The bottom line in all of this is that we do not know the scoring system used by the DfT, and if they told bidders that compliance with certain requirements was mandatory.
If the DfT had made compliance with certain requirements mandatory in the ITT, any bidder submitting proposals which did not meet these mandatory requirements was knowingly submitting a non-complaint bid, and should have done so in the knowledge that their offer was likely to be rejected. However, there are no reasons as to why non-compliances can't be submitted for other elements of the ITT, and those undertaking the tender evaluation will mark-down such non-compliances accordingly; this is typical in any tendering/evaluation process.
It should be noted that public procurement rules prevent post tender negotiation; clarification of bids is permitted - and very often happens - but whereas in most of the private sector it is permitted for buyers and sellers to discuss and vary bids after their submission, the DfT could not have contacted Stagecoach after tender submission and given them the opportunity to revise their bid and make it compliant with any mandatory requirements of the ITT.
It will be interesting to see how this goes forward. The standstill period was voluntary, and therefore the DfT could have awarded the franchise to Abellio when the announcement of them being selected as preferred bidder was made back in April; moreover, the Stagecoach press release doesn't specifically state that the company is asking the High Court to prevent the DfT from awarding the contract to Abellio.
A question of all "legal eagles" looking in; is it significant that the action regarding the award of the contract to Abellio is being made by East Midlands Trains Ltd and not Stagecoach Group plc? Would it not have been the parent - Stagecoach Group plc - who was invited to bid for the three franchises?
The scoring system used by DfT is in the ITT:
https://assets.publishing.service.g...t-midlands-franchise-invitation-to-tender.pdf
Essentially it is a price modified by a quality score multiplied by a DfT-decided constant, which is meant to produce the best value for money. All bidders know what this is and can make their own decisions about what to include in their bid, e.g. is it worth going for an all-new fleet, or should they refurbish existing?
The ITT also issues instructions. These days on of those instructions is that bidders should not seek to pass risk to the department. This is where Stagecoach were clearly non-compliant. As previously pointed out, these bids are so complex that there are often many minor non-compliances, which the DfT will seek to iron out in contract negotiation. For instance, all bids have to include a financial model, supporting models and a record of assumptions. Producing this is a herculean task and, in the timescales, it also almost impossible to produce a full suite that meets all the DfT requirements (which are generally designed to smooth any future franchise changes). Equally bidders have to submit new timetables. Normally TOCs have 18 months to devise their timetable (and can still muck it up as last May showed); Bidders have 3 months. Also NR validates those TTs, but unlike with a TOC, where it is an iterative process with NR and TOC looking to make it work in tandem, on bids NR just has its say and so if it says "this can't be done" then the TT is non-compliant.
DfT has discretion over non-compliances; this is also written in the ITT. It tends to overlook minor non-compliances. Refusing to take risk on pension is not minor (even though I feel it is unfair). Sometimes though, I feel that DfT uses the excuse of non-compliance to rule out a bid that they think is sub-standard for other reasons, like the price is just too low - probably because they feel that this is easier to defend legally (we shall find out whether this is true, I guess). Believe me, since the WCML fiasco, DfT has been very concerned about legal challenges and I feel it is one reason why competitions run over time - almost certainly why the current competitions have, given the decisions made re Stagecoach and Arriva.
I see that Stagecoach have quoted the pension risk at £1bn; I feel that is misleading. Shortfalls do not have to be cleared at once (and are very unlikely to be that high in any case), but over many years and staff will probably have to increase their contributions, so will pay some of it. On top of that, you are allowed to price in the risk - so if you think it is going to cost £50m a year then you simply add that to your costs. Basically Stagecoach have baulked because they didn't like to make a decision where, on the one hand they might bid it high and then lose on price, or the other, bid it low and then take a hit during the franchise. My guess is that Stagecoach was expecting unanimity from bidders on this, but some bidders have proven willing to take on the risk.
