Transport Committee Select Committees

Good afternoon and welcome to the transport Select Committee. This

afternoon, we are going to be looking at recent procurement and

other issues relating to a chest too. Given the scale of HS2 and the

sums of money at stake, it is essential that the public is full

confidence in the processes involved. Today's session will focus

on the withdrawal of C H two M from a major contract and other recent

developments. Please can I have your names and positions for our records?

What with the offence that led to the withdrawal of C H two M? Shall I

give you a quick run through? Pesach matters predominantly looked at by

the responsibility of the board of HS2. David will talk about it from a

company perspective. Let me give you my perspective. It is worth saying

that, from a department point of view, we have been working hard to

make sure that things are right because we have gone through a

process that, when Simon left, we appointed an interim chief executive

who had previous employment history in the project and you are well.

When we recruited Simon's permanent successor and the leading candidate

has also from the company, we were particularly careful to ensure that

notwithstanding the need to manage proper process and pick the best

person for the job, and this is a small world where project managers

to work for a small number of organisations, we worked very hard

to ensure that recruitment process was done very carefully. We took the

right person for the job but also did so given the links for the

company and we oversaw the process is carefully as we could. Then when

this particular contract was let, and they ended up on the top of the

list, as you would expect, alarm bells are not the phrase but the

desire to make a droopy certain that we know were not getting ourselves

into difficult territory rang in my head. I asked my permanent Secretary

to do serious due diligence to make sure neither of the two individuals,

interim or incoming chief executive, had any position that would have

compromised the recruitment process. That work was done independently, I

was given absolute complement comfort by my permanent secretary,

so we signed off the contract. We then went into the proper process,

which is a standstill period. During that period, we were alerted to the

fact that there was a conflict-of-interest in the bid

team. We made an appropriate enquiries about that and, to be

frank, they took a decision to step back from the contract before we

could take a decision that this compromised the position. You

clearly saw that there was potentially difficult territory. It

has raised major questions about what has happened. What did you do

to address the issue of potential conflict-of-interest? I ask the

committee indulgence to go through a timeline. We keep focusing on the

one tender. The actual tender was ?500 million. The design were

prepared the hybrid bill for Parliament. That starts with the

prequalification questionnaire to the market, that happened on

February 20 16. Before that signed off by the we have independent legal

on the tender conditions and the scope. We also have an independent

review by an insurance panel that is chaired by David Hall. With an

imminent panel of experts, all independent on that panel. The sign

off on all those prequalification tender documentations pride was

going out. That tender went out. We got the feedback from the market,

prepared a tender on the basis of how the market reacts to our

information. Entirely independent review of the tender documentation

starts with our independent legal advice is advising the board as to

the satisfactory nature of the tender documents in the preparation

of them as well as the independent assurance panel chaired by David who

refuse at work. The tender is closed, the review comes in,

evaluation of that process. At this stage, it is usually unusual because

the process is not subject to independent assurance because it is

a more technical process, but the board insists on having an

independent review of the process of evaluation that it can apply with

the method, criteria, of assessment that the company setup. That was

passed and signed off. I know you will seen commentary in the press

that the assessment may have been up for questioning. It is quite

detailed and clear here. Let them me see the assessment tender on how

tenders get assessed. This is signed off by the bidders at the stage of

bidding, so if a bidder, one of the three bidders in this contract, were

to satisfy, the time to complain about this assessment table was the

time and they were submitting the bits. Once they have submitted their

bids, they have to sign a declaration, all tenders have the

sign it. Part of is this term here, a conflict-of-interest term. If I

could just quickly read clause 615? Tenders are reminded from the date

of expression of interest, when they start to tender, to the date of

contract. It is their responsibility to ensure any personal companies

does not have any conflict-of-interest in connection

with ages to projects. Steps should be taken to identify all persons and

companies who have knowledge of ages two projects and checks should be

made so that such person contained confidential information. So if any

tenderer advises all individual within our company advises of any

such potential perceived or actual, it goes to an independent panel

within HS2 to determine whether there is a conflict-of-interest. In

this particular case, this one individual, and this comes down to

15 contracts, because it is important to say that, out of ?500

million, ?350 million have already been awarded contracts to companies,

they are already working on engineering work on the design phase

2. This came down to one whistle-blower that said there was

one individual person that did work as a consultant, which is correct,

at HS2 between 2011 and 2016, and this person worked on a bed. We were

aware that this individual was put forward by CH2M to work once the

project had been awarded, that was perfectly acceptable. Many of the

people have worked for a just or other contractors, but what they

have to do, and the clause is clear, it is in the preparation of the

tender and between the time of contract. If someone has worked for

us before that has confidential information about the tender, then

that should be raised with us and it was not. So when it was raised with

us, which we welcomed, we went back to CH2M and said we have had this

issue raised, can you identified? The response was, this person had no

confidential information and had a minimal role in the preparation of

the tender. However, he was going to be used if they were successful. For

us, that was not sufficient or satisfactory so, by this stage, we

had independent legal advice is advising the board. We are in the

process of exchanging up to 50 different questions to get into debt

great detail the individual involved, to get to the bottom of

this issue of judgment as to whether or not this person did possess

material that could have been considered as confidential and

Wetherby four days that this person potentially sat on meetings were

material enough to influence the bid. That is what it came down to.

