HS2 Supply Chain FAQs

Transcription

1 HS2 Supply Chain FAQs As part of our ongoing market engagement activity, High Speed Two (HS2) Limited contacted four key umbrella, industry and trade associations. Our aim was to poll a sample of their membership and ascertain the supply chain s key questions about the HS2 project. We have categorised the most-asked questions and provided our responses as follows: Contents Programme and packaging... 2 Procurement process... 3 Contracting strategy... 4 Supplier engagement... 5 Fair payment... 7 Early Contractor Involvement... 8 Skills and employment... 9 Sustainability BIM/ Innovation Design stages Workforce HS2 as an organisation Should you have any queries or further questions, which are not covered by this document, please contact the HS2 Supply Chain Team using the supply chain communications mailbox: SCC@hs2.org.uk 1

2 Programme and packaging 1. Can you summarise the packaging strategy for delivery of Phase One of the project? The packaging strategy sets out the main categories of procurement required to deliver Phase One. These range from design, tunnels, surface route and stations, to railway systems and rolling stock. Further information on the packaging strategy is included within our Supplier Guide, which can be downloaded from The Supplier Guide will be updated as more detailed plans for procuring the individual works packages are developed under each of the main categories. 2. Has HS2 Ltd decided how it will procure the railway systems? Will it be a single package with long-term operations and maintenance included? We are working to develop the proposed packaging arrangements for the railway systems category. It is expected that the packaging strategy will be based around the procurement of large, networkwide packages, with operations and maintenance provisions being considered as a part of the scope. We are also looking at the scheduling of the procurement of the railway systems, so as to minimise the risks associated with equipment obsolescence. Further information will be made available in due course. 3. How will the rolling stock category be procured? We will be responsible for procuring the high-speed rolling stock. We are establishing a specialist team to develop the procurement strategy for rolling stock. The strategy will be based on feedback from potential rolling stock suppliers, as well as on current best practice. It will also draw on lessons learned from recent projects, including the Intercity Express Programme, Thameslink, Crossrail, and major international high-speed rail projects. We are considering packaging the rolling stock and depot contract(s) as a long-term service-level provision. As a result, the rolling stock contract is likely to require a bespoke contract solution to support these complex requirements. 4. How will HS2 ensure proper systems integration that includes design input from rolling stock manufacturers and suppliers, operators and maintenance suppliers? We understand the importance of a robust and comprehensive approach to systems integration. We envisage that the railway systems will be delivered on a network-wide basis. In developing our delivery strategy, we are considering the optimal approach for the systems integration role and requirements. We will engage with potential suppliers at a category-level once our plans have been sufficiently developed. 5. How will the operator be chosen? We envisage that infrastructure operations and train service operations will be provided by separate entities. Therefore, the safe, efficient and successful operation of the complete railway system will require robust management systems that will integrate all elements throughout the operating phase this will include track, trains, stations and the customer information and traffic management systems. We will be the infrastructure operator and will act as proxy passenger train operator until a commercial passenger train operator is procured. The commercial and technical arrangements for the operator will be the subject of further development. Until such time as the procurement process for this begins, we will develop the train service specification options that takes account of passenger, community and freight priorities across the whole rail network. 2

