The government has admitted it turned down a higher offer for the London-Edinburgh rail franchise than the record £1.4bn that won the contract for National Express. The Department for Transport said one shortlisted bidder , believed to be Arriva , bid more than £1.4bn but the offer was rejected (link below.)
http://business.guardian.co.uk/story/0,,2165738,00.html

A DfT spokesman confirmed that an offer of more than £1.4bn was turned down this time , but declined to name the bidder.

The spokesman indicated that there were concerns over "deliverability", adding: "It is true that the winning franchise was not the highest bidder. We award franchises not only on cost but also on deliverability."

There is also speculation within the rail industry that the east Midlands franchise was awarded to Stagecoach ahead of a bid that offered better financial terms to the government.

Interesting quote from the Guardian article :

"Despite turning down the £1.4bn-plus offer for the east coast franchise, the government has ordered a long-term change in the balance of railway funding. By 2014 it expects fares to provide 75% of network revenue, with the government paying the rest. The current balance is about 50/50. Rail minister Tom Harris has defended the funding shift, saying it restores the balance to pre-2000 levels."