This week the Office of Fair Trading (OFT) imposed a fine of £455,235 on Bramall Construction and a fine of £595,747 on Richardson Projects in relation to the building of the Beacon Centre, off Cromwell Road in Charlestown in 2004.
"Both bidders engaged in cover pricing" the OFT stated "Two other invited bidders did not tender."
The OFT gave the value of the contract as £1,478,000 but the real cost to Salford council tax payers was almost £1million more than this.
When Charlestown and Lower Kersal New Deal for Communities (NDC) arrived in the area it was decided that a youth centre was needed, and a budget of £1,792,900 was set aside for its construction. In November 2003, the builders, Ballast plc, went bust, having already done some work and collected £493,777.
To finish the work, a number of contractors from the Council's "select list" were asked to put in tenders but only two companies did because, according to a Council report, there were "risks" of accepting partially completed works. These "risks" were, according to the same report "reflected in their prices".
Richardson Projects won the contract with a bid of £1,478,161, beating Bramall's bid of £1,624,798.
Malcolm Sykes, Director of Development Services at the time explained "Both
companies qualified their tenders and the details have been checked and assessed by the Development Services Directorate. The conclusion following the tender checking was that the lowest tender was valid and should be recommended for acceptance."
The successful Richardson bid of £1,478,161, together with the original
payment to Ballast (£493,777), Professional Fees and Charges (£172,000),
Cabin Hire and Site Security (£150,000) and Furniture and Equipment costs of
£150,000, took the new total to £2,443,938, leaving a shortfall in funding for
the Beacon Centre of £651,038 which was duly picked up by Salford Council
from its 2004/5 Capital Programme.
We now know from the Office of Fair Trading that the bidding price was
rigged, with Salford council tax payers picking up the bill, and further bills for
the £31,000 a year running costs…excluding salaries but including an expensive heating system and "30 different types of light bulbs used throughout the building where 5-10 would be acceptable" according to a case study report done for the government Department of Children, Schools and Families.
Despite the OFT expose, Salford Council is still using Bramall Construction on its `select list'. Seddon Group, also on that list, was similarly fined by the Office of Fair Trading for price rigging, although not for Salford contracts.
Katy Barnes, spokesperson for Salford City Council said: "Now that the court has given its verdict we need to look to see what action, if any, we can take."
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