3 Procurement process 6. Will HS2 specify the pre-qualification process to be used for its supply chain - and if so, what will it be? We will endeavour to use a pre-qualification process based on Publicly Available Specification 91 (PAS91), as developed by the British Standards Institute (BSI) for our Tier 1 (ie, direct) contracts. We are also working with industry organisations to consider the possibility of cascading a similar approach to other tiers of the supply chain; we would prefer to achieve this through agreement with the supply chain, rather than by imposition. PAS91 is freely available from the BSI through the following link (registration is required to access the document): HS2 Ltd is a utility company as defined in the Utilities Contracts Regulations As such, any procurement actions that are subject to the provisions of the regulations will be administered so as to comply with the regulations (or any amendments or updates to the regulations that may be enacted prior to the commencement of a procurement). 7. Will separate pre-qualification questionnaire (PQQ) applications be required for each separate work package? Wherever possible, we will endeavour to group contracts together as lots under a single Contract Notice to be advertised in the Official Journal of the European Union (OJEU). This will help to make the procurement action more efficient, allowing for greater simplification of the PQQ process, and assist with managing the pre-qualification process for the suppliers. 8. When and where will information about individual procurement actions be published? For direct procurement opportunities (i.e. opportunities with HS2 Ltd), details of those live and forthcoming opportunities will be published on: the business section of our website ( as they develop and when it is appropriate to do so; and the OJEU as Contract Notices are published; and the UK Government Contracts Finder ( We will also encourage our supply chain to promote details of all appropriate indirect procurement opportunities (i.e. opportunities in the HS2 supply chain) via CompeteFor ( 3

4 Contracting strategy 9. What forms of contract are likely to be favoured? We will use the Third Edition of the New Engineering Contract (NEC3) suite of contracts for most project requirements. Specifically, we are likely to use the Professional Service Contract (PSC) for consultancy services opportunities and the Engineering and Construction Contract (ECC) for the works contracts. However, NEC3 may not be suitable or appropriate in some cases for example, the rolling stock and depot contract(s), or in the delivery of the Phase One ground investigation works. We will remain flexible in our choice and use of standard forms of contracts. Where we use the NEC3 suite of contracts, we will also promote the use of NEC3 for our Tier 1 suppliers own sub-contracts, the wording for which will be pre-approved for use on HS2 contracts (provided that they are not unnecessarily or significantly amended). We will expect a cascading of similar terms and conditions to our Tier 1 suppliers contracts, particularly those provisions that relate to fair payment. 10. Will any incentivisation mechanisms be developed collaboratively within workshops and be linked to the delivery of the project objectives? We are developing and considering incentive mechanisms that may operate at three levels: within each individual contract; within geographical areas; and across Phase One. The incentivisation mechanisms that we use will take into account the feedback we have obtained from market research exercises. We expect that our suppliers will develop innovative approaches to deliver successful outcomes that respond to these incentivisation mechanisms, and these approaches are likely to be considered as a part of the award criteria during the tendering stage of a procurement. 11. How will HS2 ensure a whole-life costing approach? We are developing the approach to the delivery of best whole-life value, and we are reviewing the comments received during our recent market engagement exercises. The approach we adopt will include the use of appropriate standards, and we will further consider the operation and maintenance requirements (that require consideration within the contracts) so as to take into account whole-life cost as an element of any award criteria. 12. What are HS2 s views on the acceptability and use of joint ventures (JVs) and consortia? We recognise that JVs and consortia may be essential for the delivery of the larger works packages and thus welcome the establishment of sensible and appropriate JV and consortia. Compliant expressions of interest or PQQ applications received from JV and consortia will be treated on an equal basis to submissions from single-entity organisations. 4