They put in a compliant bid, with no such issue of conflict-of-interest.

And as this clause says, failure to meet this obligation may result in

the occasion of the tender. So, clearly set out in the tender

documentation by HS2 is the ability for us to disqualify an individual

tenderer and go to the next two order. And it's fair to say, that

has happened before on government contracts, so this isn't the first

time that this situation has occurred. It is our attention to

have a ten day cooling off period and this tender is now open to

anyone. That is I think the extensive work we carried out to

make sure that the issue of conflict of interests was fairly dealt with.

There are the number of very important issues that you've raised

there. It rather sounds to me like an account, an justification of what

happened, after other people pointed out what had gone wrong. Members

will want to ask you a number of points, which will include the

nature of the independent assessment that you refer to, and it being

conducted by people you appointed, so? Is about how independent they

are. And there's one or two points I would like to push before members

have their own questions. It sounds like the owners for identifying

conflicts of interest rest entirely with the bidder. Is that the case?

The Secretary of State has already spoken about looking at potentially

difficult territory, I think that was the phrase. It would appear that

the onus is in fact on the bidder to identify the conflict-of-interest,

and not you, in this major contract, with very large amounts of public

money, is that right? Who is responsible for identifying

conflict-of-interest? I would argue that the process has worked as you

would expect it to... I am asking you a very specific question - who

is responsible for identifying conflict-of-interest. I was going to

answer that. In a situation like this, ultimately, first and foremost

it is for the bidder to conform to the rules. We cannot, no government

contracting body can crawl through every aspect of an organisation that

is tendering for contracts. There is a duty on behalf of the tenderer to

conform to the rules. And as a consequence, there will be

consequences if they don't. So, the company involved here has lost a

substantial amount of business as a result of the breach of the rules.

That has come to our attention because somebody inside the

organisation told one of the other bidders. That information could have

come from a number of different channels. But I think it is really

important to say that the process has worked in exactly the way that

you would wish it to work, there is an exhaustive procedure, an issue

has arisen, the issue has been investigated and the bidder has

withdrawn before HS two and my department took steps on the future

of that contract. Had they not done so, it is more than likely that we

would have chosen to ask them to withdraw anyway. I don't really see

how else you would have wished the procedure to work. I am asking you a

question, are you saying that it is wholly up to the bidder to identify

conflict-of-interest, and that neither the depart nor HS2 have any

responsibility in identifying conflict-of-interest? What I'm

saying is that it is not realistic for any government contracting body

to monitor every piece of work done by an individual... But this is a

major thing, is it not correct that I think it is Mr Reynolds we are

talking about, that his involvement in the phase two redevelopment part

of the contract was really very substantial? The concerns is, isn't

it, that there was somebody from the winning company who in fact designed

the contract and therefore one? That's entirely incorrect. The

individual you're talking about is Chris Reynolds, and the allegation

is incorrect. I can guarantee you, he did not prepare the procurement

document. However, he did work for HS2 on or off for some 45 years, on

51. -- on phase one. There is also a statement and I think I have seen it

on the Construction News website, but there was a statement made that

he wrote a lessons learned document which was crucial. I have not seen

that document, it certainly has not come to the board in the last few

hours. I have done a bit of investigation. Yes, there was a

report of lessons learned from phase one, and that mainly related to how

we would, how HS2 would resource ourselves, in particular dealing

with the community, the community director. And we have done that, a

lady called Julia King has been appointed. It was about HS2 working

out how to upgrade resources on relations. It was not as a result of

any of the tenderers' feedback on how we should write the procurement

document, which is what has been implied in this media speculation.

