An independent report into the procurement of highways-related services at Liverpool City Council has called for the highways service to be completely restructured after finding a culture of ‘rule avoidance’ leading to excessive costs.
The report by Max Caller CBE followed a request from communities secretary Robert Jenrick to lead a statutory inspection into the council’s use of public money and whether it was achieving ‘Best Value’.
It describes the ‘piecemeal’ transfer of highways and associated services in house following the termination of the council’s contract with Amey LG as appearing ‘to proceed without plan or foresight as to how they would be managed and delivered in future years’.
It states: ‘There is no evidence that senior managers understood the risks to the service or what resources, structures, processes, or procedures should be put in place to ensure a good service could be delivered. This situation was exacerbated when the AD responsible for the service was arrested and suspended.’
The report notes that, despite the original intention to insource services, most highway works ‘are by a mix of term and tendered contractors or with mini tenders being used to price specific jobs using contractors already under contract’.
It adds that management were reluctant to make use of the professional expertise of the central procurement team (CPU) and that adherence to contract standing orders was poor, with ‘a high level of exception reports (in essence, a breach of the rules remedied by a retrospective approval) together with a significant number of compensation events (claims) which increased the overall costs of the schemes’.
The report describes a situation where contractors charges increased following additional costs which, had they been known about in the first place, would have prevented the contract being awarded.
It comments: ‘Overall, the culture appeared to be rule avoidance.’
The report adds: ‘Overlying all of this was the Mayor’s insistence that his concept of social value was best achieved by employing contractors with a Liverpool postcode base.’
It notes that the when other contractors won in competition this normally provoked a complaint to the mayor from a local contractor, resulting in external consultants being called in to review the process. ‘Their report revealed some minor irregularities but nothing worthy of intervention.’
The dismantling of the Churchill Way Flyover (pictured) – a major civil engineering project – is singled out as a particular example of ‘the approach taken by officers to circumvent the control systems’.
The report describes how the council insisted Amey, which was still providing a range of professional services, employ a firm that that had never undertaken any work directly for the council and was not on any approved list.
It notes: ‘For LCC to use its services, unless it was below the exemption limit, would require a waiver of Contract Standing Orders.’
The report adds: ‘From the evidence available on file, the quality and content of the output provided to the client-side did not justify the scale of contract payments.
‘Although the arrangement was announced as lasting only 4- 6 weeks, the engagement came to an end after 4 months with expenditure of the order of £250,000, once the CPU became aware and pointed out the availability of framework contractors providing the same service at less cost.’