Direct Award franchise contingency planning
Directly Operated Railways
Directly Operated Railways – direct awards negotiation
Overview
Directly Operated Railways (DOR) serves as the Secretary of State’s ‘Operator of Last Resort’ to step in and manage UK train operating companies in the event that they fail or a franchise agreement cannot be agreed.
- Structured franchise analysis
- Contingency plans
- Identifying key risk areas
Our client's challenge
The Secretary of State (SoS) required DOR to achieve a state of readiness to step in to each franchise successively as the programme of Direct Award negotiations progressed.
This state of readiness had to be sufficient to ensure that the franchise operation could continue relatively seamlessly in the event that an agreement with the incumbent could not be reached, thereby ensuring that the SoS would be neither embarrassed by a high profile franchise failure nor prevented from securing satisfactory commercial terms through the absence of a credible alternative operator. DOR was also required to achieve the necessary state of readiness with a minimum of interference to the incumbent operator (whose senior team would already be busy running the franchise as well as preparing their response to the RfP (Request for Proposal) for the Direct Award) and at a minimum cost. This meant that IPEX, along with the other expert functions, had to maximise the use of existing franchise knowledge and experience and minimise the need for additional analysis.*
Our response
IPEX deployed a crack team of engineering and rolling stock experts experienced in operating and bidding for rail franchises.
The value to the client
A critical success factor of the IPEX approach was to deploy a structured approach to analysing the franchise in each case and to focus quickly on the key parameters to be summarised.
This enabled the data and insights to be captured in a consistent form that could be shared easily amongst the wider DOR team as well as being retained on file for rapid assimilation in the event of mobilisation – potentially by a different set of individuals if necessary. The IPEX team were also able to reduce to a minimum the engagement required with the incumbent operator and the ROSCOs and other key suppliers, thereby ensuring that no criticism could be levied at DOR for distracting the franchisee or its own sensitive negotiations during the Direct Award RfP response and subsequent negotiations. Our familiarity with the franchising domain and the rolling stock, maintenance and depot territory meant that we were able to add to the DOR team’s understanding of the whole operation and help the team to discern the strategic issues concerning the franchise and its re-letting.