Did Mr Reynolds design the tender document or have any influence on

it? No, he didn't design the tender document. Did he have any influence

on the scoring of it? No, because he was not involved in it. Not involved

at all? But what I would say, if we were aware that Chris Wenger was

going to be a critical part of the team doing the work on phase two, if

we had been aware that he had been in the four days in meetings in the

lead-up to the preparation, he never met with HS2 in the bidding process,

we would have said to them, don't do it, we are unhappy with it, because

the perception is that he worked on and off for HS2 for four years and

you should not have him anywhere near the tendering team. This isn't

the first time someone has left our organisation and gone to work for a

major engineering company which is tendering for work. We are very

clear, and what we have said in other situations, keep that

individual well away from our organisation in the tendering

process. We should have been consulted. We agreed to disagree in

the end. They said he had no confidential information, all the

information was public. Even if it was public, he knew where to find

it, so he was quicker than others in finding it. Secondly, he was only

four days attending meetings. He should not have been there. That was

our position. If we had been asked and they had gone to our panel, we

would have said, keep him away from the tendering document. They would

say, no confidential information, therefore, this doesn't apply. This

is the same as every other major engineering tenderer, such as

Crossrail. So if they had not raised any objections, nothing would have

happened? If they hadn't, then the whistle Blair may well have raised

it with us. If they had raised it with us after we had awarded the

contract, we would have done exactly the same as we did during the tender

process, we would have written to CH, answering them to answer

questions, and if they had answered the questions in an unsatisfactory

nature, then we would not have given them the contract. The key thing for

me here, struggling to understand why a company like CH2M, a

commercial organisation would have voluntarily withdrawn from such a

big project without good reason. That is the bit which flummoxed

me... We'll never know. I won't know. It happened before we

expected, to be honest. They make a commercial decision, they have other

work with us, they're one of three in the consortium which is advising

us on phase one. They've got contracts on Crossrail, work on

Thames Tideway, maybe they didn't look forward to a legal battle with

us on this particular contract. OK. So they've got other contracts with

you, they have a reputation to protect, so perhaps it could be

suggested that they withdrew from a 107 ?2 million project, apparently

without good reason, because what was it possible that he was a

judicial review, with a deadline of the end of April, and the last thing

they wanted was documents being published and allegations that could

then stand up in court of their level of involvement between it and

HS2. It would never have got to judicial review. The state that it

was in before they were through, unless CH came back with further

information, we were ready to disqualify. Our QT said, you have to

give them one last chance to respond to these questions. And it's unfair

to disqualify them otherwise. If they had been unable to

satisfactorily answer our questions, we would not have waited for someone

else to come in and challenge it with a judicial review. Following up

on the Chair's point about Christopher Reynolds and the work he

was doing... So, just to check my understanding, Christopher Reynolds

was the chief of staff at HS2, is that right? You work for two years

as the chief of staff, which is an assistant role to the, they look

after the business diary and... It is not chief operating officer. But

would have access to a lot of information? Of course. So, he was

chief of staff at HS2, he had access to a lot of information, some of it

highly commercial and confidential... Presumably, yes. And

he had been working at CH for some time... No, he was working at CH so

Condit from HS2, not for CH right, but he was still involved with CH,

whether as Acer Conte... Troop. -- whether as a secondee. He wasn't

working on HS2 B. He had left the organisation, he was not working on

HS2. He worked on lessons learned from phase one. Was involved in

phase one primarily. And then he was saying, these are the lessons, he

wrote some report, saying, from phase one, this is what we would

recommend you do. It is not a report that the board ever saw. So, Chris

Wyles, who was the chief of staff at HS2, had access to such information,

let's ask it another way, what was his involvement...? From 2013, three

years before... What was his involvement? Can we say that he

wasn't involved in the bid at all, would that be accurate, to say that

Chris Wyles was not involved in the bid at any stage? I think I've got

something here saying what he did in the organisation. -- Chris Reynolds.

As I say, his primary role was working on phase one. Somewhere

here, I think I've got a description of when he left the organisation.

