Higgins ‘flummoxed’ why CH2M bailed, but would ditch them anyway

In a metaphor for HS2 itself, the scheduled start for yesterday’s Transport Select Committee was put back, with the start itself being delayed again by the general election vote by MPs. The committee was questioning Chris Grayling MP, Secretary of State for Transport, and David Higgins, Non-Executive Chairman of HS2, about the procurement process for Phase 2b contracts.

Early in the session, Chris Grayling said that they had tried to make “quadruply certain” that that there was nothing inappropriate in the choice of CH2M given the fact that both the interim and appointed chief executive of HS2 had been senior CH2M employees. Saying that “Because of the fact that CH2M was strongly linked to HS2 and one of its colleagues was interim chief executive I asked for further due diligence”, Grayling admitted they had still ended up with what he described as “a conflict of interest“.

Describing the process, Higgins said it was a ‘whistleblower‘ – who did not work for Mace – who alerted them to the fact that Chris Reynolds, a former HS2 chief of staff who had taken a role with CH2M, did four days of work with CH2M’s bid team.

Higgins told MPs: “CH2M said that he [Reynolds] had no confidential information, the information was public. However, he would have known where to find it, and been quicker at finding it. We agreed to disagree on this issue.” In addition Higgins also said that Reynolds could have had “unique information because of his history.”

Higgins said on several occasions that he had no idea why CH2M dropped out after the flaws in the process were revealed, describing himself as “flummoxed” over their decision, before going onto say that if they hadn’t dropped out voluntarily then HS2 Ltd would have ditched them anyway.

Unlike Higgins, who was oblivious to CH2M’s reasons, Ellman later said “you do know why, its because it got too hot for them”.

Grayling also said “To be frank, they (CH2M) took a decision to step back from the contract before we took a decision that this compromised their position and they couldn’t go any further with it,“.

Higgins also praised the Bechtel bid, who were second choice and have now been given the contract, with Grayling saying that if they were to now rerun the procurement there was a risk of legal challenge.

Asked if this would delay the opening on Phase 2b, which is due in 2033, Mr Grayling replied: “I don’t think it will. This is a matter of weeks rather than months.”

Louise Ellman, chair of the TSC, asked if the entire onus for for identifying conflicts of interest was on the bidders asking “Who is responsible for identifying conflicts of interest, apart from whistleblowers or the media? Who within the company?”

Higgins confirmed that the entire responsibility was on the bidders, and said that they would not change the wording of the clauses that put the entire responsibility on the bid companies, but did say they “will tighten the rules in future and do a more intrusive level of investigation“, and would require firms to say who was working on the bids.

Discussing documents that Chris Reynolds was involved with for HS2 Ltd, Higgins said that the HS2 Board had not seen them: before saying that Reynolds had written one about community engagement. Many people in the communities affected by HS2 will not be surprised at that!

Chris Grayling told the committee: “The company involved here has just lost a very substantial piece of business as a result of a breach in the rules, that has, in this particular circumstance come to our attention because somebody inside the organisation told one of the other bidders.” The potential set of contracts was worth approxiatemy £12 billion, according to Grayling: this leaves over £40 billion of other contracts over the course of the project.

However Grayling appeared to warn against legal challenges, saying “My message to any contractor working with government, come to us if you have a grievance, but please do not use the courts without good grounds, as that does not do us any favours”.

Asked about his workload, Higgins who is also chair of Gatwick airport said that role there took “hardly any time” – not necessarily what the owners of Gatwick would be happy to hear.