[To receive an update from the Director of Regeneration].
Minutes:
The Chair welcomed Richard Lawrence, Director of Regeneration to the meeting.
There were three elements to the current scheme regarding the refurbishment of the Civic Halls:
1. The design element (including planning),
2. The future operating model
3. The physical build
It was confirmed that on 17 June 2019, the contractors had ceased trading and the Council now needed to procure a new contractor for the refurbishment.
At the moment the Council was progressing against the required framework. The Council was confident that there would be a new contractor in place by the Autumn and that this would keep the project within budget and timeframes.
The collapse of the contractors had been unforeseen, and it was confirmed that all due diligence processes had been completed as part of the original contract and prior to the variation of contract in February/March this year. At no point during this time had there been any indication that the contractors were going to stop trading. The Council had taken all necessary health and safety checks to close the Civic Halls and to terminate the contract.
It was confirmed that the first part of contract had ended on 31 May with the second phase due to start on 1 June. This meant that even though there had been mobilisation for phase 2 no payments had been made and a performance bond was in place so there were no additional costs to the Council and there would be no procurement delays and no budgetary increases in the finding of a new contractor.
The Board considered that there had to be a delay as work was not going on at the moment. It was confirmed that work was not going on but that it was hoped to restart in the Autumn.
It was confirmed that part or the work had been completed and that the asbestos had been removed but there was still a long way to go.
The Board considered the issue of due diligence and questioned what this actually meant and what analysis had specifically been carried out by the Council in relation to the contractors. The Board queried who had carried out the due diligence and some members considered that it should have been a contractor firm with a detailed understanding of what was required rather than a solicitor firm.
The Board questioned how much money had been paid to the Contractor and whether there was still money owing.
The Director for Regeneration confirmed that the Council had paid the contractors for the first phase of the project which had included asbestos removal and had concluded on 31 May. Nothing had been paid following this.
The question was also raised as to why this project had only been given an amber risk rating when it had been considered by the Audit Committee recently. The Board considered that it needed further assurance that the projects were going well and questioned what, if anything was now going to be left out of the original design.
The Board considered that it was a strong statement regarding the fact that the project would remain on schedule and budget and queried whether the Director of Regeneration had any concern that the project might get blown off course considering the assurances he had now given. It was vital to get the project back on track and managed well.
The Board considered that given the circumstances, the Council could not have known what was going to happen regarding the contractor and that it was now imperative to try and get things right for the future. It was time to pick up the pieces and get back on track whist ensuring that all policies, procurement processes and audits were carried out to the highest level.
The Board queried whether the external auditors had signed off the project yet as it was thought that they still had some concerns and continued to ask questions about it.
The Director for Regeneration stated that full due diligence had been carried out and all appropriate legal and financial confirmation requested and on both occasions the information returned had given the council no cause for concern. There was very little that could have been done to know about the demise of the contractors and as soon as the Council were aware they had secured the site as quickly as possible. The Council was now focusing on how to deliver the project. The contract and procurement side would play a part of this and this process had already been started and some interest shown from certain contractors. This was a very volatile and challenging time due to Brexit, but the project was fully designed and contracted, so officers were confident that they could get a contractor in place to deliver it.
The Board accepted that due diligence had been carried out but expressed concerns that if positive responses had been received that perhaps the Council should look at how the process for assurance and due diligence was carried out.
The Board accepted that the new contractor would not be in place until the autumn but queried whether there was anything the Council could do in the meantime to ensure that when the new contractor started everything was ready to go with immediate effect.
The Board agreed that the vital information was the fact that the project was on time and within budget. It was time to focus and highlight this and not focus on what had happened to a local contractor.
It was considered that it was important to ensure that the Council had a definition of due diligence and what it actually meant. It was important to ensure that if we were requesting information that we were being given it along with proper assurance from our advisors that this had been done.
Regarding due diligence, the Director for Regeneration confirmed that all requested assurances had been received.
The Board understood that there had been a full in investigatory report last year containing 28 recommendations and considered whether these had been taken actioned.
Regarding a review of the due diligence process, the Director of Regeneration stated that there was a lessons learnt report about 12-14 months ago and all recommendations had been implemented.
It was suggested that the Council might consider reviewing its procurement processes, taking into consideration external audit advice, government recommendations and advice from legal departments about how to go through contract procedures.
Resolved: That a report be brought to the Scrutiny Board once a new contractor had been appointed to provide information about whether the finances and schedule were still on track.