HS2 derailed after engineering firm CH2M pulls out of £170m deal

An engineering firm has pulled out of a £170m deal to develop a section of the HS2 rail link amid concerns over alleged conflicts of interest.

US-based CH2M had been chosen by HS2 last month to deliver phase 2b of the high-speed line, running from Crewe to Manchester and Birmingham to Leeds.

But the contract signing has been delayed as HS2 is reportedly investigating concerns from another bidder, Mace, that there may have been conflicts of interest.

CH2M has been involved with HS2 Ltd since 2012 and was awarded a £350m deal to develop Phase 1 of the line from London to Birmingham.

Mark Thurston, HS2 Ltd's new chief executive, is a former CH2M employee, as was his temporary predecessor Roy Hill.

It has been reported that dozens of CH2M employees are also on secondment to HS2.

CH2M released a statement insisting it has "taken all appropriate measures" in order to "ensure the integrity of the procurement process".

It continued: "We have taken the decision to alleviate any further delays to this critical national infrastructure project which could ultimately lead to increasing costs to UK taxpayers, as well as to our firm."

The firm added that it is "fully committed" to delivering Phase 1.

An HS2 Ltd spokesman said it would now open discussions with the runner-up in the bid process, Bechtel.

CH2M has been involved in delivering a number of major UK projects, including the London 2012 Olympics and Crossrail.

Conservative former cabinet minister Cheryl Gillan said the decision to pull out of the Phase 2b deal was "a pretty amazing announcement".

She called for a transport minister to come to the Commons to "explain this extraordinary state of affairs".

Liberal Democrat transport spokeswoman Jenny Randerson said: "The Government have made a clear error by not undertaking a thorough or proper process."