The government's decision 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, Britain 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 government 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 Britain's Conservative-Liberal coalition government says it is keen not to be protectionist in the way it awarded 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.
The government has since said the decision to select Siemens for the contract would not be reviewed or put out to tender again.
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.
(Editing by David Holmes)