That's not what I asked you. I asked you, what was his involvement in the

bid, was he involved in the bid at any stage? He was never preparing

the procurement documentation, I know that because I asked him that

exact question. Sir David, that's not what I'm asking you. I'm asking

you, was he involved with the bid at any stage? Erm, was he involved in

the bid...? He was not involved in the evaluation at all, or setting

the procurement documentation. Was he involved in phase one, and did we

take lessons from phase one? That could be construed to help phase

two? The answer is yes. So he was involved in the bid? No, he wasn't

involved in the bid, he was involved in phase one, and lessons from phase

one could have helped anyone preparing face to. Again, just to

clarify for the record, when it did Chris Reynolds leave HS2 and when

did he start working at CH? He left HS2 in June 2016, left earlier in

the year and then he came back again to do some further work. And then he

started at CH in September. This contract is a matter of huge

public interest and the committee should share the documents compared

by Mr Reynolds. Could you ensure there forthcoming? We do not have

any dispute the Chris Reynolds should not have been involved in the

tender process. Our tender conditions are very clear. Anyone

that either could reasonably seem to have had or could be perceived to

have had any potential, seen or construed, to have any influence or

confidential information, he will maintain he had no confidential

information. We maintain it could be construed that he had unique

information because of his history. So, if we had been asked, as is

required under this clause, which the tenderer has to sign, we should

have been informed. We were certainly informed he was going to

work on the project. You should not have been involved in the tender

preparation of CH's bid because it was too close to us. That was the

wee reason why we were close to disqualify. Would you release all

documents Mr Reynolds has prepared the HS2 has in its possession to the

committee? I will ask our legal advice because some of that will be

his and some will be CHs. It is his information, his e-mails and private

information. I am not interested in his personal stuff but his

involvement. That is what is concerning here. What the contracts

that are still in existence between C H and HS2? Tell me a bit about

them. The contract the work on is phase 1 and they work with two other

organisations. They advise us as a delivery partner for the contracts

which then carry out the physical work. The were two other

organisations and they provide the programming expertise as they do not

Crossrail and the Olympics. What is the ballpark cash figure? Around 300

million, divided by three companies. The date, of the 2 billion we have

spent on the contract, we have spent 120 million with C H. What is

important to understand... It seems like a lot of money. Under the

contracts which is up for tender tomorrow, there are ?12 billion

worth of contracts for tender. ?12 billion worth of contracts under

evaluation at the moment or under tender. CH, because of

conflict-of-interest requirements we impose on them, are not allowed to

any work. We are focusing on a particular problem area and it is

true to say that Mr Reynolds had information because of his previous

involvement, which was of benefit to the winning bidder. We do not know

that. Well, you do know that because you did just say to us that his

involvement in phase 1 worn the lessons learned would be of benefit

in looking at phase 2. What I said was that this lessons learned paper

which refers mainly to how we handle all the community relationships

which we put on ourselves as an organisation. Whether that would

ever benefited tenderer is questionable, but the point we make

is, under our terms and conditions, we should have been informed as to

his involvement in the tenderer or the potential to involve him, in

which case we would advise strongly not to involve him. What is ballpark

to the nearest 10 million, the ballpark some money in existence in

contract between ages two and C H? There is a contract of 300 billion,

and that contract is run by three different organisations, of which CH

is one of the consortium members. How those members actually divide up

at work between them... Is that not something you should know? I do not

know what the internal arrangements of what three companies are. It is a

consortium. I will give you a simple example. Laing O'Rourke and CH

formed a consortium to deliver the Olympics. I do not know how they

divided the money between them, which is paid one company. You do

not say to them, how much did you split the profit? Absolutely

extraordinary! We have got ?300 million though we are talking about

here, we have got a company that has withdrawn from a process under

severe questions as to why they withdrew from that process, and we

have got the chairman of an organisation sat before us that does

divvied up and what share it is divvied up and what share it is

going to a company that has been withdrawn. I know that the three

companies involved, they have formed their own consortium of how the

service is and we contract them a figure that ranges between 250

million and 300 million over a 10-year period. We are clear this is

about a bit contract which is very important to which other company.

What we are getting very confused with is one thing, there is another

party in the room here which no one has ever talked about, OK? We are

not getting confused. We are concerned about something with the

big question around it, and that is what we will keep pursuing. Your

company's approach on the due diligence is effectively to put the

obligation under clause 6.12 back to the bidders and, if they effectively

breach that, they could end up loosing the bid, which in this case

has been an successful. Is it your understanding that that is the usual

process? That is standard practice, you see that with Crossrail and all

major government contracts. We do intend to tighten up following this

exercise. What we will say in future... This seems fairly own

arrests. There is also a document you need to sign. But in future, we

will say, you need to disclose to us who you intent to use on your

tendering. Give us more of a chance to scrutinise this ourselves. It is

something we will tighten in our tendering process, but it is

standard practice and is used every major engineering and civil

contracts in this country today. The publicity that surrounds this, there

would not be a contractor or engineering firm in the UK that

would be very focused on the issue of declaring conflict-of-interest

because our board has been prepared to be top with us. We could've

simply waved it through and said, CH had said minimal involvement would

be no confidential information. We have got a heavy legal team, went

through extensive questioning of CH, we were not concerned they worked on

another contract, and it was quite clear that, if in the end, they were

unable to answer our questions, we had no compunction whatsoever about

cancelling debt tender, and we were covered to allow for that. I get

back to the point which I was time to make earlier on, everyone is

saying that we are forgetting, one party has complied verily with this

entire tender. They put in a compliant bid cheaper and better as

per all the independent assessments, and now they have been awarded, and

people are forgetting it would be utterly unfair to stop this process

when they have complied completely with the rules including

conflict-of-interest. You will not believe this but I was going to make

a suggestion you could take the names and do the due diligence, but

you ready are. It is a very sensible suggestion. Is that standard? It

would be new. I am sure everyone else would've reflect on it now.