5 Supplier engagement 13. How does HS2 propose to drive engagement with small and medium enterprises (SMEs)? Does HS2 propose to engage directly with SMEs? And what is HS2 looking for from SME organisations? The delivery of the project represents an opportunity for businesses of all sizes to get involved during all phases. We will ensure that all potential suppliers (including SMEs) are engaged, informed and prepared to compete for the business opportunities most suited to them. We will actively encourage SMEs to participate in the delivery of the project. For the construction and infrastructure works associated with Phase One, we expect to contract directly with several larger entities (Tier 1 level) on a low number of very high-value works contracts; this means that at a Tier 1 (direct) level, there are unlikely to be many opportunities for SMEs. However, throughout the supply chain, there are likely to be many thousands of opportunities for SMEs and other suitable organisations. Furthermore, there will be an ongoing and sustained requirement for corporate services to support the delivery of the project (in areas such as marketing and finance), as well as the development of the plans and proposals for Phase Two. These may present further opportunities for SMEs. Where appropriate, some direct opportunities will be sourced through existing public sector frameworks visit the Crown Commercial Services website to find out how to join an existing framework: We will be adopting a range of initiatives to facilitate SME involvement in the project, which will include: encouraging our Tier 1 suppliers to advertise all appropriate internal supply chain opportunities on CompeteFor ( and providing guidance to SMEs on our website; requiring our Tier 1 suppliers to hold regular meet the contractor events that will maximise the transparency of opportunities for SMEs; hosting regional roadshows which will update local businesses on the project s progress, so that SMEs can get ready to respond to future and forthcoming opportunities; and working with local enterprise partnerships, British Chambers of Commerce and national enterprise agencies (including the Welsh Assembly Government, Scottish Enterprise and Invest Northern Ireland) to ensure that SMEs are made aware of opportunities when they are published on the various portals, and promoting our regional roadshows to their networks. Further information on these initiatives is available in our Supplier Guide, which can be downloaded from the business section of our website Will HS2 provide contact information for a HS2 representative for every procurement that will be promoted? Contact arrangements for HS2 supply chain enquiries will be published on our website. The contact details for those appointed as Tier 1 suppliers will also be published, and we will actively encourage our suppliers to provide contact details for an appointed representative when they promote an opportunity. Supply chain enquirires can be directed to our Supply Chain Communications mailbox SCC@hs2.org.uk 5

6 15. When will HS2 award Tier 1 contracts? We have already started procuring as part of Phase One and will need to do so until completion in Many of the major works packages under each category will be procured between 2015 and 2019, with Contract Notices for the first major packages expected to be published from mid We will use Early Contractor Involvement (ECI) for our civil engineering contracts where possible and appropriate. As part of this, we anticipate the progressive early involvement of Tier 1 suppliers in the development of the designs and the development of innovative and best-value solutions that will meet the requirements of the project. A high-level timeline of our latest procurement and delivery schedule can be found in our Supplier Guide, under When will we be buying?, available via 6

7 Fair payment 16. What are the payment terms on HS2 contracts likely to be? Will HS2 specify the payment terms throughout the supply chain? Does HS2 support the commitments in the Supply Chain Payment Charter (published by the Construction Leadership Council)? Payment terms within our contracts will be aligned to UK government policy and will meet all statutory and mandatory requirements. We will work to: ensure prompt payment of the supply chain; help protect suppliers - particularly SMEs - from poor payment practices; and support adherence to the commitments in the Supply Chain Payment Charter. Furthermore, we will monitor the payment performance of our Tier 1 suppliers to ensure that they adhere to the fair payment requirements in their agreements with us. Finally, we are monitoring the introduction of any future amendments to the regulations that may permit us to make direct payments to sub-suppliers in the event that it is appropriate to do so, and when the commitments setdown in the Supply Chain Payment Charter are not being adhered to. 17. Will HS2 use project bank accounts (PBAs) and, if so, will they be used throughout the supply chain? We recognise that there are advantages and disadvantages associated with use of PBAs. However, at this stage, we are still considering the use of PBAs and a range of other options for ensuring fair and prompt payment throughout the supply chain. At the appropriate time, we will confirm these arrangements. 18. Will HS2 withhold retention from its Tier 1 suppliers? Will they be required to implement the same terms with their sub-suppliers? We do not intend to withhold retention from our Tier 1 suppliers. Any proposals to apply retention by a Tier 1 supplier (or one of their sub-suppliers) will need to be fair, reasonable and approved by us. We will monitor the application of any such arrangements. 7

