Network Rail overhauls procurement procedures after legal challenge
Network Rail, the owner and infrastructure manager of much of Great Britain’s railway infrastructure, has overhauled its internal procurement and tender evaluation processes following a legal challenge by one of its long-term infrastructure suppliers.
Progress Rail, a Scottish head-quartered engineering firm and subsidiary of Caterpillar, had been the principal supplier of the relevant infrastructure to Network Rail for over a decade, employing more than 400 skilled workers at sites in Scotland and North of England to meet Network Rail’s requirements.
In late 2020 however, Network Rail decided that Progress Rail would do longer be a significant supplier in the future and awarded a series of contracts for the manufacture and supply of track components, including safety critical switches and crossings, would be awarded to overseas contractors.
Major track renewals layouts contracts were split between Trackwork and Vossloh Cogifer; maintenance S&C products would supplied by Trackwork, Vossloh Cogifer and Voestalpine; and around 80% of cast manganese crossings were purchased from Voestalpine’s foundry in Spain.
The move attracted considerable criticism, with the chief executive of the industry association Scottish Engineering, Paul Sheerin, highlighting that Progress Rail’s foundry at South Queensferry manufactured more than ninety per cent of rail crossings used throughout the UK, at a modern factory only eleven years old.
Manuel Cortes, the general secretary of the Transport and Salaried Staff Association (TSSA) trade union was equally scathing of Network Rail’s decision stating that “No other foundry in the world has the skills, knowledge or expertise found in South Queensferry and it makes no sense to sacrifice that knowledge on the altar of supposed cost-savings.” adding that “If there is one thing the coronavirus pandemic has demonstrated, it is the importance of robust supply chains”.
In addition to launching redundancy consultations amongst its staff, Progress Rail launched legal proceedings against Network Rail under the Utilities Contracts Regulations 2016 contending that the procurement process had been conducted in a manner that was “unfair”, and failed to comply with Network Rail’s duties of equal treatment and transparency.
Following disclosure by Network Rail to Progress Rail of its contemporaneous evaluation documents and consequential amendments of case, Network Rail announced that the procurement process would be abandoned, the proposed new contracts would not be awarded, and that Progress Rail would continue to operate as a significant supplier to Network Rail.
A Network Rail spokesperson said:
“Network Rail will be restarting its procurement exercise for switches and crossings as a result of the legal case raised by a current supplier and due to changes in its ongoing needs following the pandemic. More work on future flexibility and demand will be required before the new exercise can kick-off and current suppliers will be maintained to meet our present needs.
“We are keen to ensure we learn all we can from the activity to best position the industry when we look to re-procure switches & crossings in the near future. As such, an internal review is being undertaken to capture and build on these experiences.”
Minutes from February 2021’s Board meeting of Network Rail, published in New Civil Engineer magazine following routine publication, state that “new procurement assurance processes had been introduced” and that “an internal audit review of procurement evaluations” is being carried out.
The minutes add that the internal review is as a direct result of the legal challenge bought against it by Progress Rail.
Whilst the dispute was settled out-of-court by both parties, the case reinforces the primary importance for public authorities in conducting their evaluation of tenders in strict accordance with the principles of equal treatment and transparency.
High profile cases such as Lancaster County Council’s decision in 2018 to award a £104M healthcare contract to a private provider, Virgin Care, and the saga surrounding the Nuclear Decommissioning Authority’s now overturned decision to award a multi-billion pound contract for the decommissioning of 12 nuclear reactors both foundered on manifest errors and an absence of record keeping during the tender evaluation process.
Arfon Consulting’s procurement specialists have in-depth specialist experience in conducting robust public procurement evaluations as well as advising public authorities in defending the integrity of their evaluations against aggrieved tenderers.
