HS2 scraps contract in fresh headache as it gears up for MPs' scrutiny

 
Rebecca Smith
The first phase of HS2 is planned to open in December 2026
The first phase of HS2 is planned to open in December 2026 (Source: Getty)

MPs will question transport secretary Chris Grayling and the boss of High Speed Two (HS2), Sir David Higgins, over the recent scrapping of a major HS2 contract.

HS2 is facing further scrutiny over its procurement process after telling bidders for a contract meant to be awarded in February that it will rerun the tendering process altogether.

City A.M. understands Arcadis, Mott MacDonald and Turner & Townsend had been shortlisted for a commercial management services framework worth around £10m, but were recently told the process would be scrapped and restarted as conflicts of interest emerged.

Read more: CH2M pulls out of controversial HS2 contract due to "ongoing speculation"

These were not in the same vein as the controversial £170m development partner contract for phase 2b of the project, that CH2M recently withdrew its interest from, after “protracted delays and ongoing speculation”.

The larger contract has been mired by concerns over conflict of interest regarding the movement of senior personnel between the two firms; HS2 appointed CH2M managing director for Europe Mark Thurston as its new boss at the beginning of the year. He replaced Roy Hill, also seconded from CH2M, while former HS2 chief of staff Christopher Reynolds has taken a role at CH2M.

The smaller scale commercial management services framework, comprising of contract management and commercial services, is set to be restarted, as it would have stopped the shortlisted companies from bidding for other, bigger value contracts. HS2 realised the nature of the work needed had changed, which became a bigger issue over time.

“Since we started the procurement process we have reviewed the scope of requirements in relation to the contract and decided that it no longer meets our needs,” an HS2 spokesperson said. “To ensure that we are getting the best value for the taxpayer, we are reworking the scope of the tender and will restart the process shortly.”

This setback marks the latest headache for the rail project, which has been faced with increasing questions over the £170m contract CH2M stepped away from, which is still being queried by losing bidder Mace.

The British company is considering legal action, after calling for that tendering process to be rerun. HS2 has said the processes were "fair and robust" and is set to award the contract to the original second-placed bidder, Bechtel.

Read more: Mapped: This is the route HS2 will take north of Birmingham

This afternoon, the transport select committee said it would hold an evidence session on Wednesday 19 April.

"HS2 has the potential to deliver significant benefits," said committee chair Louise Ellman MP.

"As with any investment of this size, however, it is essential that it is managed effectively.

"The withdrawal of CH2M from a major HS2 contract raises several questions which must be answered. We will be asking the Secretary of State and Sir David Higgins to explain the circumstances behind CH2M’s withdrawal and what lessons need to be learnt."

Prior to the timing of the committee hearing being confirmed, HS2's spokesperson said HS2 chairman Higgins “would be happy to appear before the relevant parliamentary committee” when called upon.

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