Source · Select Committees · Public Accounts Committee
Recommendation 20
20
Deferred
Major HS2 contractors willing to renegotiate terms for future infrastructure programme opportunities.
Conclusion
We challenged HS2 Ltd on the feasibility of renegotiating existing contacts to deliver significant cost savings given the lack of incentives for the contractors to change terms. It told us that all major contractors have expressed willingness to discuss and work through a renegotiation as there was recognition from the private sector that better alignment of incentives between the taxpayer and the delivery of the works was necessary to reduce long–term risk. HS2 Ltd also emphasised that the major contractors would want to work on future rail and wider government infrastructure programmes and so would want to help successfully deliver HS2.34
Government Response Summary
The government "disagrees with the committee's recommendation" but "agrees with the substance," explaining that contract renegotiations are ongoing and highly commercially sensitive, forming part of a wider programme reset, with further updates promised in future six-monthly reports.
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.