UK needs ‘to look at’ EU procurement

UK transport secretary Philip Hammond and business secretary Vince Cable have reportedly written a letter to Prime Minister David Cameron suggesting that the UK needs to look at the way in which European Union (EU) procurement rules operate, according to the BBC.  

This follows an announcement from Canadian transport company Bombardier that it plans to cut more than 1,400 jobs at its factory in Derby in the East Midlands of England. Bombardier recently lost out to a consortium led by Germany’s Siemens when the latter was awarded preferred bidder status for the Thameslink Rolling Stock Procurement Programme (TRSP) private finance initiative (PFI). The government said that the Siemens bid represented best value for money.

The TRSP scheme involves the delivery, maintenance and financing of around 1,200 trains and the construction and financing of two depots. It is part of a £6 billion (€6.7 billion; $9.7 billion) upgrade programme for the Thameslink rail network in south-east England. Infrastructure fund managers 3i Infrastructure and Innisfree are part of the Siemens consortium. 

Unions and opposition politicians are reported by the BBC to have called for the Conservative/Liberal Democrat coalition government to review the decision to choose Siemens as preferred bidder but Hammond said this was not possible. EU procurement rules do not allow the country of origin of a bidder to be taken into account. However, the BBC reports that he also said the following:

“The way some of our continental partners approach these things is to look more strategically at the domestic supply chain. It is clear that it is possible to structure the contracts such that, even within the constraints of the European procurement directive…there are much greater chances of the domestic supply chain succeeding. I think we need to look at how we manage these things in the UK in the future.”

The UK subsidiary of Bombardier said that there was not enough work to keep its Derby facility, which employs 3,000 people, running at current levels. However, it is not clear that the loss of the Thameslink contract has made much difference. The BBC reports that, in a letter to the government before the selection of the preferred bidder, Bombardier said that – whatever the outcome – it would have to lay off 1,200 workers in Derby as it adjusted to other major contracts coming to an end.

Siemens, which currently employs around 16,000 people in the UK, said that it would create an additional 2,000 UK jobs as a result of winning the Thameslink contract. However, the trains will be built in Germany and only 300 of the new UK jobs will be in ‘directly employed’ manufacturing posts in South Tyneside in north-east England. 

Mark Young, co-ordinating officer of Unite, the UK’s largest union, told the BBC: “I don’t know of any procurement that’s been [done] in France or Germany that has gone to any other company than the indigenous rail manufacturers in their countries.”