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Sun April 18 2021

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Bechtel loses HS2 legal challenge

5 Mar US construction company Bechtel has lost its legal action against High Speed Two (HS2) Limited in a dispute over its losing bid to build Old Oak Common station in west London.

Old Oak Common station will be built by a joint venture of Balfour Beatty, Vinci and Systra
Old Oak Common station will be built by a joint venture of Balfour Beatty, Vinci and Systra

Bechtel claimed that HS2 evaluated the final two bids incorrectly and that it should have won the contract instead of BBVS (Balfour Beatty, Vinci, Systra).

HS2 said that it did the evaluation just fine and that even if Bechtel had scored higher, which it hadn’t, then it would have been disqualified anyway for submitting a non-conforming bid.

Judge Sir Peter Fraser, who this week stepped down as judge in charge of the Technology & Construction Court (TCC), agreed with HS2 and threw out Bechtel’s claim.

Bechtel had been particularly aggrieved not to win the contract because it had also pre-qualified to bid for Euston station too but withdrew from that competition to focus all its efforts on Old Oak Common.

At more than £1bn, Old Oak Common will be one of the most expensive railway stations ever to be built in Europe, although still somewhat less than the $4bn cost of the New York World Trade Centre Transportation Hub in the USA, said to be the most expensive railway station in the world.

At one stage Bechtel had contemplated bidding jointly for Old Oak Common with Morgan Sindall, but in the end it bid alone, with Morgan Sindall as its intended subcontractor.

In the bid assessment by HS2 BBVS scored 75.38% and Bechtel scored 73.76%. Although Bechtel scored higher than BBVS on some areas of the evaluation –Technical, Behavioural Assessment, Commercial and Staff Rates – it was substantially outscored by BBVS on the fifth area, Lump Sum Fee. On that one area of the evaluation, which was worth a maximum of 10%, Bechtel scored only 5.76% and BBVS scored a maximum 10%.

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Bechtel argued that the tenders were not evaluated correctly, and that BBVS should have been given a lower score on some questions, and that Bechtel should have been given a higher score on others. It criticised the BBVS bid as being an ‘abnormally low tender’.

HS2 said that Bechtel would have been disqualified even if it had scored more than BBVS because its bid contained a significant qualification that did not conform to the invitation to tender. As the judge said: “The nature and effect of the Bechtel qualification was such that for HS2 to have accepted it, this would have led to a contract entirely different to the one HS2 wished to award.”

He continued: “That different contract… would have been directly contrary to the whole commercial rationale of the procurement, which was intended and carefully designed to enable HS2 to construct Old Oak Common Station within the budget set of £1.054 billion and to the programme target. HS2 was not prepared to enter into such an amended contract, and gave Bechtel several opportunities to withdraw its qualification. Bechtel declined to do so.”

He concluded: “I find for HS2, and Bechtel’s claims all fail.”

Bechtel was represented by  Michael Bowsher QC and Ligia Osepciu (instructed by Hogan Lovells LLP).  Sarah Hannaford QC, Simon Taylor and Ben Graff (instructed by Addleshaw Goddard LLP) acted for HS2 Ltd.

A Bechtel spokesperson said after judgment was handed down: ‘‘We brought this case because we believed the ‘practical achievability’ of a bid was central to its evaluation. We are disappointed the judgement has come to a different conclusion. We will continue to press for fundamental reform to how major projects are procured. HS2 is an important multi-billion pound programme for the UK and we remain focused on our role as their development partner on Phase 2B.”

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