High Speed 2
Shadow Transport Secretary seeks independent inquiry as CH2M withdraws its interest in £170m HS2 Phase 2b contract.
Following “ongoing speculation” about the legitimacy of a £170 million HS2 Phase 2b contract award to CH2M, the company has withdrawn its interest in the work.
Chairman and Chief Executive of CH2M Jacqueline Hinman wrote to HS2 Ltd Chairman Sir David Higgins on March 29 to advise him of the company’s decision to withdraw from the Development Partner contract.
CH2M cited “protracted delays and ongoing speculation [that] risk further delays to this critical national infrastructure, thereby increasing costs to UK taxpayers, as well as to the firm”.
A spokesman for the company said: “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.”
The company was awarded the Development Partner 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.
MPs have also questioned the award, owing to the “revolving door” of employees moving between HS2 Ltd and CH2M in recent times - including the appointment of Mark Thurston (previously CH2M’s managing director for Europe) as HS2 Ltd Chief Executive. Thurston took over from interim chief executive Roy Hill (previously project director for CH2M Hill - the Hill was dropped from the name in April 2015).
Shadow Transport Secretary Andy McDonald said that HS2’s former Chief of Staff Christopher Reynolds, who now works for CH2M, worked on the company’s bid for the project.
Saying that the situation “stinks to high heaven”, McDonald asked Secretary of State for Transport Chris Grayling to order an immediate independent inquiry into the issue.
Grayling responded: “On the appointment to the chief executive role of HS2, I want the best person for that job, and we will always seek to recruit the best person for that job. I will also ensure that if there are any questions about the recruitment process, they are addressed and investigated carefully by the civil service to reassure me that we can make an appointment without any concern. That we did, and I have absolute confidence in both that recruitment process and in that new chief executive.”
On the news that CH2M had decided to withdraw from the contract, Grayling cited “an issue - not a massive issue” that emerged in the contracting process, meaning that the company’s decision was the right one.
Chesham and Amersham MP Cheryl Gillan said in a debate in the House of Commons on March 30: “With billions of pounds of taxpayers’ money at stake… confidence in the transparency and decision-making processes in HS2 Ltd and CH2M have been called seriously into question.
“Firstly, will the Secretary of State tell us whether CH2M jumped, or was it pushed? For a company to give up a £170 million contract is enormous news.
“Secondly, will he give the House an undertaking that no further contracts will be issued to other bidders - such as Bechtel or Mace - further down the line before there has been a full inquiry into the decision-making processes in HS2 Ltd and CH2M?”
Grayling responded: “CH2M has done the right thing in taking a step back, having identified a problem that would have called into question whether it could and should operate the contract.
“It was not some massive misdemeanour, but an error in process that has caused CH2M to take a step back. It is now for the board of HS2 Ltd and its independent directors to make sure that they do the right thing in taking the contract forward.
“From the country’s point of view, it is important that we get on with the job.
“We will have all the necessary governance in place as we go through the process of replacing CH2M, but we do need to get on with the job.”