Laidlaw - Now we can all count the costs

This from Third Degree Burns...

"The costs of the Laidlaw Inquiry are yet to be finalised as not all of the invoices have been received. The department's best estimate of the final costs of the Laidlaw Inquiry is £3.55 million".

How much!

Did Centrica Chief Executive Sam Laidlaw demand a gold throne from which to conduct his inquiry?

Evidently the energy sector has little to teach the railways about Value for Money.

Laidlaw tells it like it is!

This via the Birmingham Post...

Mr Laidlaw criticised the fact that the bidding was mainly conducted by a relatively junior DfT team, meaning that when transport ministers were briefed by senior civil servants about it, the ministers were "in a sense talking to the wrong people"...

Quite so.

Pretty much the experience of almost everybody who deals with the department.

The case of the missing numbers

Telegrammed from 221b Baker Street
I say, Holmes,  this report by Mr Samuel Baker on the strange case of the Intercity West Coast franchise is a deuced three pipe read if ever I saw one.

Indeed so, Watson, but since I observe that you have reached page 29 I am sure you will have noted the significance of the different Subordinated Loan Facilities required of messrs Virgin and First Group.

But Holmes, all the figures for First Group have been redacted!

That, my dear old friend Watson, is the significance.
 

DfT publishes Laidlaw Inquiry report

This from the DfT (includes links to the actual report)...

West Coast Main Line: Final report of the Laidlaw Inquiry

06 December 2012 11:40
 
The independent inquiry into the cancelled West Coast Main Line franchise competition has concluded that the project failed because of an accumulation of significant errors related to inadequate planning and preparation, complex organisational structure, and a weak governance framework.

Transport Secretary Patrick McLoughlin asked Sam Laidlaw, the chief executive of Centrica and a non-executive DfT board member, to conduct an urgent investigation following the discovery of unacceptable flaws in the procurement process that led to the competition being cancelled on October 3.

His final report, published today by the Department for Transport, finds that:

• The DfT used flawed and inconsistent methodology when guiding bidders on the amount of risk capital (known as the Subordinated Loan Facility) they would need to offer to guarantee their franchise against default (Inquiry report paragraph 4.31, p22);
• The Subordinated Loan Facility figures resulting from the flawed methodology were then varied in a way that contravened franchise competition rules (3.4, p11);
• Ministers made the original August 14 provisional contract award without being told about the critical flaws (2.12, p8) and having been given “inaccurate reports” (3.8, p12).
• But the Laidlaw Inquiry also concluded that:
• The report’s recommendations to strengthen accountability and governance structures “if acted upon quickly and effectively, will help to restore confidence in the DfT’s ability to conduct effective rail franchising and procurement” (paragraph 8.6, p79);
• While there were inconsistencies in the way First Group and Virgin Trains Ltd were treated during the franchise process, the report finds that there is no evidence of a culture of bias against Virgin at the DfT (paragraph 2.6, p7);
• There is nothing in the report to suggest that the flaws discovered in this franchise competition exist in any other DfT procurements (paragraph 8.3, p79).
• The DfT is today publishing its formal response to the report which commits the Department to implementing swiftly a series of actions that will enable it to resume the franchising programme, with the confidence of the rail industry, as soon as possible.

These include:

• Ensuring future franchise competitions are delivered at a good pace based on sound planning, a clear timeline, rigorous management, and the right quality assurance;
• Creating a simpler and clearer structure and governance process for rail franchise competitions, including the appointment of a single director general with responsibility for all rail policy and franchising;
• Ensuring we have the right mix of professional skills, in-house, and where necessary from professional external advisers.

Sam Laidlaw said:

“Building upon and confirming the conclusions from my initial findings, the final report provides an in-depth analysis of the events that led to the flaws whereby the InterCity West Coast competition was cancelled. Alongside this I have also made a series of recommendations for the future.

