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HS2 contract saga: What next?

When CN revealed yesterday that US engineering giant CH2M was pulling out of its HS2 phase two bid, it was the culmination of a storm that left both parties with few alternatives.

After weeks of revelations, something had to give, and it was CH2M who threw in the towel. 

The US firm pointed to “speculation” – in other words allegations of conflict of interest – which could have further delayed the £55bn rail project. 

Within an hour, Bechtel had emerged as the natural successor as it had been the second placed bidder. 

CH2M had taken the decision to withdraw, HS2 pointed out, and Bechtel was now in line to take the job. 

“Standard procedure,” HS2 said. But is it as easy as that?

To say this is a unique situation is an understatement (Mace said it had not “seen a procurement process run like this” in its 26 years).

It is not every day a company turns its back on a £170m contract on one of the UK’s most high-profile projects.

Transport secretary Chris Grayling hinted today that the problem lay with CH2M.

“CH2M has done the right thing in taking a step back having identified a problem that would have called into question whether they could or should have carried out this contract,” Mr Grayling said.

But CH2M clearly disagrees.

The company said yesterday it had gone “above and beyond” protocols on conflict of interest and had responded to each of HS2’s requests in a timely manner.

On the involvement of former HS2 chief of staff Christopher Reynolds’ in its bid, CH2M claims HS2 knew about him all along.

So clear was his involvement in the pitch, CH2M says, he was named and quoted in its bid documents.

HS2 assured me in January that the phase 2b procurement was the “most robust it had come up with yet”, but CH2M’s claims raise red flags about that assertion.

This is not to mention the fact that it is understood HS2 had started communication with CH2M’s successor – namely Bechtel – before the US engineer announced its withdrawal. 

And while Mr Grayling was robust in his views that an independent inquiry will not happen, there is no doubt the calls will grow stronger.

In the wake of the Magnox nuclear embarrassment, another public procurement mishap will provide political capital for weeks to come.

The public accounts committee could also want to take a look.

And finally, what about Mace, the company that saw to CH2M’s contract by raising complaints in the first place?

While the withdrawal of CH2M is a small victory for the firm, Mace is still left without a development partner contract on HS2. And let’s face it, they didn’t complain purely for altruistic reasons.

Tomorrow will see Mace meet for showdown talks with HS2, and it seems as if the London-headquartered firm won’t settle for anything but a rerun.

If today’s statement is anything to go by, Mace might have a few cards up its sleeves for tomorrow.

Want more?

Read the timeline which shows how CN’s investigative reporting brought about the collapse of CH2M’s deal.

Plus, Arcadis joins with two other firms to launch a new venture in explosive demolition.

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