UK Edition
HS2 came close to kicking CH2M off controversial contract over cronyism allegations
HS2 was close to asking CH2M to withdraw from a controversial contract to design a section of the project if the company had not pulled out itself as allegations of cronyism over the deal grew.
MPs on the Treasury Select Committee were told by Sir David Higgins, chairman of the high speed rail project, he “would have had no compunction in cancelling” the £170m deal "unless if something came back satisfactorily" because of growing concerns.
The committee was investigating the award to US group CH2M of the contract in February to design the Phase 2B section of the £56bn high speed rail link connecting Birmingham to Manchester and Leeds.
But last month it abandoned the job as allegations mounted over a “revolving door” between it and HS2, with staff joining its ranks from the project and giving it an unfair edge. CH2M has denied breaching any rules.
Late last year, CH2M executive Roy Hill was seconded to HS2 as interim chief executive when the rail project’s boss left to join Rolls-Royce and in January CH2M’s European boss Mark Thurston was appointed as the new chief executive of HS2.
Concerns intensified when a whistleblower said that former HS2 chief of staff Chris Reynolds took a job with CH2M.
Rival bidder Mace threatened legal action unless its concerns were addressed. Days before a deadline Mace had set CH2M withdrew, saying “protracted delays and ongoing speculation risk further delays to this critical national infrastructure project which could ultimately lead to increasing costs to UK taxpayers, as well as to us”.
MPs on the Treasury Select Committee quizzing Sir David and Transport Secretary Chris Grayling about the contract were told HS2 had acted properly, with Mr Grayling adding it was “up to the bidders to follow the rules”.
However, he conceded that Mr Reynolds could have been seen to “have been too close to us. That is why we came close to disqualifying CH2M.”
He added that anything that might be “seen or construed” as a conflict of interest should have resulted in HS2 being informed.
The contract has since been awarded to second-placed bidder Bechtel, but Mace has previously stated that it is considering all options about the possibility of a legal challenge to the award.
But Mr Grayling appeared to warn off Mace over the prospect of a judicial challenge.
“My hope is that organisations do not use the courts gratuitously,” the Transport Secretary said. “There is a huge amount of infrastructure work in this country. Sometimes bidders will win, sometimes they lose and each will learn lessons.
“If you have a legitimate grievance we will address it but please do not use the courts without good grounds because that does no favours to anyone.”
MPs also heard that it would be “utterly unfair to cancel” the award, with a retendering likely to derail the project by nine to 12 months.
A Mace spokesman said: “As the Transport Select Committee has shown there are a lot of serious questions to be answered around HS2’s procurement process. If we hadn’t raised these concerns, these serious issues would never have come out.
“David Higgins admitted that HS2 needs to tighten up their process is an admission that the procurement was seriously flawed."