Council awarded Marine Lake contract to firm despite its financial trouble - report (From Wirral Globe)

Council awarded Marine Lake contract to firm despite its financial trouble - report

3:12pm Wednesday 20th June 2012 in News By Craig Manning

Council awarded Marine Lake contract to firm despite its financial trouble - report

ANOTHER damning report alleges senior council officers hid key information over the precarious financial state of a firm handed a major contract to repair West Kirby's marine lake.

According to the Audit Commission's Grant Claims and Returns report, Wirral's Technical Services department knew Northwich UK was in "serious financial difficulties" but handed them the £750,000 contract without telling councillors of the concerns.

The company started work but pulled out and subsequently went into liquidation.

The contract was completed by another contractor, Jones Bros Civil Engineering, from Ruthin, North Wales.

According to the Grant Claims and Returns report, which was discussed at a meeting of Wirral's audit and risk management committee on Thursday, council officers received an external credit report in January 2009 that highlighted "significant financial concerns in respect of the original contractor" which stated there was a "very high likelihood of business failure".

The council then completed a tendering exercise to select the original contractor for the works and that contractor was approved by cabinet on February 11, 2009.

The Audit Commission's report says: "There is no mention in this Cabinet report nor any supplement issued following receipt of the credit report of the serious concerns regarding the financial status and the very high likelihood of business failure of the company.

"There is no evidence in the minutes of the cabinet meeting that officers informed members of the risks at the meeting itself."

It adds: "There was a failure to adequately communicate known concerns about the financial standing of the company awarded the original contract to members and legal officers and the contract was approved by members without this knowledge."

The results of the credit report were discussed by senior officers in the departments of Technical Services, Finance (Procurement) and Internal Audit, who agreed to continue to recommend the approval of the original contractor to members.

According to the report, Technical Services officers confirmed that there were no minutes taken at the meeting that decided on the selection of the original contractor.

The report says councillors were asked to agree the recommendation to award the contract to the original contractor without being given the details that would have enabled them to make an informed decision.

Section 3.4 of the report states: "The Corporate Procurement Unit have been consulted and are satisfied with the procurement process implemented for this scheme."

It adds: "There is no reference to any legal advice obtained and no reference in the minutes that members sought the assurance of Legal Services.

"The group solicitor was only notified by Technical Services of the concerns on April 3, 2009, nearly two months after the award of the contract and nearly a month after work had started on site."

Deputy chair of the audit and risk management commitee Cllr Darren Dodd said today: "Looking at the report, it says that officers in technical services knew there was a very high likelihood of business failure.

"Nowhere in the report does it show that this was highlighted. It was actually hidden from councillors. This is a major concern."

The council's Director of Technical Services, Dave Green, is currently on suspension from the council while it investigates his role in the awarding of a £40 million, five year highways maintenance contract to outsourcing firm Colas.

A separate Audit Commision report released just a week ago confirms Mr Green met with a representative of Colas to discuss the tender - but did not meet with any of the rival companies shortlisted for the tender process.

That report concluded Mr Green had "probably" broken European Union Treaty rules by meeting with the company representative – and by further then failing to declare an interest when the contract was awarded.

It was the second time in six months the council had been seriously rebuked for failings in its corporate governance.

Last year independent consultant Anna Klonowski found that in Wirral, practices which would be viewed as abnormal in most other local authorities "had become seen as commonplace”.

Last week's report was released one minute after midnight on Friday, June 8 - less than six hours after Jim Wilkie, the council's chief executive who had been on sick leave since February, left the authority with immediate effect.

At last Thursday's teatime employments and appointments committee, Labour and Liberal Democrat members voted to approve his request for early voluntary retirement.

Conservatives had argued the request should not be granted until Mr Wilkie addressed their concerns to why two senior adult social services workers were allowed to leave the authority less than 24 hours before the damning Klonowski report was published in January.

The Klonowski investigation and report - sparked by whistleblower Martin Morton's allegations into the abuse of vulnerable adults, first reported in the Globe in 2008 - cost council tax payers £250,000.

Despite assertions otherwise from Wirral Council, the Klonowski report has still not been published in full.

A council spokesperson said: "Work is ongoing to implement the recommendations made in the Audit Commission's Grant Claims and Returns Report, as discussed at the Audit and Risk Management Committee on June 14.

"The report raises some familiar themes around governance as other critical reports received by the Council, and work is already underway to address many of the issues, particularly in relation to communications between councillors and council officers."