“I have explained in detail the technical nature of certain errors, specifically around modelling flaws and the Subordinated Loan Facility sizing process. In addition, the report outlines an accumulation of contributory causes including a lack of transparency, inadequate planning and preparation, as well as a complex and confusing organisational structure with weak quality assurance and insufficient governance oversight.

“While it is clear that a number of serious and regrettable errors have occurred, I believe that if acted upon quickly and effectively, my recommendations will help to restore confidence in the DfT’s ability to conduct effective rail franchising and procurement.”

Patrick McLoughlin said:

"The final report from the Laidlaw Inquiry makes extremely uncomfortable reading for the Department. It has identified precisely what went wrong, revealing serious failures, as well as offering us a number of sensible recommendations to put things right.

“We will not allow these mistakes to be made again and the Department is determined to ensure all future franchise competitions are conducted on the basis of sound planning, the rigorous identification and oversight of risk, and the right quality assurance.”

He added:

“Sam Laidlaw has delivered an uncompromising report that offers us a way to face up to a number of shortcomings and I would like to thank him and his team for producing these findings with such diligence and speed.”

DfT Permanent Secretary Philip Rutnam said:

“There is no question that this has been a serious blow for the Department and I am determined that we learn everything we can from this episode.

“We will implement all of Mr Laidlaw’s recommendations, and go further, to ensure we have the right set of skills, support and training to ensure failures like this do not happen again.”
 
Notes to Editors

1. The Laidlaw Inquiry final report to the Transport Secretary is available here:
https://www.gov.uk/government/publications/report-of-the-laidlaw-inquiry

2. The Department’s response to the Laidlaw Inquiry’s final report, setting out the actions being taken immediately to resolve the report recommendations, is available here:
https://www.gov.uk/government/publications/response-to-the-report-of-the-laidlaw-inquiry

3. The Transport Secretary’s oral statement to the House of Commons is available here:
https://www.gov.uk/government/speeches/laidlaw-inquiry-final-report

4. The Laidlaw Inquiry’s final report is only part of the work the Department is doing to review its rail franchising policy. It will also take into account the forthcoming NAO report into the lessons from the cancellation of the InterCity West Coast franchise and the conclusions of Richard Brown’s review of the future of the rail franchising programme, due to be submitted to the Secretary of State by the end of December.


- ENDS -

Laidlaw evidence delayed - no sh1t, Sherlock!

This from the Transport Select Committee...

RESCHEDULED ORAL EVIDENCE – RAIL 2020: WEST COAST MAINLINE FRANCHISE

The oral evidence session with Transport Committee scheduled for Tues 04 December with Sam Laidlaw and Ed Smith has been cancelled.

Commenting on this decision, Louise Ellman, Transport Committee Chair said, 

“I am very disappointed that the Government has delayed publication of Sam Laidlaw’s final report into the collapse of the West Coast Main Line franchise competition. It was expected that the report would be released last week and, as a result, we arranged to hear oral evidence from Mr Laidlaw and his colleague Ed Smith on 4 December.

“Not only has the report not appeared, but the DfT has not had the courtesy to contact us directly about the delay nor explain when this document will be made public. It is regrettable that the DfT should have added to the confusion caused by the abandonment of the West Coast Main Line competition with this episode.

“We have reluctantly decided to postpone the evidence session on the Laidlaw report until Tuesday 18 December at 10am, by which time the Laidlaw report should be in the public domain.”

Tuesday 18 December 2012

Witnesses:
10.00 am

Department for Transport

•         Sam Laidlaw, Non-Executive Director

•         Ed Smith, Non-Executive Director

The DfT delaying something and failing to communicate - now who would have guessed it?

Dods tells it like it is!

This, surprisingly, from the 'Tash of Dickie Davis...

Trust you saw the influence of Freud in this recent email from Dods!

Highlighted for ease of reading…

'Laidlow' indeed!

Will legal action delay Laidlaw report?

This from the Daily Telegraph...

Kate Mingay, one of the three civil servants suspended over the West Coast rail bid fiasco, has filed legal proceedings against the Department for Transport over the way she has been treated.