What is clear here is it is about interpretation. Here is a tender of

that who knows what the discussion was between Chris Reynolds and CH? I

am not aware of it. And how much input he had a tour into the bid. He

will maintain and his lawyers will maintain that the issue is, we have

a different level of judgment and standard and we intend to apply that

ruthlessly and intend to do our more intrusive investigations. The most

important thing for us is an open and transparent tendering system to

make sure we get the industry confident enough with our bidding so

we get competitive prices. The last thing we all the government wants is

the industry to think our process is not fair. The downside of HS2 doing

due diligence is that it could perversely allow company to say, it

was your fault. So we are still in the game. I can see you are dammed

if you do, dammed if you don't. Have your legal advice is giving you the

advice that you still have the same deterrent effect from six point 12,

notwithstanding you do as well? We will not remove that close. A

question for clarification, and I apologise if I've misheard what you

said. I understood he said the bid was the best technically and was 15%

cheaper of the three... Of the remaining two. I was going to then

ask what gave CH the advantage. They were rated technically higher. That

is not surprising in some ways because they carried out the phase 1

word. And very successfully, because all the work put through Parliament

was programme managed and supervised by CH in a very competent way.

Naturally, they had a competent team. It is something we would have

to consider. I would technically wait it the highest, but they have

left the table, they are no longer there, they have withdrawn their

bed, and we are not considering CH any more. So there are two compliant

tender is left in the evaluation process now. The evaluation is

marginally higher and cheaper from the public's point of view, and

therefore the award is clear. It has gone through the department, is

subject to a tender, and extends to a period which is standard practice.

If Mace want to challenge it, it it is entirely in the right to

challenge it. It is worth saying that, in terms of this process, this

is how it is supposed to work. You go through the tender process, you

evaluate the tenders, you announce a preferred contractor who then have a

standstill period to challenge that decision, you move onto the final

stage of confirming contracts. In this particular case, we went

through all of that during the period. The appropriate steps were

taken to monitor, investigate and before my department or ages to

could take any decision, the company chose to withdraw. My argument would

be that is how the process is supposed to work. This particular

case, a whistle-blower chew our potential to the bid process, it

could've been something different. You would want a process whereby if

an issue arises during that standstill period, we would take

appropriate action, that is what happened. Well you concerned that

affect health might take legal action you if you did not give them

the contract? It would've been contrary to our contract tender

award. It's as if we disqualify a party because of this, we have the

right to disqualify them. It does not say we have the right to abolish

the bidding process. They may have challenged all we could get in the

bizarre situation to retender it, and they win again, what happens

then? Family times would we have the retender it? You think that was

really likely? They have the right to do it. They withdrew under

pressure, didn't they? They withdrew for their own reasons. I have not

met with CH to understand why they did that, but I would be interested

to understand what reason they give for withdrawing. Haven't you

previously said to us there was conflict-of-interest that there had

not been declared? I said that unless Bechtel came up

with more information than a board... -- I said that let CH came

up with more information. We were clear to the board that they had to

give CH a chance to respond in a satisfactory way wise you were

denying them the chance to respond to respond to your challenges, the

disquiet by them for that youth is a waste of challenge. Doesn't that

really contradict the statement you made to is that you really don't

know why they withdrew, sure you do know why, because it got too hot for

them. I do not know why they've finally, you asked, one of the

members say, was it because of commercial... I will never know,

they made a judgment, they are a private company they did not want to

go on in this long legal challenge between the two organisations to

continue, they may have decided they couldn't respond to the questions

adequately. Who knows? I do not know where they decided. All I'm saying,

at the state when they withdrew we were certainly under the decision

that unless something came back satisfactory is we would have

disqualified them, but we didn't. And you spread to others about

having an independent oversight of what happened. You appointed the

institution of civil engineering? An individual who was past president,

he did the same role on Crossrail and he was a past president of the

Institute of civil engineers and he still chairs are independent

insurance panel and on his panel he has a series of experts on the road

from a legal and other backgrounds which review all of our tenders,

they would be the tender document for the go out of as well. So it was

the individual rather than the institution? Correct. His previous

role, he is an eminent engineer that is the only reason we have mentioned

him. What do you look at, the evaluation of the bid specifically?