8 Early Contractor Involvement 19. Can HS2 confirm its commitment to ECI? How will these contracts be procured? What will suppliers have to commit? Will the works package be re-tendered at the end of Stage 1 of the ECI process? The use of ECI on appropriate packages is a fundamental part of our Phase One procurement strategy, and will be used on our civil engineering contracts where possible and appropriate. The ECI approach integrates design development and construction planning at a relatively early stage of delivery, which in turn permits the contractor, designers and key supply chain partners to develop innovative solutions. We intend that the appointment of the Tier 1 suppliers procured using ECI will be on the basis of a two-stage process that allows for the design, development and construction planning (Stage 1) to be followed by the detailed design and construction (Stage 2). There will be a potential break point between the two stages, and progression from Stage 1 to Stage 2 will depend on satisfactory performance during Stage 1 (which will include the development of a cost-effective solution and the agreement of an affordable target price for the construction). A guidance note on the use of ECI and its implications for the supply chain can be downloaded from the business section of our website: How will HS2 promote collaboration? Collaborative working arrangements underpin HS2 s whole approach to the procurement of the project. The principles of British Standard 11000: Collaborative Business Relationships are forming the basis of our working methods, and we will expect to see good evidence from businesses applying for HS2 opportunities that they have successfully worked in a collaborative culture on previous projects. Furthermore, we are developing collaboration arrangements and performance mechanisms which will require suppliers to collaborate both horizontally with other suppliers of a similar level, and vertically throughout the different tiers of their supply chain. 21. How will HS2 deal with potential conflicts of interest relating to the engagement of designers and professional advisers? As many designers and consultants that are likely to provide advice to us may also be engaged in advising our Tier 1 suppliers, there is the potential for perceived or actual conflicts of interest, some of which may be unacceptable. We will ensure that transparency is achieved in relation to the management of any such conflicts. As we finalise our proposals for the procurement of the works and services that we will require, we will also develop our supplier requirements and will publish a policy note on how we propose to manage the risks associated with any potential conflicts of interest. 8

9 Skills and employment 22. How is HS2 working with the industry to address current and future skills shortages? We have conducted a labour and skills forecasting and gap analysis in order to understand the demands that the project will create in the construction and railway engineering sectors. We propose to extend these studies in future to cover digital engineering and environmental disciplines. In light of the expected demand from a step-change in investment stemming from the UK Government s National Infrastructure Plan, we are working with Infrastructure UK and other major programmes and projects to examine current and potential skills pinch points and identify potential mitigation measures. The National College for High Speed Rail will be based in Birmingham and Doncaster and will open in It will help to train world-class engineers and deliver the higher vocational skills that HS2 and the UK industry need. We have developed a range of different programmes to address the skills shortage at different levels of the educational and labour system. For example, as part of our schools programme, HS2 Educational Ambassadors are helping students to explore a full range of potential roles in the construction and rail industries, so that they can subsequently build a skill-set that is in demand by future employers. 23. Will HS2 set targets regarding employability and skills? We propose to use a Balanced Scorecard that will help us to describe the value-for-money criteria across our procurement actions and when awarding contracts. The scorecard is based on the realisation of a number of strategic goals for the project, one of which relates directly to building a skilled workforce and the creation of opportunities that will provide benefit (in the form of investment and employment prospects) for local businesses and disadvantaged and underrepresented people. We will monitor performance in these areas both throughout the life of the project and during the term of individual contracts. We are also undertaking a project with the Construction Industry Training Board's Major Projects Team to develop a full range of benchmarks which will form the basis of expected supplier commitments to employment and skills. Further information on our strategic goals is available in our Supplier Guide, which can be downloaded from the business section of our website How can stakeholders get involved in employability and skills? The National College for High Speed Rail will deliver the training that employers need in order to create and develop the workforce required for the project. We believe that getting employers involved in the design, development and delivery of the curriculum for the National College is key to the successful delivery of its contribution to the project. In partnership with the National Skills Academy for Railway Engineering, we are talking to the industry to ensure they can contribute as we further develop the scale, scope and curriculum for the National College. If you would like to take part in this consultation, please skills@hs2.org.uk to register your interest. 9

