Shortly before the Cabinet reshuffle on 4 September 2012, officials informed the then Secretary of State, my right hon. Friend Justine Greening, that their preparations for the legal challenge brought by Virgin Trains Limited had raised a potential technical concern about one aspect of the franchise process. The advice at the time was that there was no evidence that the issue would have made any difference to the outcome of the franchise competition. The Secretary of State immediately ordered officials to conduct further detailed examinations to reassure her that the process and decision arrived at remained robust.
Following his appointment as Secretary of State, my right hon. Friend Mr McLoughlin, also asked officials to provide reassurances to him on the process given the ongoing legal challenge. Officials provided these reassurances and advised that they were looking into the process and decision, in line with the request of the previous Secretary of State. The potential area of concern in relation to the process was raised at this time, but again reassurances were provided that there was no evidence that this would have made any difference to the outcome.
Increasingly detailed examinations carried out in line with the requests of Ministers and in anticipation of litigation revealed additional concerns with the way the competition had been implemented. This examination work was carried out by officials and was latterly aided by external advisors PwC, who started work on this project on 24 September.
On 2 October, following completion of these detailed examinations, officials delivered their final opinion to the Secretary of State that the technical flaws were so significant that the competition would have to be cancelled and restarted. The Secretary of State then took the final decision to cancel the competition and acted immediately to make this fact known by informing the bidders concerned as soon as he feasibly could, during the evening of 2 October, and making the decision public at 00.01 hours on 3 October once all the bidders had been informed.