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HS2 to tighten procurement after CH2M debacle

HS2

High Speed 2 Ltd (HS2) is to tighten up its procurement process after accusations of conflicts of interest caused one of its major contract awards to collapse.

High Speed 2 Ltd chair Sir David Higgins and transport secretary Chris Grayling were grilled by MPs yesterday over the appointment and subsequent withdrawal of CH2M from its £170M Phase 2b development partner role amid allegations of a conflict of interest.

At the Commons transport select committee hearing, Higgins confirmed currently the onus to declare a conflict of interest rests solely with the bidder under clause 6.12 of the contract document. However in the future HS2 intends to “tighten up” the process by insisting people working on a bid are named, allowing HS2 Ltd to examine their histories.

“In the future we will say, ’you need to disclose to us who you intend to use on your tendering’ so it will give us more of a chance to be able to scrutinise this ourselves,” he said. “It’s something which we’ll do to tighten in our tendering process…

”…It’s clearly seen that in the end our board is prepared to be very tough with this.”

Higgins added there ”wouldn’t be an engineer or a contracting firm in the UK now that won’t be very, very focused on the issue of declaring conflict of interest.”

The committee hearing focused on the role played by Christopher Reynolds, a former HS2 Ltd chief of staff who worked for body’s chief executive up until last June before moving to CH2M in September.

Higgins said there was no dispute that Reynolds should not have been involved in the Phase 2b tender process, although at HS2 Ltd his work focused on writing a report drawing lessons about community relations from phase one and not the second phase.

“Our tender conditions are very clear and apply to anyone that could reasonably be seen to have had, or could be perceived to have had, or construed to have had any influence or confidential information,” said Higgins.

“He will maintain that he had no confidential information and we will maintain that it could be construed that he had information because of his history.”

HS2 Ltd said it had taken legal advice and as part of the process had given CH2M time to answer its questions. Higgins said he did not know why CH2M had taken the decision to withdraw from the contract before HS2 Ltd had a chance to formally rescind the tender.

The debate touched on the involvement of former interim chief executive Roy Hill and current chief executive Mark Thurston, both former CH2M employees. Both Higgins and Grayling said additional measures had been put in place to avoid conflicts of interest.

“Prior to him [Thurston] coming to HS2 we had clarification that he had no shares, no options and no payments from CH2M and since Roy Hill has been here they had no involvement with any CH2M contracts or with the Phase 2b contract,” said Higgins.

HS2 Ltd has since announced that second in line consultant Bechtel will take over the phase 2b development partner role, saying it was technically better and 15% cheaper than rival Mace’s bid.

Mace originally raised the issue of the conflict of interest between HS2 Ltd and CH2M, although it came to light during the hearing that the whistle blower was not a Mace employee.

Asked if he thought Mace would have grounds to question Bechtel’s appointment, Higgins said it would be “difficult to understand” how the decision could be challenged, based on the clauses in the contract.

He said he was grateful to Mace for raising the issue and assured the committee that no company would be disadvantaged from further tenders for whistle blowing.

Grayling agreed, but also added that he would hope any professionals would not “seek to use the courts gratuitously”.

Other things we have learnt from the hearing:

  • The alleged “revolving door” between HS2 Ltd and CH2M is “pretty squeaky” according to Higgins as he said only 2.5% of its 1,100 employees came from CH2M and he was unaware of HS2 Ltd employees going the other way.
  • The government is looking to simplify the Hybrid Bill process saying it is “too convoluted”
  • The retendering of the £9M commercial management services framework canned due to a “change of scope” will take place in a couple of years’ time.
  • David Higgins is committed to his role and works seven days a week to make sure his role at Gatwick does not compromise his work for HS2 Ltd
  • Three of the four senior figures who have left the organisation in the last year were “planned departures”

 

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