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Alstom Disputes Over The New EMUs For The RER B Line In Paris

posted on 5th Mar 2021 15:40

In early this year, we witnessed extensive disputes over the contract for new trains to be ordered for the Line RER B in Paris. They concerned a tender for a batch of 146 Type MI20 double-deck trains (Matériel Interconnecté, the number indicates the year of the order), which was announced in June 2018 by Ile-de-France Mobilités (IDFM), RATP and SNCF to replace the Type MI79 and MI84 single-deck EMUs. IDFM is the representative of the Ile-de-France region, which finances the new trains. The latter are acquired by RATP, while SNCF is the operator that will use the trains together with RATP on the RER network.

The original goal was to select a supplier in early 2020 so that the order could be placed during the same year and deliveries could begin in 2025. However, this plan was delayed in the first phase by the COVID-19 pandemic.

Only Alstom and the consortium of Bombardier Transportation (BT) and CAF submitted their bids. In the end, the winner was announced BT/CAF before Christmas 2020. It was envisaged that the contract will be signed until the end of 2020. The worth of the contract is stated 2.56 billion EUR, which means an average of 17.5 million EUR per train (the technical parameters are not known). Production was to be arranged between the Bombardier Transportation Crespin and CAF Bagnères de Bigorre works.

Alstom's Complaints

But already in early December 2020 Alstom claimed at the Tribunal Administratif de Paris that the bidding process was irregular. In France, Tribunal Administratif (an Administrative tribunal) is a court of first instance and a court under common law of the administrative order. 

Alstom accused RATP and SNCF Voyageurs, among other things, of changing specifications during the competition when, in November 2020, RATP revised a specification article concerning certain parameters for assessing the price criterion due to the uncertainties associated with the coronavirus pandemic. RATP states that „This modification applied to all competitors in a non-discriminatory manner and aimed to adapt the terms of the contract to take account of new planning constraints, in particular in the context of the health crisis. Moreover, that amendment concerned only a marginal part of the contract and did not particularly harm any participant.“

However, Tribunal Administratif, which rejected most of Alstom's arguments, considered that RATP was not entitled to change certain parameters during the proceedings and therefore ordered on 17 December 2020 that both, RATP and SNCF, should allow bidders to adjust their bid on this single point within 15 days, and then resume the procurement process. In addition, RATP has to pay Alstom an amount of 7 000 EUR.

RATP expressed the „surprise that the complaint was lodged before the decision on the winner of the competition was taken“. Following the above-mentioned court announcement, RATP and SNCF decided to appeal to the Supreme Court, but in the end RATP complied with the decision by partially reopening the tender, and by 4 January 2021 candidates could submit modified bids.

Alstom also lodged a complaint against that decision at the Tribunal Administratif de Paris. However, on 13 January 2021, the latter tribunal rejected the Alstom’s claim. Nevertheless, the company has appealed to this decision to the Conseil d'Etat (the Council of State). It is the French national government body that acts as legal adviser of the executive branch as well as the supreme court for administrative justice. 

But Alstom also claimed at the Tribunal Judiciaire de Paris (TJ de Paris) at the last moment that the notification of rejection of its bid was incomplete, blocking the contract signing. TJ de Paris (the Paris Court of Justice) is located within the jurisdiction of the Paris Court of Appeal.

Finally, on 13 January 2021, following an extraordinary meeting of the Management Board, the RATP and the SNCF Voyageurs, in cooperation with the Île-de-France-Mobilités, decided to commission the BT/CAF consortium to supply trains for the RER B line, after the statutory deadline of 11 days.

On 22 January 2021, Alstom filed a new objection at the Tribunal Administratif de Paris. In the manner described, Alstom sought to obtain more details on the reasons for the rejection in the RATP competition, mainly about to the price difference, as the BT/CAF consortium's bid was around 500 million EUR lower than that of Alstom (which is an unusually large difference).

Another Obstructions Of Alstom

When all the court complaints failed, Alstom tried to interrupt the tender from another angle. To do this, it used its recent acquisition of Bombardier Transportation, completed on 29 January 2021, and on 4 February withdrew the bid of the BT/CAF consortium, which RATP selected as the winner.