10 Sustainability 25. How will you recognise sustainability performance in the procurement of HS2? Our Balanced Scorecard is all about sustainability, be it environmental, social or economic. As part of this, a number of strategic goals have been developed, against which value for money will be assessed when letting contracts. The proportion of marks that will be allocated to sustainability (at the shortlisting and/or tendering stages) during procurement will be sufficient to demonstrate that sustainability is a high priority and that it will have a significant influence on the development of a tenderer s proposals. Further information on our strategic goals is available as part of our Supplier Guide, which can be downloaded from the business section of our website Will suppliers be required to report on sustainability performance? We are in the process of developing a set of sustainability Key Performance Indicators (KPIs) that are suitable to enable the production of a regular sustainability report. As part of this, we will also be developing reporting requirements for suppliers. 10

11 BIM/ Innovation 27. Will HS2 require the use of Building Information Modelling (BIM)? If so, to what extent? BIM will be integral to the success of HS2 as such we will require the use of BIM technology in the delivery of the project. BIM will enable us to save money by eradicating waste. It will deliver a digital asset model fit for operation and maintenance. In line with targets contained in the UK Government s Construction Strategy, we are committed to operating at Level 2 maturity by The UK Government s Construction Strategy is available for download here: -Construction-Strategy_0.pdf 28. How will BIM be incorporated across the scheme? We will continue to develop our plans for the implementation and use of BIM across the project, and we will provide further information on this in due course. However, in broad terms, we propose to adopt a client-led approach, in which we will: own the BIM model; up-skill our staff to manage and drive the use of the data; support the up-skilling of the supply chain to ensure the successful application of BIM; and future-proof our approach (by using a software-agnostic approach, for example). 29. How will the design of the project cater for subsequent developments in technology? We will look to ensure, where appropriate, that upcoming technology is anticipated. We will also safeguard any provisions that are necessary (by considering how we may future-proof the project) and ensure that the timing of decisions recognises the need for future-proofing. This will be factored into our decision making on railway systems and rolling stock procurement actions, and also with whole-life value considerations. 30. How will innovation be encouraged and shared? Successfully deployed innovation will be critical to the success of HS2. We know the market is capable of high levels of innovation in both design and delivery. We are continuing to develop our proposals for innovation; we will provide further information on this in due course. However, in general, we aim to foster an approach that: is led by the client; develops a collaborative culture; is proactive; takes a practical approach to risk management; and engages with other programmes and the industry at large. We will be encouraging innovation from the supply chain at an early stage, and the use of the ECI contract process will help to facilitate this. Further work is being conducted to finalise how innovation incentives will be applied. A guidance note on the use of ECI can be downloaded from the business section of our website 11

12 Design stages 31. What is HS2 s approach to scheme design and why have these design stages been adopted as opposed to GRIP or RIBA? We found that the usual stages of others plans of work (such as GRIP and RIBA) could not adequately cover the stages of the project s activities. Therefore, we have written our own system to track design stages for each discipline (e.g. civil engineering and rolling stock). The approach we propose tracks the design from parliamentary design, through specification design and scheme design (which produces a single approved, buildable scheme), to the detailed design (which will typically be carried out by a contractor s designers). At present, we are focused on developing our plans for the delivery of the scheme design specifically, how much of this will be done by the designers working directly for us, and how much will be delivered via an ECI-type contract. There is likely to be a saw-tooth cut through the overall scheme design, as some elements will need to be taken further by us than others. Our focus is on ensuring that the integrated design of all parts of HS2 is developed in a coordinated way. 12

