National Express, one of the firms that was competing for the 15-year contract, said yesterday it is taking legal advice after “the unfair and inconsistent decision not to compensate bidders”.
“We put a huge amount of effort into developing detailed plans to deliver the government’s aspirations and improve train services for passengers,” added a spokesperson for Stagecoach, which also bid.
“It is extremely disappointing that investment has been wasted through no fault of our own.”
Arriva’s UK managing director Bob Holland said he was concerned by the move.
Transport secretary Patrick McLoughlin acknowledged yesterday that he had made “some tough decisions” over the rail franchising process, which was frozen across the board in October after a string of errors were found in the West Coast Main Line competition.
The Department for Transport endured criticism at the time for pledging to repay at least £40m to bidders in the botched contest.
But the DfT said of the latest cancelled auction: “In keeping with the relevant invitations to tender, which made clear that bidders are responsible for their own costs, the secretary of state does not believe it would be appropriate to reimburse bidders.”
FirstGroup, whose contract to run the Great Western route had been due to run out in March, is now in talks to operate it for a further two years while the contest is run again.
The company chose in 2011 to exercise a break clause to end its contract three years early, avoiding paying premiums that were set to run into hundreds of millions of pounds.
First could also keep hold of its Capital Connect contract for a further two years. McLoughlin said yesterday the ongoing bidding process will be resumed, but that it could take longer than planned.
The Essex Thameside franchise was also unfrozen yesterday, but the government has started talks with incumbent operator c2c for a two-year extension.