GERMAN train-builder Siemens has backed out of the competition to win a £1 billion order for Crossrail rolling stock.
In a statement, the company described its action as a 'strategic decision'. It continued: 'Crossrail is a very large project and, since first undertaking our initial assessment of capacity and deliverability, Siemens has won multiple additional orders. To pursue another project of this scale could impact our ability to deliver our current customer commitments - something we believe would not be a responsible course of action.'
The company has just signed a £1.6 billion order to build more than 1,140 vehicles for Thameslink. It was named as preferred bidder – beating Derby-based Bombardier – as long ago as June 2011, but the choice of Siemens sparked a long-running controversy about the future of the British train-building industry.
The Crossrail rolling stock procurement is not the same as the Thameslink contract. This had included funding to be provided by the bidder, and it is widely believed that completing the funding deal at an acceptable price had proved difficult because of the financial crisis in the Eurozone, and caused the two-year delay.
Crossrail rolling stock was originally set to be funded in the same way, but the Government has changed its stance more than once. The first change of policy came when it announced that the first £350 million would be publicly funded.
However, on 1 March this year it emerged that the whole procurement would now be funded by the public purse.
Transport minister Stephen Hammond told MPs: "The financing of the contract is the only key element of the contract that will change. The ‘responsible procurement’ requirements set out by my predecessor last February will remain as will the requirements for bidders to set out an estimate of the contract value that will be spent in the UK. While this is not an assessment criterion, the successful bidder will be required to report against it following contract award.
"Following this decision, Crossrail Limited intends to issue a revised Invitation to Negotiate in due course. I will ensure that a copy of this is available in the House library as soon as it is available. Bidders will then be asked to resubmit their bids based on this revised financing structure later this year."
This change means that the relative status of Crossrail bidders on the international credit markets will be less significant. As well as Bombardier, the other remaining shortlisted bidders following the exit of Siemens are CAF and Hitachi.
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Railnews editor Sim Harris writes:
Industry observers are speculating that Siemens may have decided that public sentiment would influence ministers when the Crossrail decision came to be made, and that there was little point in putting a bid together.
The announcement has also come on the same day that the House of Commons is debating the future of the United Kingdom in the European Union.
Whatever the underlying reason, the Siemens decision will be seen as good news in Derby, where Bombardier is still expected to continue with its bid for the Crossrail rolling stock contract. It can now do so in the knowledge that a major competitor has retired from the field.