To ask the Secretary of State for Transport, what (a) financial viability and (b) risk assessments his Department has undertaken on major HS2 Ltd contractors on Phase 1 of High Speed Two following (a) Carillion going into administration and (b) the covid-19 outbreak; and if he will make a statement.
9 July 2020
a) HS2 Ltd’s Supply Chain Management (SCM) function undertakes daily financial and capacity risk monitoring for all HS2 critical & strategic economic operators and their parent organisations during tendering and throughout contract delivery, at a Tier 1 and Tier 2 level. In addition, SCM receive daily alerts in relation to financial risks associated with critical suppliers and have aligned their processes and assessment criteria with Cabinet Office guidance.
b) All of the Phase 1 Joint Ventures that have received a Notice to Proceed are joint and severally liable for their contractual requirements and therefore provide mitigation to any financial risk that materialises. Also, each of the Economic Operators were required to provide a Parent Company Guarantee from a parent of sufficient financial standing. Both Economic Operators and Parent Companies have had their financial standing tested and scrutinized during both procurement and then again at the point of award for their contracts. Since the point of award, HS2 Ltd have continuously monitored financial stress indicators, which are updated on a daily basis according to predetermined alert parameters:
a) Prior to the COVID-19 outbreak HS2 Ltd had in place regular monitoring for all major contractors.
b) Following the COVID-19 outbreak an HS2 Supplier Relief Working Group has been established and a supplier monitoring report is reviewed at least weekly to highlight suppliers at risk and initiate plans required to support the supplier and ensure continuity of supply.
HS2 Ltd is a member of the Department for Transport (DfT) Strategic Supplier Working Group. Both before and after the COVID-19 outbreak, this Working Group has monitored strategic and critical suppliers in conjunction with DfT and Cabinet Office and taken coordinated action where appropriate.