Siemans resists political pressure for public disclosure of Crossrail deal

3rd January 2012

UK MPs on the Transport Select Committee are arguing that the details of German-based Siemans bid and that of Derby-based Bombardier, which came second, should be made public by another Parliamentary committee the Public Accounts Committee as the Guardian reports here.

But Siemans has attacked the idea. The paper quotes Steve Scrimshaw, the head of UK rail at Siemens saying: "I don't think that it is beneficial to any party that has been involved in a competitive process. Such information is commercially sensitive and highly confidential."

With 1,400 jobs at risk at Bombardier's Derby plant, the MPs believe it is in the public interest to disclose the information. Siemans is in the midst of confirming corporate debt financing for the deal. MPs believe that it may have been Siemans' stronger financial strength – i.e. it could access cheaper financing – that may have clinched the train deal rather than the quality of the train carriages themselves as the BBC reported last month.

The select committee report focused on Siemans A+ rating compared with Bombardier's B+ credit status: "It is hard to escape the conclusion that Siemens' A+ credit rating made a significant contribution to its success in winning the Thameslink procurement," the report added.

The deal is part of the controversial private finance initiative and the Guardian describes its structure as follows: 

"The Thameslink deal will be financed by the Siemens-led consortium, which will put equity into a specially created business and then raise the debt to build the trains at the Siemens factory near Düsseldorf. In a private finance initiative-style structure, those trains will then be leased back to the train operator on Thameslink, which will pay a regular fee to the consortium that will in turn repay the debt."

On the Guardian message boards, commenter Optymystic is quite pessimistic.

"If a company tenders to provide a service surely the manner and costs of financing that service must be a matter for the company. The costs of the rolling stock, leased or purchased outright are the costs of the rolling stock, the contractor's costs of finance are irrelevant to the customer, just as my costs of getting to work are not a problem for my employer. Unless that is we have another scam under which the company is having its debt underwritten by the UK tax-payer, while pretending not to underwrite it. Now you see it, now you don't. Its commercial debt, no its not its public debt, or more precisely its commercial debt debt while the going is smooth, but it rapidly transforms to our debt when things go wrong. What is the point of an economic strategy predicated on keeping down the cost of borrowing if that benefits companies based elsewhere more than companies based in the UK?"

However that issue has seen the Government putting back final confirmation to consider the tender process in light of the UK's growth strategy as this report from Railway Gazette in August shows.

It writes: "Delaying tendering will also enable the process to take into account the conclusions of the government's ongoing Growth Review. This has been asked to look at public procurement policy following the selection of Siemens as preferred bidder for the Thameslink rolling stock contract, and the announcement by unsuccessful bidder Bombardier of significant job losses at the UK's only passenger rolling stock manufacturing plant in Derby.

"Crossrail Ltd said the Growth Review will examine 'whether the UK is making best use of the application of EU procurement rules, as well as the degree to which the government can set out requirements and evaluation criteria with a sharper focus on the UK's strategic interest'. It will also consider 'how the government can support businesses and ensure that when they compete for work they are doing it on an equal footing with their competitors."

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