He looked at what process did we set out to a valley with attenders and

did we comply with our own processes that will we publicly said in the

tender documents by weight them. On the Sedgemoor, this assessment is a

jewel here, it is quite detailed, did we carry out the evaluation in

accordance with our assistant panel. So he looked at the evaluation

himself? He looked at the processes. Do you look at the actual

evaluation, not the process, but the content? He did not go back on be

evaluate all the tenders, he did not go back because the evaluation is a

pro that interviews, there is actual work shops where the interview

staff, there is an interview of the CV, he did not go back and review

the ten to evaluation and he asked what tempers we put in place and how

we carried out evaluations. He looked at the process and did not

review or re-evaluate the tenders himself. No. Was there any outside

evaluation of the process, not the process of the actual evaluation?

With any outside assessment? Was there an outside assessment, no,

there was an outside assessment of the process of evaluation, there was

that external review of the tender? Not quite saved by the bow, we will

be returning. You were giving us information about the evaluation.

The question was asked about what was the relationship between CH and

the other two companies, it was actually Andrew Jones in Parliament

on the 13th of April who confirmed that the ratio was 10%... 50%

Bechtel so hopefully that answers the question now on the ratio

between the three parties and the other thing I was trying to save the

history of Chris Reynolds, December 11 to April 13. -- 50% CH. Then he

worked at HS2 on secondment from CH2M, he worked on the phase one

hydro Bill then from April 14 to March 16 he worked against a conduct

from CH2M on the additional provision, so you can effectively

say on and off until March 2016 he worked on the hydro Bill and the

amendments that came with it. -- dehydrate Bill and the amendments

that came with it. He spent several months undertaking work on

organisational design to the phase two team which is what I think is

referred to as I have not seen the question, the letter which is the

organisational design belated particularly to the community

engagement level. That was a short term contract. That is the history

of Chris Reynolds as I have it. Thank you. I want to ask you about

your conflicts panel... Surrey, on the back of that none of that

negates the issue that Chris Reynolds should not have been

involved on the bid as we have consistently said and as has been

said in the evidence today. He should not have been involved in the

bid? He should not have been involved in the bid by CH. And you

still say that was entirely Bechtel's responsibility. None of it

was just to identify? It will be future. -- that was the

responsibility of temp to TDs. Of that Makabu responsibility of CH.

You are now changed that in the light of the situation? We will

leave that clause exactly as it is because that is how every other

major transport contractors operated on but we will be more intrusive to

catch this issue to tighten the catch this issue to tighten the

rules in this particular case in the future. There are some close

connections between the two companies between CH and yourselves.

Including the appointment of a cheap executive. In relation to the chief

executive appointment, you did say at one point that you were looking

for Derry worldwide and you would get the best worldwide, it had out

to be the man already in the building. -- at one point that you

looking for Derry worldwide. Not in the building, the Acting Chief

Executive was not the person appointed as the chief executive, he

was running CH2M's European operation. We had a list of

candidates are number of different organisations around the world, he

came with the strongest CV and did the most effective job in presenting

his case to the current Chief Executive. At once point did you

decide he was the best candidate? Whose decision was it was it HS2,

was Secretary of State? The two of together. The Secretary of State's

decision ultimately. Basically, there was an interview process I saw

the CVs of the applicants, there were clearly a small number of

strong candidates of which the successful candidate was one. They

were all interviewed, the panel made a recommendation to said David and

to myself. Before that was accepted because of the fact that CH2M was a

strongly linked to HS2 as they wear, because we had one of his colleagues

the interim Chief Executive I instructed my permanent Secretary to

carry out a further level of due diligence. That made sure that he

was absolutely happy that the process was robust, isolated from

commercial interests, between CH2M and HS2, when I received the usual

and I approved the appointment. I make no apology but doing so we won

the best people and if the best person is running the European

operation of the contractor if he's the best person for the job he is

the best present the job. At what point was that happening? Before.

