Source · Select Committees · Public Accounts Committee
Recommendation 17
17
Deferred
Previous Public Accounts Committee warned HS2 Ltd about managing revised contracts and cost risks.
Recommendation
However, the previous Public Accounts Committee was clear on the risk of these changes and that HS2 Ltd needed to closely manage these contracts. In its May 2020 report it warned that: “Now that it is bearing more of the risk of cost increases, HS2 Ltd also needs to ensure that it has the right commercial skills to manage its revised contractual arrangements with its main construction contractors.” 29
Government Response Summary
The government states it disagrees with the recommendation but agrees with its substance, needing more time for an update as commercial renegotiations are subsumed into a complete programme reset by the HS2 Ltd CEO. HS2 Ltd will apply robust contract management in the interim.
Government Response
Deferred
HM Government
Deferred
3.1 The government disagrees with the Committee’s recommendation. 3.2 The department agrees with the substance of the recommendation but will require more time before it can update the Committee. HS2 Ltd has concluded the first phase of commercial renegotiations, however further work is still needed to conclude this process. The negotiations are highly commercially sensitive, and it may not be possible to set out details including of levels of savings while they are still ongoing. 3.3 Following his appointment, the new CEO of HS2 Ltd committed to a complete programme reset over the coming year, which includes developing revised ranges for both cost and schedule, as well as a new baseline which will be contracted to HS2 Ltd’s supply chain. 3.4 To ensure a holistic overhaul of the programme, work to renegotiate contracts has been subsumed into the programme reset, and until this work concludes HS2 Ltd will be applying pressure through robust contract management of their existing contracts using all available levers. Further updates will be provided through the department’s future six-monthly reports to Parliament on HS2.