The reasons stated were that „a number of audits have been carried out since BT takeover, revealing several disagreements that should lead RATP to reject the BT/CAF consortium offer, as the technical and financial conditions of the offer do not correspond to market prices and the contract might not be executed without significant risk for the manufacturers and RATP, SNCF and IDFM. This offer is characterised by price aggression, which is not justified, and the customer's technical conditions leave no room for mistake.“ And suchlike.

Henri Poupart-Lafarge, Alstom CEO, said: „If we accepted these conditions, it would be certain that RATP, which is a very demanding client, would require us to do everything from scratch and would impose fines for delays. (...) If RATP is not open to discussion and the modernisation of the RER B fleet is delayed, it will be the responsibility of RATP itself and the regional authorities, which will have to organise a new tender.“ One option was to accept the bid originally submitted to Alstom.

Despite these and other proclamations, however, behind this procedure we can rather see the effort that Alstom, even at the risk of certain difficulties, pursued the higher goal of obtaining the entire huge contract in the end for itself, i. e. not through BT (although it is now its owner), which also shares the project with someone else (CAF). If only for nothing else, at least because from the reason that in Alstom's annual report, a sum of 2.56 billion EUR would certainly look better than, for example, only half of that amount.

Due to these difficulties and delays of the tender, RATP has in fact become the first victim of the "Alstombardier" merger, which, according to Alstom's claims, is to bring customers the huge benefits... And if it were decided that RATP would not sign a contract with the winner and would accept Alstom's bid, it would fall victim to the merger for the second time, as this bid is more expensive than that of the respective consortium.

For Alstom, on the other hand, it would be a second victory, as a total of even more than 2.56 billion EUR would be great in its annual report. Last but not least, Alstom would be able to eliminate CAF, which is an unpleasant competitor for it on the domestic market, especially after winning a contract from SNCF in September 2019 for 28 EMUs with an option for 75 more.

RATP Reaction

On 4 February, Valérie Pécresse, director of IDFM, criticised Alstom's „scandalous strategy“ and called on the company to „keep its word.“ According to her, Bombardier's offer, for which Alstom is now responsible, was binding and the contract should be signed. With its approach, Alstom risks a litigation with one of its largest customers.

Also on 4 February 2021, the RATP/SNCF Voyageurs group stated that it condemned Alstom's decision to withdraw the bid submitted by Bombardier Transportation as part of a consortium with CAF, just one day before the Tribunal Administratif de Paris was to rule at Alstom's request on the viability of the bid on the basis of the documents submitted.

The RATP/SNCF Voyageurs group was ready to take all legal action against Alstom/Bombardier, in view of the commitment made by the BT/CAF consortium, confirming its last bid on 4 January. With the BT acquisition, Alstom took over all contracts and liabilities of Bombardier Transportation.

As regards the bid itself, the RATP/SNCF Voyageurs group emphasized that it had been examined with extreme care and using all the expertise of both operators. The group therefore condemns the Alstom comments on the work done and on the RATP/SNCF Voyageurs skills. In addition, an external independent and reputable company also performed an economic and financial verification of the offer, which was not evaluated as unusually low. This audit was carried out over a period of two months based on an analysis of several hundred documents.

Contract Signing 

Finally, on 5 February 2021, RATP/SNCF Voyageurs signed the contract with BT/CAF. As Alstom’s decision to withdraw the definitive offer of Bombardier was flawed, the consortium remained fully engaged in the tender. Moreover, Alstom itself withdrew its last two appeals at the Tribunal Administratif de Paris, thus there were no further obstacles preventing the signing of the contract. Earlier, on 9 December 2020, IDFM approved a budget of 2.5 billion EUR to finance the new trains.

The signing of the contract took place without much publicity, it can almost be said that in secret, and no one of Bombardier Transportation, Alstom and CAF did publish press releases for this important contract. Only CAF on 14 January 2021, i. e. before the contract was signed, limited itself to stating: „RATP and SNCF Voyageurs award an order for the new trains on Line B to the Bombardier-CAF consortium. This is the first project in which CAF units will be supplied for the RER network in the Paris metropolitan area, one of the largest transport administrations in Europe. This attests to CAF's clear commitment to the French market, where it has executed a significant amount of contracts over recent years.“ 

Even after repeated inquiries at BT, CAF and RATP, we were not able to obtain more detailed technical data on the new trains and their illustrations ... 

