Lines. This
obviously means that in addition to the present job losses which
are wholly unpalatable, the very future of Bombardier remains
precarious.
On this basis, we write this letter with a view to obtaining
further information as to how this appalling decision has been
reached, which once again undermines the United Kingdom’s
manufacturing base. It is imperative that we fully understand
this, so that we can speak to our membership about it and consider
what steps can be taken in relation to the decision to select
Siemens as the preferred bidder.
The Process
We understand that it is proposed to award the contract under
the Utilities Contracts Regulations 2006 (the “Regulations”).
Pursuant to these Regulations, in seeking offers and selecting the
party to be awarded the contract, the UK Government, and
specifically its Department for Transport, has the choice of
procedure to use (open, restricted, or negotiated with or without
advert) under regulation 14. In this instance it appears the
government chose a negotiated process and the contract was
advertised in an official EU Journal.
Once requests to be selected to negotiate are obtained, we
understand a short listing process then ensues where the government
determines which interested parties are going to be invited to
negotiate for the contract. That process may involve excluding
potential bidders at various stages and may involve selecting a
preferred bidder prior to the contract finally being awarded. We
understand that the selection of the preferred bidder would be done
by means of the same criteria used to determine the award of the
contract.
The contract has to be awarded on one of the following basis:
1. Lowest Price
2. The offer which is "the most economically advantageous" having
regard to various published and specified criteria.
We understand the government has chosen to invite requests to
negotiate and to award the contract pursuant to the second
option.
We further understand that the contract was to be awarded
comprising the production, manufacturing and maintenance of the
rolling stock and the ability to organise the finance necessary for
the acquisition of the rolling stock. It appears however that in
the advert inviting bids, the government reserved the right to
accept a bid without regard to the ability to organise financing.
We note that there was no obligation on the government to contract
on the basis that it was seeking a bidder to produce, manufacture
and maintain the trains and to organise the finance and that this
was something the government chose to do. The preferred bidder was
of course thereby placed at a substantial advantage through being
able to rely upon a sister company which provides loan
facilities.
We also understand, and find it remarkable if this is correct, that
Siemens has not yet even developed a “bogie” or wheel axle for the
trains it will supply. Indeed, it appears that Siemens has actually
approached Bombardier and asked it to supply this “bogie”. It took
Bombardier over 10 years to develop its “Flexx Eco bogie” which is
lighter than any other “bogie” on the market and is therefore
considerably better for the environment than other models currently
available. It will simply not be possible for Siemens to produce a
comparable “bogie” in a 2 year timeframe.
The process that we understand has taken place leads us to a number
of unanswered questions that we would be grateful to receive a
response in relation to. These are as follows:
Questions
- Is it correct that the government has chosen to contract for,
and consider which was the most economically advantageous bid for,
a single contract comprising the production, manufacturing and
maintenance of the rolling stocktrains and the ability to organise
the finance? If that is the case, why was it done on that
basis?
- Did Siemens win the contract on its ability to organise the
finance of the rolling stock, as opposed to its ability to produce,
manufacture and maintain the trains?
- Is it open, at this stage, for the government to exclude the
finance element of the offer and award the contract on the basis of
the best bid to produce, manufacture and maintain the trains?
- Is it fair and equitable to include the criteria of the
provision of finance when this would automatically advantage a
company such as Siemens benefit from a wholly owned subsidiary
finance company and are thereby able to obtain financial
arrangements at preferential rates?
- Is it correct that the government has awarded Siemens
“preferred bidder” status notwithstanding the fact that it has not
yet developed a “bogie” to use for the fleet it is going to
produce.
- If it is the case that Siemens has not yet produced this
“bogie”, how is it possible that it was awarded” preferred bidder”
status?
Request for Further
Information
We would be grateful if you could supply us with all the
contractual documentation including the invitation to tender and
negotiation documentation. Please note that we intend to make a
Freedom of Information request if this is not supplied and
therefore trust that you will be willing to provide it
forthwith.
Details for Reply
We would be grateful if you could acknowledge receipt of this
letter and confirm you will provide a substantive response to the
questions raised within the next 14 days. We would be grateful if
you could address your response to both Mr L McCluskey, General
Secretary of Unite, 128 Theobald’s Road, Holborn, London, WC1X 8TN
and Mr B Crow, General Secretary of the RMT, Unity House, Chalton
Street, NW1 1JD.
We look forward to hearing from you by return.
Yours sincerely
Diana Holland (assistant general secretary of Unite)
Bob Crow (general secretary of the RMT)