With the preliminary hearing due to take place in the High Court on Thursday Eye wonders if this will have an impact on the publication date of the Laidlaw Inquiry's findings, due out at the end of this month?
 
The involvement of m'learned friends may also mean that Sam Laidlaw's appearance at the Transport Select Committee next Tuesday will be rather less than illuminating.

The Case of the Silent Committee

Telegrammed by 221b Baker Street
Mornin' Holmes.

Good morning, Watson.  I observe you have been reading Mr Samuel Laidlaw's initial report into the strange case of the ICWC franchise competition cancellation

Indeed so, Holmes.  And given the limited time available it is an excellent piece of investigation.

You will, of course, have noted the significance of the section covering the deliberations of the Contract Award Committee?

But Holmes, dashed if I could see any reference to any deliberations by that Committee in the report.

That, Watson, is the significance.

Philip Hammond - a gift that keeps on giving

This from yesterday's interim Laidlaw report...

And this from Eye favourite Petrol-head Hammond on 19 May 2011...

Amongst other proposed changes, we intend to replace the current “cap and collar” revenue sharing system that has driven perverse behaviour by train operators, with a GDP-based risk-sharing arrangement and a profit-share mechanism which will ensure the taxpayer benefits from any unexpected profits over the term of the franchise.

Because relaxation of full prescription of train services in line with Sir Roy’s recommendations was not signalled in the consultation document that we published on 19 January, I have decided that it is right and proper to consult on these proposals again, starting today, and ending on 17 August.  As a consequence of this decision, Mr Speaker, I can inform the House that the new franchise on the Intercity West Coast will now be awarded in August 2012, after a competitive process involving the four shortlisted train operators, and will commence operations on 9th December 2012.  In making this decision, I have deliberately avoided a change of franchise immediately ahead of or during the Olympic period and have also decided to take advantage of the short delay to complete the integration of the 106 new Pendolino carriages into the fleet prior to the commencement of the new franchise...

Longer franchises and a changed relationship with Network Rail will have a positive impact on the behaviour and appetite for investment and risk taking by train operators.  But I want to send a clear message that the new culture of cooperation in the rail industry, and the focus on cost reduction, is here to stay and it is mandatory, not optional.  So I can today announce that, as a matter of policy for all future franchise competitions, a significant part of the assessment of bidders’ capability at the pre-qualification stage will be evidence of success in collaborative working and driving down costs.

Success in driving down costs? 

With the ICWC debacle costing taxpayers at least £40m without a wheel turning in anger perhaps we can all afford ourselves a hollow little laugh.

Update: This from a Mrs A P Tis...

Perhaps all the DfT's current problems over the WCML can really be tracked back to individual political opportunisim?

Christian Wolmar writing on the 17th September 2010:

"Talking to a well informed source at the Rail awards last night, I learnt that the Department for Transport has become one of the first departments to agree a budget with the Treasury. The transport secretary, Philip Hammond, has not only accepted the Treasury figure, but he has done so quickly because he wanted to jump over the table to sit on the other side of the Star Chamber. So now he will sit alongside Osborne and Alexander pronouncing on the budgets of other departments.
        
"In a way that is hardly surprising. Hammond never wanted to be Transport Secretary. He is a Treasury man through and through, and now, with Osborne about to become the most unpopular man in Britain after Ashley Cole, he must reckon that, having been shafted over the Chief Secretary job because of the deal with the Libdems, he has a chance of the big job in a year or two. By the time the damage he is wreaking in transport starts to become apparent, Hammond will not be in Marsham Street".

Mystic Wolmar indeed!

Official Railway Eye Laidlaw Joke

Welcome to the Official Railway Eye Laidlaw Joke!

And here it is:

Q: How come everyone who knows how to run the railway is either cutting hair, driving a taxi or in a 'matrix'?

A: "Unfortunately, no one can be told what the Matrix is. You have to see it for yourself."

