Engineering firm CH2M, which was handed a £170m contract to design the second phase of HS2, has pulled out of that section of the project, the company announced today.
It said the decision was due to "protracted delays and ongoing speculation", as concerns over potential conflicts of interest led to a losing bidder for the contract querying the award.
A spokesperson for CH2M said:
CH2M today provided formal notice to Hs2 Ltd that we are withdrawing our interest in the Hs2 Phase Two B contract.
CH2M has demonstrated all appropriate measures taken throughout to ensure the integrity of the procurement process.
Notwithstanding these efforts, we have taken the decision to alleviate any further delays to this critical national infrastructure project which could ultimately lead to increasing costs to UK taxpayers, as well as to our firm.
City A.M. understands HS2 has no plans to rerun the bidding, so it will begin talks with the second placed bidder from the original process, Bechtel.
In February, it was announced that British firm Mace, which pitched alongside Turner & Townsend in a joint venture, and Bechtel which pitched in a separate bid, were beaten to the contract to work on the second phase of the HS2 route, by American engineering consultancy CH2M.
It then wrote to HS2 to challenge the awarding of the contract and HS2 delayed the process to meet Mace for talks.
The contract award stirred up controversy after HS2 appointed CH2M managing director for Europe Mark Thurston as its new boss at the beginning of the year, causing questions over a potential conflict of interest and a "revolving door" between the operations.
Thurston replaced Roy Hill, who was seconded from CH2M too.
A spokesperson for Mace said:
The investigation regarding our concerns about conflict of interest has clearly raised some serious questions about the process.
They added: "A meeting is scheduled between Mace and HS2 on Friday, and we look forward to hearing what HS2 propose to do next and their response to our questions. When millions of pounds of British taxpayers’ money is being spent, the public rightly expect decisions to be made following a thorough process and on a level playing field."
While CH2M will no longer proceed as the development partner on Phase Two B, the section of the route from Crewe to Manchester and Birmingham to Leeds, it said it remained "fully committed" to working with HS2 on delivering Phase One on time and within budget. It had already won £500m of work on the first phase.
HS2 said: “As they have announced CH2M have decided to withdraw from the Phase Two Development Partner bid process, a decision which we welcome.”