HS2 Matters

CH2M withdrawal.

CH2M would have been disqualified from its HS2 Phase 2b Development Partner contract had the company not withdrawn, according to HS2 Ltd Chairman Sir David Higgins.

In a Transport Select Committee evidence session on April 19, Higgins and Secretary of State for Transport Chris Grayling were asked to give evidence relating to the withdrawal of CH2M from the £170 million contract and the events leading up to it ( RAIL 824).

The contract involves the design work to prepare the Hybrid Bill for Parliament in two and half years’ time for Phase 2b (Birmingham to Leeds and York, and Crewe to Manchester).

CH2M had been awarded the contract in February, but formal signing of the agreement was put on hold following questions raised by unsuccessful bidder Mace about the robustness of the procurement process.

“It came down to one whistleblower who notified Mace that there was one individual person who did work as a consultant at HS2 between 2011 and 2016, and that that person worked on the bid,” Higgins said in his evidence to MPs.

“We were aware that this individual was put forward by CH2M to work once the project had been awarded. That was perfectly acceptable - many of the people who work on this project have worked for HS2 or other contractors. The clause is clear, however, as to the time between the preparation of the tender and the time of contract. If someone who has worked for us before has confidential information about the tender, it should be raised with us. That was not raised with us.”

Higgins explained that it is down to the tenderer to identify potential conflicts of interest, and they have to sign a declaration that no such conflicts exist.

Once Mace had raised the issue with HS2 Ltd, questions were put to CH2M about the situation. Higgins said that HS2 Ltd and CH2M were in the process of exchanging information about the potential conflict when CH2M withdrew its bid, before the HS2 Ltd board could make a final determination.

Higgins told MPs on the Select Committee that we will never know exactly what led to CH2M withdrawing from the contract: “It happened before we expected it, I have to be honest. They made a commercial decision.

“They have other work with us. They are one of three in a consortium that is advising

us on Phase 1. They have contracts on Crossrail. They have work on Thames Tideway. Maybe they didn’t look forward to a legal battle with us for a while on this particular contract. Who knows?”

Higgins said that the situation would never have got to a Judicial Review because unless CH2M had come back with sufficient answers to HS2 Ltd’s questions, they would have been disqualified.

Following this experience, he said that HS2 Ltd intends to tighten up the procurement process. And he was keen to raise the issue of what happens next:

“We are forgetting that one party complied very fairly with this entire tender. They are called Bechtel. They put in a compliant bid that will be 15% cheaper than Mace and technically better as per all the independent assessments. Now they have been awarded it, and people are forgetting that it would be utterly unfair to stop the process or re-tender it when Bechtel have completely complied with the rules, including the rules on conflict of interest.”

Asked whether the public should feel confident that HS2 is in good hands following this issue, Grayling responded confidently that it is: “In this particular case, we were notified of a procedural flaw in the contracting process, something that was not acceptable.

“During the standstill period, the supplier took the decision to withdraw rather than have us take a decision on whether or not that should happen. The standstill period is for precisely that purpose... we have added an extra layer to the process as a result, which goes beyond what is the norm in public contracting. I do not really see what else we could have done.”

Following the session, Mace released this statement: “David Higgins admitted that HS2 needs to tighten up their process, which is an admission that the procurement was seriously flawed. It’s remarkable that he also admitted that if CH2M hadn’t withdrawn, they would have been sacked - which is a clear admission that their procurement process was riddled with errors. Over the past 26 years we have bid on thousands of projects, but we have never yet taken a case to the High Court. This tells you how seriously we take the matter.”