American-based CH2M was to have delivered two stretches of the high-speed line, between Manchester, Birmingham and Leeds. It is already working on the London to Birmingham portion of line, under a separate £350m arrangement.
The signing of its new contract had been delayed as officials investigated contractual concerns raised by a rival bidder.
Mark Thurston, the new chief executive of HS2 Limited, which is awarding the contracts, 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’s chief executive, Jacqueline Hinman, wrote to HS2 chairman Sir David Higgins to “formally advise him of their withdrawal of interest” in the new contract.
CH2M insisted it had “demonstrated all appropriate measures taken throughout to ensure the integrity of the procurement process” and remained “fully committed” to delivering the first phase of the HS2 project.
But John O’Connell, chief executive of the TaxPayers’ Alliance think-tank, said: “The revolving door between HS2 Ltd and CH2M never passed the smell test and serious questions were rightly raised around HS2 continuously appointing staff from one of their contractors.”
Conservative former cabinet minister Cheryl Gillan called for a transport minister to “explain this extraordinary state of affairs”, adding: “This now raises questions over large amounts of taxpayers’ money that are being sunk into this project.”
HS2 said it “welcomed” CH2M’s decision and would now talk to the runner-up bidder, Bechtel.
Phase one of the £55.7bn scheme is scheduled to open in December 2026, with the second Y-shaped phase launching in two stages, between 2027 and 2033. The section that will connect the west and east midlands to Leeds and South Yorkshire, will be the last to begin operating.
Opponents of the project say it will create havoc during construction and have disastrous environmental consequences.