The process by which the government decided to award a key rail contract to Siemens AG, which led incumbent Bombardier Inc to cut hundreds of jobs at its British plant, will be subject to an official review, a committee of MPs said on Friday.
In June, the government awarded a consortium led by Germany's Siemens a 1.4 billion pounds contract to build and maintain 1,200 carriages for the Thameslink cross-London railway.
As a result, Canada's Bombardier said it would cut more than 1,400 jobs at its plant in Derby, central England, where it made and maintained trains for use on the line.
We believe that in the public interest an independent review must evaluate whether this massive contract was awarded correctly on the basis of the criteria in the original invitation to tender, said Louise Ellman, chairwoman of Britain's Transport Select Committee.
Ellman said the committee had asked the National Audit Office to review the decision and report to parliament by next summer.
The British government has said the Siemens contract itself would not be reviewed or put out to tender again.
Britain is grappling with a huge budget deficit and is looking to manufacturing and private sector growth to help offset public sector cutbacks and redundancies.
But the Conservative-Liberal coalition government says it is keen not to be protectionist in the way it awards contracts and would look at each tender on its individual merits.
Though Siemens said the contract win would allow it to create hundreds of jobs in Britain, the company plans to build the trains in Germany.
A spokesman for Munich-based Siemens declined to comment in light of the UK review.
The transport committee's report into the procurement process found Siemens' triple A credit rating almost certainly made a significant contribution to its success in winning the Thameslink deal.
It said the bundling of train manufacture and financing together in large procurement exercises would skew the market towards larger multinational firms, possibly at the expense of excellence in train design and domestic manufacturing.
The government must do more to ensure that UK-based companies in, or supplying, the train building sector enjoy a steadier flow of business opportunities including new projects before the next major train procurement, said Ellman.
NEW 2,000 JOBS
When it announced its preferred bidder status in June, Siemens, which makes products ranging from fast trains and steam turbines to light bulbs and hearing aids said up to 2,000 new jobs would be created as a result of the project.
It has said up to 600 highly skilled roles involved in making train components would be created, including up to 300 at a Siemens factory in Hebburn, South Tyneside.
The remainder would be created within the Siemens supply chain across the UK, it said, adding that positions would also be created in the construction and service industry involved in building the two new train maintenance depots and the ongoing maintenance of the fleet.
Normally a preferred bidder status means it's almost sure you get the contract, said a company source who declined to be named.
The source said it would normally take about six months for the contract giver to check if all the project's requirements were met before signing it.
(Editing by David Holmes and Helen Massy-Beresford)