Written statement to Parliament

Crossrail train procurement

This speech was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

Crossrail Limited has opened the invitation for companies to negotiate for tender of rolling stock and depot facilities.

I would like to inform the House that the invitation to negotiate for the procurement of rolling stock and associated depot facilities has today (28 February 2012) been issued by Crossrail Limited.

Together with the Mayor of London, my co-sponsor on the Crossrail project, I welcome this major milestone in Crossrail’s journey from inception to reality.

Crossrail will create vital new transport infrastructure to support economic growth. It will deliver faster journey times and a 10% increase in the capacity of London’s rail network.

Crossrail Limited is inviting suppliers to design, manufacture, finance and service around 60 new trains and build a depot at Old Oak Common in west London. These new trains will provide around 27,000 seats, reducing congestion and bringing an additional 1.5 million people within 45 minutes of London’s major business centres.

Honourable members will recall that the previous Secretary of State for Transport committed to consider any relevant findings of the government’s growth review as part of this and other large scale procurements. Honourable members will also be aware that My Right Honourable friend, the Chancellor of the Exchequer, published the National Infrastructure Plan in November 2011 and included a package of measures to reform public procurement in the Autumn Statement.

My department has been working with colleagues across Whitehall, and suppliers and delivery bodies to implement these recommendations. Across the transport sector we want to improve dialogue with suppliers and increase the long-term visibility of forthcoming contracts in order to strengthen the capability of the UK supply chain.

In respect of Crossrail, reflecting its stage in the procurement process, this invitation to negotiate is a clear example of how, working in partnership with the Mayor and Crossrail Limited, we are already adapting our approach:

First, the invitation to negotiate includes requirements for responsible procurement. This means that bidders are required to set out how they will engage with the wider supply chain and provide opportunities for training, apprenticeships, and small and medium size businesses within their procurement strategy. Bidders are also required to establish an appropriate local presence to manage the delivery of the contract.

The Mayor and I are also keen to understand and communicate the benefit of this contract to the UK economy; bidders are being asked, in the invitation to negotiate, to specify from where each element of the contract will be sourced. This is not an assessment criterion in the decision process however the successful bidder will be required to report against their proposed estimates.

Second, Crossrail Limited, which has already developed a reputation for being an industry leader in this field, will ensure that, going forward, this procurement is efficient and effective and does not involve unnecessary costs for the bidders.

In addition, this contract will provide a significant element of public investment, alongside private finance, optimising the balance of public debt and transfer of risk to the private sector. This approach will help ease the costs of debt repayments to the public purse, as well as reduce bidders’ requirements to raise debt and equity, while still transferring significant risk to the private sector ensuring that we secure value for money. First and foremost, the successful bidder must be able to deliver the right trains and depot facilities.

Above all, I want this procurement to be a fair process that provides best value for money for the UK taxpayer and future fare-payers and high quality, reliable trains for the millions of people that will use Crossrail services every week.

Four bidders will be receiving the invitation to negotiate having performed strongly at the pre-qualification stage and I look forward to a highly competitive process. The contract will be awarded in Spring 2014.