Ken Skates, Cabinet Secretary for Economy and Transport
Further to my Written Statement on the impact of the Carillion liquidation on the Wales and Borders rail services and Metro operator and development partner procurement on 17 January, Abellio Rail Cymru (ARC) have notified Transport for Wales that they have withdrawn from the procurement process as of 17:00 on 22 February 2018.
Despite the best efforts of the team of experts, lawyers and counsel at Transport for Wales, and the ARC team, ARC has taken the regrettable decision to withdraw its bid having been unable to overcome the impact of Carillion’s liquidation.
ARC has participated in the procurement process and has contributed professionally throughout. I want to express my thanks to the ARC team for their hard work during the process. It is unfortunate that, having invested significant time, effort and money into the process that they should be a further victim of the liquidation of Carillion.
Transport for Wales learned of Carillion’s share price drop in July 2017 and raised this with ARC. At this point ARC considered options but elected to stay with it’s consortium partner, Carillion. As a consequence Transport for Wales required independent financial guarantees by a bank for Carillion’s performance.
When Carillion entered liquidation, Transport for Wales asked ARC to provide a proposal which demonstrated that ARC could still deliver the Final Tender without changing essential elements of it. The liquidator has since been in discussion with a number of parties to sell Carillion Rail and to secure jobs, and it was possible that through this process, ARC could have secured the relevant capability. ARC was required to present a firm proposal once the liquidator had made its decision, by 17:00 on 22nd February.
A consortium member for another bidder yesterday successfully purchased the majority of Carillion Rail from the liquidator. Whilst this has safeguarded a number of jobs in Carillion Rail, it has unfortunately left ARC unable to secure the capability it would need to proceed. On the evening of Thursday 22nd February, ARC informed Transport for Wales of its intention to withdraw from the process.
Transport for Wales has analysed the robustness and technical capability of the remaining bidders and are confident that they are both capable of providing a high quality solution that will enable us to transform rail services right across Wales.
I would like to further recognise ARC’s contribution to this process. The team’s enthusiastic and professional involvement to date has contributed significantly to the procurement process.
The procurement evaluation will continue and ARC’s withdrawal does not expose the Welsh Government to any financial risk or delay to the process. At the time Final Tenders were submitted in December, three bidders remained in the process. Final Tenders were therefore prepared with strong competitive pressure. Final Tenders are binding and remaining bidders could not alter them now ARC has withdrawn.
We have two strong bidders remaining in the process and remain on target to award this exciting contract in May 2018 and to transform rail services in Wales and borders from October 2018.
This statement is being issued during recess in order to keep members informed. Should members wish me to make a further statement or to answer questions on this when the Assembly returns I would be happy to do so.