Agenda item

6.1  Gerri Scott, strategic director of housing and community services, and Ferenc Morath, investment manager, introduced the report.  In response to questions from members, they explained that the contract had initially been awarded on the basis of a quality/price evaluation.  The possible back-up contractor, Apollo, was more expensive based on initial estimates but for the type of works necessary on Hawkstone, John Kennedy House and the 4 Squares Estate its price was very similar to Wates.

6.2  Members queried whether the Wates price could ever have been achieved.  The strategic director commented that in the past the price of contracts had increased during delivery but that on this occasion the council had not been persuaded of any need for an increase.  The investment manager added that Wates had put in low prices in some areas and had been specifically written to about these areas but had held to their price.

6.3  Members were concerned about the impact on leaseholders of an increase in price.  The strategic director explained that the council had taken legal advice and was confident that a decision to use the cheapest back-up contractor could not be challenged.  At the same time, detailed conversations had been held with leaseholders in order to explain the situation.  One to one discussions had taken place with leaseholders about options for payment.

6.4  Members were also concerned at any delay in work that would result from a change in contractor.  The strategic director indicated that the new contractor would be able to get on-site very quickly and that other contracts were already progressing.  In response to further questions, the investment manager explained that work on other estates were behind time, including Manor, St Saviour and Dickens, but that as these were smaller contracts it would be a relatively quick contract process and that the design process had not been interrupted.

6.5  Members asked whether the council would gain a reputation for holding contractors to account and what would be the possible effect of this.  The strategic director commented that the decision had been covered in the trade press and was helpful to the council in terms of ensuring that other contracts delivered what the council wanted.  However, terminating a contract would always be a decision in the last resort, especially bearing in mind the impact on residents’ expectations and officer resources.

6.6  A member suggested that the validity of the partnering concept was now cast into doubt.  The investment manager responded that, instead, the strength of partnering had been shown in that it was possible to continue contracts and not delay woks.  In addition, it was possible to benchmark partnered and funded contracts against those of other authorities.  The strategic director gave her view that a mixed economy lead to healthy provision but that partnering required extremely strong contract management.  The investment manager added that going through the supply chain process with a number of contractors achieved a combined price at a lower rate.  Also, contractors were rewarded if they did not take up the full amount of inflation each year.

6.7  Some members were concerned at the quality of work that would be delivered by Apollo, especially on the 4 Squares Estate.  The strategic director reported that residents in the Wates contract area were being enabled to see the work that Apollo was currently delivering in other areas.  In addition, the council had engaged in robust discussions with Apollo and the contractor had clarified its whole management structure and new senior managers who would be responsible for work in Southwark.  The council would be able to agree the specific materials to be used in homes.  The strategic director stated that the overwhelming majority of tenants trusted that the council would be able to get value for money from a contract with Apollo.