Let us remind you that RER B is used daily by around 1 million passengers (under normal conditions) and is overcrowded. At present, it is the only RER line operated by the elderly, single deck stock. For manufacturers it is not easy to design the new (double deck) trains, as the RER B line is characterised by many platforms in curves of smaller radii and high platform edges.

Editorial Comments 

In view of the above described development, we asked Bombardier Transportation and CAF: While reading Alstom’s reports on the “risky, impracticable, aggressive” offer of the BT/CAF consortium for RER B, I would like to ask if your company also shares the view that the bid was really so bad? I do not want to believe that your sales department could prepare and submit such a loss-making offer, all the more so because it was prepared in a consortium.

I also do not believe that the technical part of the bid would not be sufficiently managed, especially when Bombardier Transportation has designed and manufactured various trains for France in recent years and now even produces RER NG trains for lines D and E for RATP, albeit in consortium with Alstom. I am personally convinced that all this is the result of Alstom's efforts to win the entire 2.56 billion EUR contract for itself, and not through Bombardier Transportation, all the more so in a consortium with CAF, its competitor. What is your opinion on this?

Bombardier Transportation's press department provided us with the following answer: „As you know, Alstom announced on 29 January 2021 the completion of the acquisition of Bombardier Transportation. As such, today there are no longer two competitors (Alstom and Bombardier) but only one group (Alstom). We are therefore employees of Alstom and you will understand that, in this capacity, we do not wish to comment further on the subject you are referring to.“

The CAF press department commented as follows: „We are not going to make any kind of comments on the subject. However, we appreciate your interest and your words. Regarding information about the project (data, images), we do not have authorisation from the client to supply them.“

The described „story“ with a „happy“ end (as for whom) is not the only such case of Alstom's complaints against its customers. Just remember how Alstom protested to all sides for 1.5 year when „his“ customer Eurostar „dared“ to order new high-speed trains from Siemens in 2010... It is also worth noting how Alstom pushed the French government in 2016 to help its Belfort and Reichshoffen works, which were then on the verge of closure. The result was, for example, that in 2017 SNCF ordered Duplex TGVs, which they had not previously requested and for which no tender was announced.

All this should be seen in a broader perspective, also because following the Bombardier Transportation acquisition, Alstom has become a virtually monopoly train manufacturer in France. Companies such as Siemens, Stadler and Hitachi do not have their assembly facilities here, so the only competitor is the Spanish CAF.  On the French market CAF won a groundbreaking order in September 2019 from SNCF for 28 Type Confort 200 single-deck EMUs.

CAF also has one order from RATP, awarded in February 2017, for 12 electric shunters. Although they were scheduled for delivery starting in 2019, there is still no hearing of them. CAF stated: „Regarding the contract for RATP shunting locomotives, we inform you that CAF does not usually provide detailed information on the current project situation.“

It is also possible that another train manufacturer will soon appear in France, as Alstom recently signed an exclusivity agreement with the Czech Škoda to take over the Reichshoffen site, which according to European Commission’s merger conditions must be disposed of as part of the BT takeover.

So let's be surprised what the MI20 EMUs (or more precisely MI21?) will be - hopefully we will see more details and visualisations soon. It will also be interesting to see how the cooperation between competitors Alstom and CAF on this joint contract through Bombardier Transportation will work, and whether (or how many times) we will see similar "benefits" for clients, resulting from creation of "Alstombardier", the world number two since January 2021.

At present, a consortium consisting of Alstom (70 %) and BT (30 %) is now building for RATP a batch of 56 six-car and 15 seven-car EMUs belonging to Alstom's X’Trapolis Cityduplex family, which were ordered in January 2017. They are also designated RER NG (New Generation) trains. Pre-series units are now being tested. According to the contract, deliveries are to take place from May 2021 to June 2023. 

Jaromír Pernička

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