LONDON, May 21 (Reuters) - Britain’s Department for Transport (DfT) encouraged “ambitious” bidding on revenue projections for the failed East Coast main line contract, a rail expert told lawmakers on Monday.
“The Stagecoach-Virgin bid for East Coast was very ambitious which was essentially what the Department was asking for in the invitation to tender. It was asking for ambitious bids. It gave additional credit in the policy score for ambition,” rail expert Iryna Terlecky, Director of TBI Consulting, told the cross-party group of lawmakers in the Transport Select Committee.
Last week the British government said it planned to renationalise the rail route between London and Edinburgh scrapping a contract with Stagecoach and Virgin, five years early after they over-estimated profits.
Lawmakers were questioning rail experts to try to understand why the contract failed.
The DfT’s approach had changed over the last six months, once it knew that the contract was failing, Terlecky said.
“There has been a significant change to the way that financial robustness of a bid is assessed.”
“It was made clear that the financial robustness (tests) that were being done would now be done on a much more cautious central estimate which was not the case before.” (Reporting by Sarah Young Editing by Alexander Smith)