The tender was submitted in mid September 2016, the first discussion

I had all anyone from the Department had with Mark as a potential to be

longer listing was in mid-December, two months later. He was awarded his

contract negotiated under 9th of February. You can see there is a

clear distant is between the submitting of the bid some two

months before we had our first months before we had our first

discussion with Mark about whether he potentially wants to apply on

whether we thought he should be in a long listing process. Write him

coming to HS2 we had clarification that he had no shares, no options,

no payments outstanding CH and since he has been here and certainly with

time when Bowyer was in interim, they had no involvement with any CH

conference. All with termination of the contract. Mr chew it. On the

recruitment process for the new Chief Executive, did the company use

a professional executive search firm. I used to be an executive

search consultants, they went through the usual process of

presenting you with a long list, and then a short list... Correct. They

went around the world for a few months, there were 30 people

interviewed, I did many of the phone conversations and videos as well as

the global operators Bob Singapore, to Sydney, to America only look that

a lot of people from mining companies, it is not surprisingly

the final short list was made up by people who came from global

programme companies. Remember Mark's history, he started as an

apprenticeship on London underground, he worked his way up,

then he is in the private sector and is on the Olympics, he worked on the

structure of the Olympics Comey goes into Crossrail and on that project

only took over European operation edges it with something else, 3000

staff, 500 million annual turnover, complex issue of much of... So, he

is an obvious candidate and there were one or two other ones that came

from the usual suspects who you would recognise in the industry. The

fact that we hide from... The brief was clear, someone it knew the

English market and the UK market who had worked here who do major

projects come up ideally with a railway background and had a proven

track record in solid management. That is a relatively small Paul,

hopefully HS2 and investment will widen the pool but we did fish in a

small pond. -- that is a relatively small pool. There was a relatively

small group of very counted people that everyone is having and they

will move between client and contractors the whole way through.

Our challenge is to have an open and transparent process that the

industry has confidence in that will fairly execute and carry out so they

feel they have a fair chance to bid. We are in a limited pool, hopefully

you will get bigger as time goes on. I have a few questions about the

small pool, to make this process works transparently, fishing in a

small pool, all the Fish know each other, you have to do have a strong

believer in Chinese walls, don't you? What is the evidence that the

Chinese walls work? I know from going through all, the work on the

Olympics we had a ruthless process, I did not know, the board does not

get to see on the evaluation process, they are anonymous to in

terms of the selection process, so they are quarantined from the rest

of the organisation of the Birmingham and isolated. Being

familiar with this process and legally being challenged before and

having it stand the test of scrutiny to make sure we have a clear

process, we had the protection we had an of HS2 buy in independent

director and they do the full review of the evaluation process, so to

your earlier question, chair, what is a check and balance to make sure

the evaluation is done correctly it is that independent committee that

puts in an anomalous amount of time and effort into it. I did not sit in

this committee, because I thought, I'm sitting here evaluating people

who are coming from these sorts of organisations to be CEO,

potentially, I do not want to sit and neither do the other people on

the seven person evaluation team to choose the Chief Executive, neither

of them myself sat on the committee that signed off the final

recommendation on the delivery partner role. Secretary of State,

what interested me most as a Manchester MP is not the rather

complicated commercial details it is whether what has happened, whether

it will delay stage to be, will it? Aydin think it will. This is a

matter of weeks rather than months. -- I do not think it will. Stage two

B is a long project. I think we move quickly. If we discovered this in

six months' time it might be a different question but it emerged

during a standstill period. There will be a relatively small delay.

You came from the tender to the second tender, do you think that is

legally challenging double? It is difficult to understand how you

would legally challenge someone who is cheaper and this capability

better but there is nothing to stop them. I hope to meet with the CEO

before the end of the standstill period to explain the process. I've

written to not say how much we appreciate the fact that they, as

the Secretary of State just dead, imagine if we had discovered this in

three or six months' time. In fact they put forward this issue and I

have complete assurances from Te'o board that no tenderer will ever be

disadvantaged in this organisation. I am hoping that we can avoid legal

challenge, that is not to say they do not have the right to do it as

they do have the right to do it. I can imagine, if one tender has

dropped out and there have been certain accusations, Mace C that the

bidding process is flawed and therefore it should be be run, which

means, if there was a legal challenge of the tendering is rerun

under threat of legal challenge, which might be a sensible option,

but that not delay phase 2? Life you want this would be that we would be

equally legally vulnerable if we did not follow our process and simply

restarted this when there is a clear second place to whom we can make the

award. My hope and belief is that the professional organisations

involved here would not seek to use the court's process. There is a huge

amount of business to be one with a chest to an investment and

infrastructure are taking place, there is a real commercial

opportunity for any serious project management organisation involved in

infrastructure. Sometimes they will win and sometimes they will not and

each will learn lessons when they are not successful and apply those

lessons to future tenders. We need to get on with the job. My message

to any contractor working with government is, if you have a

legitimate grievance, come to us and you will address it. But please do

not use the court system because that does no favours to any of us.

If I can take you back to the question I asked you in previous

sessions, is hope sufficient to reassure my constituents that phase

2 will not fall behind Crossrail 2 in terms of the schedule where, what

I understand the critical parties, the timetable to get the next hybrid

Bill? So if there is a delay, will not put it behind Crossrail 2?

