Procurement off the rails

Construction of what is billed as the world’s most advanced passenger railway and the backbone of the UK’s rail network – the HS2 London to Birmingham line – already looks like being bedevilled by the same lack of attention to procurement processes as other large scale UK projects.    

The project, arguably the most important UK infrastructure investment for a generation, is being run by HS2 Ltd which is a state owned company with over 1,200 staff, led by senior people with private sector backgrounds. Hot on the heels of the news that construction of the route was to start within weeks after Royal Assent being granted in February has come admission of failure to properly check for conflicts of interest during a procurement process that has been accused of being ‘riddled with errors’.

Accusations of conflicts of interest arose after appointment of an interim chief executive and permanent chief executive from CH2M, which has been awarded major contracts. CH2M had faced conflict of interest allegations after HS2’s former chief of staff Christopher Reynolds was involved in production of ‘lessons learned’ documents from phase one of the project to inform the tender process for selecting the second phase development partner. Reynolds went to work for CH2M in September last year after leaving HS2 in June.

The preferred bidder, CH2M, has withdrawn following the MACE complaints and the contract subsequently awarded to Bechtel. Bechtel has an enviable track record in managing complex infrastructure projects, and is reportedly 15% lower than the MACE bid, but it is not the bidder that HS2 first wanted following an exhaustive selection process.

HS2 Ltd has said that the three bidders were anonymous during the procurement process, which took 11 months and used 50 evaluators. On top of that scrutiny of what has always been a very high profile and controversial project, there was three years of examination of the plans, Parliamentary hearings of 1,600 objections to the project and an even higher profile from a last ditch attempt to waylay the plans in the House of Lords in January, which failed.

Sir David Higgins, HS2 chairman, hauled up in front of the House of Commons Transport Select Committee to explain the mess, confirmed that disclosure procedures would be tightened up to ensure early exposure of potential conflicts of interest. Sir David told the Select Committee: ‘I have to say with the publicity that surrounds this, there would not be a contractor or engineering firm in the UK now that will not be very focused on declaring conflict of interest.’

HS2’s bidding procedures are now to be looked at and improved for future contracts. Tender documentation will be rewritten to make bidders name all those involved in the bidding process. Conflict of interest clauses will be tightened.
There appear to be serious questions to be answered around HS2’s procurement process, which seems to be the case with many public sector led projects. What is different with HS2 is that despite being state owned it is led and staffed by senior construction professionals with a wealth of private sector experience. It seems that the public sector is not alone in its inability to pay more than lip service to proper procurement processes.

Nick Barrett
Editor