13 Workforce 32. Will there be a consistent and project-specific induction process recognised across all HS2 projects? We are preparing a supplier induction process that will be integrated into the supplier s own induction procedures 33. Will Construction Skills Certification Scheme (CSCS) cards - or cards carrying the CSCS logo - be required by all personnel on HS2 projects? We are continuing to develop proposals for the use of CSCS, and we will provide further information on this in due course. No policy decision has yet been made for our main works contracts. However, our ground investigation works contracts require that any person who will carry out or supervise construction works will be required to carry the appropriate level of CSCS card. 34. Will supply chain members be required to join Constructing Better Health (CBH)? No commitment to membership of CBH has been made for Phase One works contracts at present, although we support efforts to create and maintain a national database for occupational health in construction. CBH membership has been mandated in our ground investigation works contracts. 35. Will HS2 require specific occupational health requirements or monitoring of workers health? HS2 will develop an occupational health standard in due course, one that will be based on good practice emerging from other major projects. The standard will be mandatory for all of our construction suppliers and will thus set a minimum requirement for the evaluation of personal health risks and health monitoring. 13

14 HS2 as an organisation What are HS2 Ltd s governance structure, key goals and values? Details of our governance structure, key goals and values can be viewed on pages of the Corporate Plan: o% pdf We are currently reshaping our organisational structure and Executive Team. In summary, under the Chief Executive there will be three delivery units Development, Operations and Infrastructure each headed up by a Managing Director and a number of enabling functions such as Technical, Finance, Human Resources, Commercial, etc. that will provide support to the delivery units. Further details will be made available in due course. 37. How does HS2 plan to deliver the project within the budget constraints? For the project as a whole, we have prepared budgets set at a core cost level. To this, contingency has been added to ensure a high degree of confidence that the project can be delivered within the available funding envelope. The core budget provides a baseline against which we will control and manage costs. Any changes to this baseline must be justified via the change control mechanism. We continue working closely with the Department for Transport (DfT) to: manage the overall project delivery costs and seek opportunities for cost reduction; take a critical look at the value-for-money and affordability of any proposals which might potentially add to costs; and apply the principles of Managing Public Money (as published and mandated by HM Treasury) to all of our activities. We have assembled a team within our Programme and Strategy Directorate to lead the development of people, processes, systems and behaviours that will be required to achieve ontime, on-budget delivery and manage the change control process effectively. Each in-year annual budget is closely controlled within the pre-agreed expenditure limits, with contingency held centrally. We will continue to work with our audit team through the Internal Audit Programme to ensure that the quality of our financial control systems remains high and supports a rigorous cost control framework throughout the HS2 project. 38. Will the Stage 1 ECI teams be co-located with HS2 s construction team in their Birmingham offices? We announced in July 2014 that our Phase One construction headquarters will be housed in Birmingham, at the heart of the full HS2 railway. The office where 1,500 employees will ultimately be based - is scheduled to open in Some of our employees will move from existing offices in London to the new offices, but the majority of our staff based at Birmingham will be filling new positions and performing highly skilled jobs - they will include engineers and designers responsible for detailed construction plans for the track, stations and signaling, as well as staff needed to support their work. The plans for the future co-location of the ECI teams will be developed prior to issue of an Invitation to Tender (ITT). 39. How will assurance of the project be undertaken? Building on both the latest industry standards and practical lessons from other large-scale projects in the UK and abroad, we will build our integrated assurance framework in order to be responsive to project risks and stakeholder requirements. This approach will ensure that we inspire confidence

15 that the project is being delivered efficiently and economically, and in compliance with the stated requirements. 40. What is the approach HS2 will take to the management of risk? We recognise the importance of adopting a collaborative approach to risk management and of working closely with all of our supply chain, demonstrated by other comparable mega-projects. We will implement an Enterprise Risk Management Framework, in order to support the organisation, its supply chain and other third party partners in identifying, analysing and managing risks identified throughout the project delivery. Risk will be fairly allocated throughout the supply chain to parties best placed to take ownership, ensuring that the level of risk taking is appropriate for them. In addition, there will be a shared expectation that every player will take ownership of the risks they could create for anyone downstream from them we recognise that risk is very rarely an isolated event within a supply chain network on this scale. We therefore see collaboration as being the absolute foundation for risk management in the supply chain. Openness and trust will be critical to enable parties to come together, to identify and assess inter-company risks that would otherwise be missed. 15