The UK’s high speed rail programme, HS2, is in danger of descending into a bit of a shambles, it seems. I should say that my personal view is that this programme is not the best use of public money. The initial business case for example was based on people’s time on the train having no economic value, which was obviously nonsense, and it just seems an awful lot of money to spend as we move into a word of virtual reality, driverless cars, drones and so on.
But anyway, setting that aside, last week the contracting process for the phase 2 fell apart when CH2M, who had won the contract, pulled out. That followed complaints from Mace, one of the unsuccessful bidders, that there were conflicts of interest in the procurement process. CH2M has provided dozens of staff on secondment to HS2, including the previous CEO, who was then replaced by a permanent appointee – who also came from CH2M!
The last straw was the revelation that Christopher Reynolds who had worked for HS2 had then gone back to CH2M to lead the bid team for this latest contract. Even if HS2 put all the feasible “Chinese Walls” in place, and took every precaution to guard against conflicts, it just got to the point where it didn’t look and feel right. And ultimately, that is a key point with conflicts of interest; it is not just whether there really IS a conflict, if the perception is that there could be a conflict, then you have a potential problem.
In addition, the Permanent Secretary at the Department for Transport (DfT) is moving on, as is the DfT Director General for high-speed rail. Now these two are not involved day to day in the programme, but it is worrying in terms of the oversight provided to HS2, who are already spending a fortune and throwing around six-figure salaries like confetti. “We need to get the best people” has been the argument – but that hasn’t exactly worked in this case, has it?
We do wonder why HS2 did not follow a pretty well-worn and proven approach and engage a partner on the buy-side to supplement the in-house team, if it was felt such additional resource was needed.
The partner, as a condition of bidding for that role, would then not have been allowed to bid for operational contracts. That was the approach taken very successfully on the 2012 Olympics, where ironically CH2M were part of a consortium along with Mace and Laing O’Rourke called CLM that acted as contract managers for the construction programme.
That worked very well in delivery terms, and the Olympic contracting programme was perceived as a big success in the end. I did a review of the CLM performance as contract managers during the construction phase (not published but for internal government purposes) and I struggled to find much constructive criticism to be honest because they were so impressive. It was however expensive, as we pointed out here after some detective work!
Surely the same approach would have worked here on HS2? Should CH2M or Mace or whoever have been appointed to work buy-side and in return agreed not to bid for other work? Instead, this view that the conflict of interest problem would not be too serious perhaps suggests a commercial naivety in the HS2 team.
That is a worry for a programme that will spend £56 billion of public money, so let’s hope National Audit Office looks into this programme’s procurement activities sooner rather than later. Our advice to Sir Amyas Morse and his auditors is please don’t tell us once all those billions are spent that it wasn’t well run – get stuck in now!