Claims companies were offered $1m taxpayer-funded ‘loser fee’ for $1b contract to privatise Adelaide’s rail network

On the eve of a new Adelaide rail contract being awarded to private operators there are claims failed bidders were offered a taxpayer-funded “loser fee” worth up to $1m.

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South Australia’s transport department says it would breach ethical standards to confirm a taxpayer funded ‘loser’ payout worth up $1 million for unsuccessful bidders for a lucrative train contract.

The payment is understood to have been offered to potential operators of Adelaide’s passenger train system in a bid to keep them in the process.

The Advertiser have been told that three potential operators – Keolis Downer, TrainCo and Adelaide Next – were interested in the project initially.

But Keolis Downer, who is now front runner for the contract, and TrainCo, attempted to pull out of the race before being offered a $1 million ‘loser fee’.

Whistleblowers have told The Advertiser to justify the taxpayer funded payment, potential operators were told it would offer up to $1 million for costs of unsuccessful bidders due to COVID restrictions making it difficult for aspirants to get to Adelaide to inspect the train assets.

The State Opposition, which has also been made aware of the alleged payments, is calling on the State Government for answers.

The contract is for eight years, with a possible extension of four more years, worth an estimated $1 billion.

New operators are expected to start in January 2021 – suggesting an announcement is just weeks away to allow a smooth transition.

But the Department of Transport and Infrastructure – which The Advertiser revealed during the week was pulling together a new “public affairs” unit to “communicate clearly and ensure we keep our customers well informed at all times” – says details of the contract are commercial in confidence.

The Advertiser asked both the department and the new Minister Corey Wingard a raft of questions about the process including

HAS the department offered a loser fee for unsuccessful bids up to $1 million due to COVID restrictions?

WHY did two of the three tenderers attempt to pull out of the process, including one who tried to pull out three times?

A department spokesman said when the Government has made a decision, a public announcement on the procurement outcome will be made.

“Until then, details of commercial matters remain confidential as they are highly sensitive and any disclosures would contravene public sector ethical guidelines,” he said.

A spokeswoman for Mr Wingard, who is on one weeks leave starting from today, also pointed out the procurement process was commercial in confidence.

“A decision has not been made,” she said.

“We’re committed to delivering the best public transport system for the people of South Australia.”

Opposition Transport spokesman Tom Koutsantonis said that the privatisation process was in chaos.

“We understand that some of the parties tried to pull out of the process altogether and the Opposition has been informed that the government approached all of the consortiums to stay in the process, to the point were they offered payments of up to $1 million to those that lost in the process,” he said.

“A consortium pulling out half way through a process raises concerns about the process to start with.”

The State Government last year announced it would move to privatise operation of the tram and train networks, while emphasising that infrastructure and ticket pricing would remain under full public control.

A contract worth an estimated $3 billion was signed with a number of operators earlier in the year to run bus and tram services.

Opposition Leader Peter Malinauskas has promised privatisation of tram and train services will be reversed if Labor wins the next state election.