Indeed.

DfT: Statement on Laidlaw Inquiry

This from the Department for Transport...

West Coast Main Line: Laidlaw Inquiry interim findings...    
 
The independent inquiry into the Department for Transport’s handling of the franchise competition to run the West Coast Main Line has submitted an initial findings report to Transport Secretary Patrick McLoughlin.

In the interests of transparency, Mr McLoughlin has today published that report, alongside a covering letter, and this afternoon delivered an update to Parliament about this report and wider progress on ensuring continuity of service on the West Coast Main Line.

Sam Laidlaw, the senior business figure and DfT non-executive director leading this independent review, has asked the DfT to release the following statement on behalf of his inquiry:

    “In the limited time available this is necessarily only a preliminary report. What is clear however is that in seeking to run a complex and novel franchising competition process, an accumulation of significant errors, described in the report, resulted in a flawed process.

    “These errors appear to have been caused by factors including inadequate planning and preparation, a complex organisational structure and a weak governance and quality assurance framework. The full causes and the lessons to be learnt will be addressed in the final report of my independent Inquiry to be published at the end of November.

    “Firm judgments should not be made based upon what are provisional findings or wider conclusions drawn at this stage.”

ENDS

No mention of the "inconsistency in treatment of ICWC bidders" referred to by the SoS in the House.

UPDATE: Interim version of Laidlaw Inquiry report published here.

Laidlaw Inquiry - Remit published

This from the Department for Transport...

Text of letter from the Secretary of State to Sam Laidlaw
 
15 Oct 2012
 
Following my decision to cancel the competition for running the InterCity WestCoast franchise, I am asking you to lead an independent Inquiry into the Department’s handling of the competition.

I would like your Inquiry to identify the lessons to be learned for the Department and for you to recommend what measures the Department should implement to ensure the sound running of future competitions. Terms of Reference of the Inquiry are enclosed.
 
Decisions on how to run the Inquiry and who to involve in it are for you as leader of the Inquiry. You may want to draw on independent advice from outside the Department and from other Non-Executive Board Members.
 
I ask that you report your initial findings to me on Friday 26 October and to provide a final report by the end of November.
 
Terms of Reference: Inquiry into the Lessons Learned for DfT from InterCity West Coast (“ICWC”) competition
 
1. The Inquiry shall identify the lessons to be learned from the Department’s handling of the franchising process for ICWC in order to ensure the Department maximises benefits to transport users and value for money for taxpayers in future franchise competitions.
 
2. The Inquiry will comprise an immediate study of the lessons learned following the discovery of significant technical flaws in the way the franchising process for ICWC was conducted which resulted in the cancellation of the ICWC franchising process on 3 October 2012, in particular:
 
a. The course of events in DfT that led to these technical flaws in order to identify what happened and why it happened up to the point that the intention to award the contract was announced on 15 August 2012;
 
b. The roles and responsibilities of different advisory and decision-making parties within DfT and externally in relation to these flaws, including the Board Investment and Commercial Committee, the Contract Awards Committee and the Rail Refranchising Programme Board; how well these committees performed their roles, and what can be learned from this about the appropriate structure for governance and assurance of major contract awards;
 
c. The arrangements for ensuring appropriate review of the technical elements of contract award and appraisal and appropriate quality assurance.
 
3. The Inquiry should make recommendations on the basis of its findings.
 
4. The Inquiry will be led by Sam Laidlaw, DfT’s lead Non-Executive Board Member who also leads on procurement among Government Non-Executives. He will draw on others as he sees fit, including from other Non-Executive Board Members. By agreement, Linklaters and Ernst & Young have been appointed to provide an external perspective to the Inquiry.
 
5. The Inquiry should be completed as soon as possible. Initial findings shall be made available to the Department by 26 October.
 
6. The Inquiry will be taking place in parallel with the Department’s HR investigations. The Laidlaw Inquiry Report will be published no later than end November 2012.

ENDS