Source · Select Committees · Public Accounts Committee
Recommendation 21
21
Deferred
Committee concerned about contract renegotiation impact on HS2's small and medium enterprises.
Conclusion
We expressed our concern to HS2 Ltd for the potential for the large main contractors to pass any financial consequences of contract renegotiations down the supply chain to the small and medium–sized enterprises, of which HS2 Ltd told us there were around 2,400, who may find it more difficult to absorb such changes. HS2 Ltd acknowledged this issue, telling us that it will take this into account as part of its renegotiations and commercial management.35 Environmental obligations
Government Response Summary
The government states it disagrees with the recommendation but agrees with its substance, deferring a full update until ongoing commercial renegotiations, which are subsumed into a broader programme reset, are complete. 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.