HS2 considered adding a company to its £2.75bn rolling stock shortlist in a bid to resolve a High Court claim, documents from a legal challenge against the client’s procurement processes have alleged.
Papers lodged at the High Court by rolling stock bidder Talgo claim that HS2 Ltd wrote to bidders in February saying it was considering adding Spanish trainbuilder CAF to the shortlist.
Talgo alleges HS2 proposed adding CAF in order to settle a legal claim lodged by the firm after it failed to make it past prequalification for the £2.75bn deal.
Four months later in June 2018, HS2 added CAF to the shortlist – a decision it said was made separately to maintain “robust” competition following shortlisted firms Hitachi and Bombardier joining forces on their bid.
Talgo, which is also on the rolling stock shortlist, is challenging HS2’s decision to add CAF to the shortlist in June despite the company initially not making it past the prequalification stage in November 2017.
Following CAF’s omission from the shortlist last year, the Spanish trainbuilder lodged a High Court claim alleging HS2 had made errors during the procurement process that breached UK and EU law.
The company demanded to be reinstated in the tender race, that the procurement re-run, or that it receive damages from HS2.
Talgo alleges that, following CAF’s legal challenge, HS2 approached it on 7 February seeking its consent to allow CAF to be added to the list.
In papers filed at the High Court, Talgo said: “By the letter of 7 February 2018 from HS2 to Talgo, HS2 informed Talgo it was considering settling the CAF litigation by expanding the tender shortlist to six prospective tenderers, and sought Talgo’s consent as well as a waiver of Talgo’s right of challenge to HS2’s decision to include CAF on the tender shortlist.”
Talgo says it refused its consent in a letter to HS2 sent two days later on 9 February.
HS2 confirmed to Construction News that it had considered adding CAF to the list back in February but did not go forward with the plan at the time.
However, in June HS2 notified shortlisted firms that it would be adding CAF to the rolling stock shortlist after bidders Hitachi and Bombardier joined forces. The Hitachi / Bombardier joint venture had taken the shortlist from five down to four bidders.
HS2 told CN at the time that the reason it decided to add CAF was to ensure “robust competition” by maintaining a shortlist of five firms for the deal.
Talgo has now challenged that decision, claiming it was based on “irrelevant considerations”, including CAF’s litigation.
Talgo says that HS2 sent a letter following the decision, emphasising that CAF’s addition would provide “maximum competition” by maintaining a list of five bidders.
However, Talgo claims that, towards the end of the letter, HS2 added that CAF’s addition would also have the “benefit of enabling HS2 to settle its litigation with CAF”.
Talgo also alleges that HS2 breached its obligations by adding CAF to the shortlist despite the company not meeting certain requirements around technical and professional capabilities.
It claims that bidders needed to meet a score 1,705 points out of 3,100 to pre-qualify for stage 3b of the tender.
Talgo alleges CAF scored only 1,060 for this stage, and as a result had its bid rejected by HS2.
HS2 has hit back at Talgo’s claims and said it is prepared to defend its decision in court.
An HS2 spokesman said: “In order to ensure the best trains are procured, it is vital that a robust competition takes place.
“We do not agree with the points raised in the challenge against our procurement of rolling stock; accordingly we have filed our defence and will prepare to defend the claim in court if and when this is necessary.
“HS2 is unable to comment further due to the ongoing legal proceedings.”
A recent report by the Financial Times has revealed that the cost of the HS2 line could cost 25 per cent more than similar overseas high speed rail schemes.
According to the paper, a report carried out by PwC compared HS2 cost estimates against similar schemes in 32 countries and found that the UK project would come in 25 per higher than the international average.
CAF and Talgo have both been contacted for comment.