That's not pecking order list one or another. We have a number of major

projects in the pipeline for more hybrid bills, but I do not think

anything happening on this project at the moment will change the

timeline for it, and I do not think it is a question of losing your

place in the queue. We intend to proceed with hybrid Bill as soon as

we possibly can. As understand it, we have rules that there is only one

hybrid Bill at a time going through. We are currently doing a review of

the procedure to simplify it, something I support the something I

was involved in. It is certainly the case that the hybrid Bill process is

too convoluted and extended. I hope and expect that, as a result of the

work that is being done on this, that by the time we come to future

hybrid bills, we will have a simplified process. I do not think

it is a question of having the queue. At the moment, we do not have

an expectation that HS2 will start and then several down the line,

Crossrail 2 will start. We are working hard to develop these

projects and all have a streamlined process that will enable us to get

the infrastructure projects we need into the system. If the tender

process has to be rerun, your optimism is unjustified. How much

would it cost? It is not the cost. It would take 9-12 months to redo

the tendering. So that is the real cost? That is the real cost, and at

that stage we would go back to the department and say, it is better we

hire these people directly rather than lose 9-12 months, and let's

hope we do not go there because it will have the potential to cause

consequences. But I hope reason prevails and we do not have a chance

of delaying it. I take the point that I missed the real cost, but do

you have a rough figure, ballpark you have a rough figure, ballpark

figure, of the financial costs? I don't know. Why is the commercial

management service contract being redone? There is a simple answer for

that, we changed the scope. As we looked at it... This is a contract

for third-party private sector companies. Major tenders for the

contracting industry deliver this. This contract is ?9 million in

total, so small. We looked at how it total, so small. We looked at how it

would tie and for the work as we gained more aware of these contracts

of opening, and we decided we needed to change the scope of that

contract. We will draw down the highways England contract, so it

would not delay anything at all. We will probably retender it in a

couple of years' time as you work at how the woodwork and how we would

administer the more effectively, we needed to change the scope. You have

got to retender, so it is our better understanding the role of this

contract. You have had a lot of change senior staff recently and you

yourself have now become chairman of Gatwick Airport. Does this mean

there is any less commitment to HS2? No, I am on seven days a week, so I

can assure you the Gatwick role is chairing the board as well. I am

contracted tip for three days a week, I certainly do that. I can

assure you my commitment to the project. In terms of change, yes, I

was sad that Simon Kirby left and went to Rolls-Royce, but having our

Chief Executive being headhunted to the country's premier engineering

company is not bad ticking the box for HS2 and the Simon, I was

delighted. We have had a pretty smooth transition and I am

enormously grateful to Roy Hill for stepping in because his previous

experience to carry out the work. We have not missed that time. Of the

senior team, four have left in the last year, and one is Simon who was

headhunted, one was a lady who was under contract, she came in to do

some contract change work on people, and we are recruiting a permanent

person there, and the other two person there, and the other two

people have left the organisation. It was our plan for them to leave

because we are finishing a stage of the hybrid Bill work on a moving

into delivery. That was something we planned for. I do not see that we

have any great churn of the top of the organisation. The other

question, there is a revolving door between ourselves and CH2M. We have

1100 permanent staff in total, 25% of them are ex-CH2M, so I am not

aware of anyone leaving our organisation and going into CH. If

it is a revolving door, it is pretty squeaky. So our organisation is

hiring people and it will inevitably hire from seat age but there is not

something you would do where people are moving constantly in and out.

But the highest proportion... 38%? They are our delivery partners. They

do make up a fair chunk of Sir Condy 's. We want to reduce or the time.

Two years ago, we had just under 800 staff, and we're now down to less

than 30%. It is logical they are a big share of visa Condys because

they are doing all the work on the delivery. Should the public feel

confident that HS2 is in good hands? Yes, absolutely. We have a new chief

executive, a very distinguished chairman, good team, the

construction workers about to start, the first phase of the hybrid Bill

is in case. In this particular case, we were notified of the procedural

flaw in the contracting process, something that was not acceptable,

and these supplier during the standstill period to do with

decision to withdraw rather than have us take a decision on whether

or not that should happen. The standstill period is for precisely

that purpose. I would argue that the process has done what it is supposed

to do, we can never legislate to stop people getting things wrong. We

can take action when they do, in this case did not have too because

they did it themselves, and we have added an extra layer to the process

as a result which goes beyond what is normal public contracting. I do

not see what else we could have done. Thank you very much. Order,

order. When we say Bob's your uncle, we

mean it is as simple as that. One convincing story about the phrase's

origin is a well-known case of Parliamentary nepotism. Victorian

Prime Minister Lord Salisbury successively promoted his unpopular

nephew. Arthur was not without talent. He even became Prime

Minister, but his career was kick-started by the jobs he received

from his uncle. First uncle Bob appointed Arthur is as private

secretary then president