De La Rue will appeal passport contract loss
Tuesday, April 3, 2018
De La Rue has confirmed that it will mount a legal challenge against the Home Office’s decision to award the huge UK passport tender to a continental rival, and union Unite said it will “strongly support” the action.
The outcry over the decision to award Franco-Dutch firm Gemalto preferred bidder status for the new blue passport design has resulted in hundreds of thousands of people signing the various petitions opposing the move – more than 325,000 as of this morning (3 April).
A De La Rue spokesperson confirmed that the PLC was taking steps to initiate High Court appeal proceedings, and again called into question the viability of the prices put in by Gemalto, which is partly state-owned.
The spokesperson said: “Based on our knowledge of the market, it’s our view that ours was the highest quality and technically most secure bid. We can accept that we weren’t the cheapest, even if our tender represented a significant discount on the current price.
“It has also been suggested that the winning bid was well below our cost price, which causes us to question how sustainable it is. In the light of this, we are confident that we remain the best and most secure option in the national interest.”
De La Rue chief executive Martin Sutherland had already described Gemalto’s pricing as “so low that you have to question whether it’s viable”.
When the passport tender was issued it had an estimated value of £490m over ten years.
Unite said that the union was supporting De La Rue’s legal move because it wanted to defend “decent jobs in the UK’s manufacturing industry”, and the union also raised concerns about national security.
National officer Louisa Bull said: “Unite strongly supports De La Rue’s legal challenge on the grounds of jobs and protecting communities.
“There is also the issue of national security. Our current passports are technically secure to a high standard and need to remain so, when concerns about national security continue to be a priority.
“We are also concerned about media reports that Gemalto won the contract by simply undercutting its rivals, which, if true, smacks of unfair competition – the government should investigate these claims urgently.”
De La Rue employs more than 600 staff at its Gateshead security printing facility, of which around 200 work specifically on the production of UK passports.
The BPIF has also voiced its opposition to the Home Office’s decision, describing it as “disappointing and questionable”.
Chief executive Charles Jarrold said: “When UK productivity is so clearly a government priority, and the UK is home to world class security printers, a decision which threatens both UK jobs and undermines a leading UK industry should be reconsidered.
“If the government is not prepared to reconsider its decision it should explain how this decision has been made, and given the lost opportunity to UK industry, why it reached this conclusion.”
The Home Office has agreed to extend the "standstill period" following its initial announcement on the preferred bidder, which means a decision will now be made on 17 April.
De La Rue’s share price fell to a 52-week low of 464.5p after the decision was announced, and is currently at 506p. The 52-week high is 711.5p.
The Home Office had not commented at the time of writing.