Engineering firm loses £170m HS2 contract after conflict of interest concerns
CH2M, an engineering firm granted £170m deal to develop a section of HS2, has withdrawn its interest in the work amid concerns over alleged conflicts of interest.
American-based CH2M was chosen by HS2 Ltd last month to deliver Phase 2b of the £55.7bn high-speed rail line, running from Crewe to Manchester and Birmingham to Leeds.
But the contract signing was delayed as HS2 Ltd was reportedly investigating concerns from third-placed bidder Mace that there may have been conflicts of interest.
CH2M has been involved with HS2 Ltd since 2012 and was awarded a £350m deal to develop Phase 1 of the line from London to Birmingham.
Mark Thurston, HS2 Ltd’s new chief executive, is a former CH2M employee, as was his temporary predecessor Roy Hill.
It has been reported that dozens of CH2M employees are also on secondment to HS2.
Joe Rukin of the Stop HS2 campaign described CH2M’s announcement as “clearly an admission of guilt over conflict of interest.
“They hope doing this now – at a good time to bury bad news – means their other contract awards will not be investigated.”
John O’Connell, chief executive of the TaxPayers’ Alliance think-tank, claimed that “the revolving door between HS2 Ltd and CH2M never passed the smell test” and “serious questions were rightly raised” around HS2 appointing staff from one of their contractors.
Liberal Democrat transport spokeswoman Jenny Randerson accused the government of making “a clear error by not undertaking a thorough or proper process”.
Conservative former cabinet minister Cheryl Gillan called for a transport minister to come to the Commons to “explain this extraordinary state of affairs”.
She added: “This now raises questions over large amounts of taxpayers’ money that are being sunk into this project.”
CH2M released a statement insisting it has “taken all appropriate measures” in order to “ensure the integrity of the procurement process”.
It continued: “We have taken the decision to alleviate any further delays to this critical national infrastructure project which could ultimately lead to increasing costs to UK taxpayers, as well as to our firm.”
The firm added that it is “fully committed” to delivering Phase 1.
An HS2 Ltd spokesman said: “As they have announced, CH2M have decided to withdraw from the Phase 2b Development Partner bid process, a decision which we welcome.”
He added that HS2 Ltd will now open discussions with the runner-up in the bid process, Bechtel.