Has the US Behemoth Become Too Big to Fail? Jacobs behind £200bn of UK Infrastructure Projects

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The US engineering behemoth ‘Jacobs’ has long been dominating majority of London’s infrastructure including £500 million-worth of projects related to the High Speed Two rail line, £5 billion super-sewer project, restoration project of Palace of Westminster worth over £4 billion, and many more.

In short, Jacobs is the biggest company people in London have never heard of.

According to research by the Standard, the company is reportedly working on massive UK infrastructure projects worth nearly £200 billion. Jacobs’ dominance has raised several concerns that it has become too big to fail or too strong when it comes to offering public work. Its huge size, owing to working as both contractor and project manager, has also led to perceptions of conflict risks.

In 2017, the US behemoth acquired its awkwardly-named US rival CH2M in a £2.5 billion deal, giving a big push to Jacobs’ overbearing presence. In addition, the deal created an engineering giant with 10,000 workforce in the UK alone, and 80,000 worldwide.

Both the companies were already serious heavyweights in the UK. CH2M came to prominence when it was assigned to be project manager of the London 2012 Olympics, alongside Mace and Laing O’Rourke.

Jacobs’ dominance, on the other hand, surged more stealthily through a long chain of acquisitions of which CH2M is the latest.

Potential conflict of interest has been raised long before the merger which led to CH2M’s withdrawal from Phase 2 contract of the HS2 line, although it was named development partner of the project on Phase 1 in 2012.

Despite the termination, Jacobs still holds the Phase 1 contract, assigned to CH2M, to manage and evaluate all the professional services firms operating on Phase 2. Most interestingly, most of those projects have gone to Jacobs’ other divisions.

In 2016, Jacobs was named design partner on the first phase of HS2; in the following year, on second phase of the route, the company achieved the role of Environmental Overview Consultants.

Jacobs’ spokesperson said that the firm is one of the premier professional services consultants supporting major infrastructure projects in the UK and taking into account the degree of talent, it has been awarded several high-profile contracts. This along with consolidations in the industry can give rise to risk of conflicts of interest, the spokesperson added.

Moreover, many in the industry complain about the company’s influence over officials in public sector.

Jacobs have claimed that they remain dedicated to ensuring integrity in the delivery of key public programs to the customers’ satisfaction.

Evening Standard (ES) reported that the company’s access to the British public’s money makes its shares a honeypot for investors.

Jacobs’ chairman and chief executive Steve Demetriou highlighted the company’s business strength in the UK. Last year, it raised $3.3 billion through a sale of one division and is on the lookout for more acquisitions. Jacob’s plans for domination is not over yet, ES reported.

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