Source · Select Committees · Public Accounts Committee
Recommendation 19
19
Deferred
HS2 Ltd is seeking to renegotiate unproductive civil construction contracts for better risk allocation.
Conclusion
HS2 Ltd told us that it is now seeking to renegotiate these contracts.32 It considers that the current contracts are unproductive and that reset provides the opportunity for a fair allocation of risk and an opportunity to find different ways of commercially incentivising the outcomes that it wants, rather than the ones that it is getting at the moment.33
Government Response Summary
The government states it disagrees with the recommendation but agrees with its substance, needing more time for an update. Commercial renegotiations are ongoing and subsumed into a complete programme reset by HS2 Ltd's new CEO, with robust contract management applied until that work concludes.
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.