Staying on track

The recent decision by Thameslink to appoint Siemens and not Bombardier for a contract to supply new trains caused a furore. Julie Muscroft looks at the procurement issues raised.

In July Thameslink decided to appoint Siemens, a German company, as preferred bidder to build 1,200 trains. The appointment was to the disadvantage of Bombardier, the Canadian company based in Derby, the last remaining train maker in the UK and the only other bidder remaining at that stage. There has been much press about the impact that this will have on the local economy in Derby and the various supply chains and other businesses who rely on its presence in the area and within that much criticism of the EU procurement rules – or at least the UKs approach to interpreting them.

At the time of writing it is unclear whether Bombardier are likely to challenge the decision and details of the evaluation criteria used, and the extent to which Bombardier fell short in the evaluation process, are not known. It is, however, a timely reminder to local authorities and other public sector bodies who are subject to EU procurement legislation of the need to have a clear and well thought out strategy for the evaluation of bids for contracts including the extent to which they are able to take into account social and environmental issues as part of the award criteria and relative weighting given to price and quality in making an overall assessment of what represents the most economically advantageous tender.

Both the EU Consolidated Procurement Directive (2004/18/EC) and the UK Public Contracts Regulations 2006 make specific mention of the use of social and environmental considerations throughout the procurement process, provided always, they are in line with the treaty principles of equal treatment, non-discrimination, mutual recognition, proportionality and transparency.

In the case of local authorities EU procurement legislation and the UK regulations are complemented by other UK legislation which enables local authorities to promote social economic and environmental wellbeing such as the Local Government Act 2000 and the Sustainable Communities Act 2007. In addition the new private members' bill, Public Services (Social Enterprise & Social Value) Bill which is currently waiting to go to committee stage in the House of Commons would also, if enacted, require local authorities when entering into public procurement contracts to give greater consideration to economic social and environmental wellbeing during the pre-procurement stage. The UK response to the EU Green Paper on modernising public procurement rules also suggests that there should be clarification and clearer guidance on how social and environmental issues can be taken into account and how they can help achieve value for money.

Ultimately the bidder with the highest score (taking into account the evaluation criteria and respective weightings) will win but what is clear, however, is that there is flexibility to local authorities and other public bodies to take economic, social and environmental issues into account and it is therefore crucial at the preparatory stage of any procurement to have a clear approach which justifies the extent to which these factors are important to the particular procurement and for this to be fully reflected in the process. They should be identified in relevant pre-procurement and/or strategy documents including any outline business case and this would need to be followed up within the OJEU Notice, Technical Specification, PQQ, Evaluation and Contract Conditions so that their significance to the project is fully reflected and the approach that will be taken to them in evaluation is clear.

A balance has to be struck and difficult decisions will sometimes need to be made. The 'local labour' clauses some would have liked to seen in the Thameslink deal do not sit well with the EU procurement rules. Indeed, this would not necessarily have avoided the Thameslink issue (it appears price was the deciding factor) but a clear, fair and transparent process which sets out the extent to which these factors will play a role in the award of any contract with proper justification may ensure that in future relevant consideration is given to this early on to try to minimise the impact of the award of such contracts on the local economy. Until and unless Bombardier challenge the decision we will not know all the details.

Julie Muscroft is a partner at Walker Morris. She can be contacted on 0113 283 2500
or by email at This email address is being protected from spambots. You need JavaScript enabled to view it..

The firm is carrying out a joint training event at its offices on 21 September 2011 with APSE looking at the issues raised. For more details please click here or contact This email address is being protected from spambots. You need JavaScript enabled to view it..