MAJOR CONSULTANTS will be deterred from working on Regional Development Agency contracts because of unlimited liability requirements, according to director of the British Consultants Bureau Brain Lott.
In a letter sent to RDA chairmen last week, Lott complained that many RDA contracts required consultants to accept unlimited liability on brownfield regeneration contracts.
'This is counter-productive,' he said. 'The major, more experienced consultants will not accept the risk, and one man bands, with nothing to lose, will be attracted to the work.'
Most large consultants work with a level Professional Indemnity cover which is acceptable to their clients, typically in the£5-10M range. This can often be backed by a 10% performance bond or retention, to keep out smaller firms which are unable to provide such security, but which might be willing to bid with unlimited liability.
Lott said he suspected that the problem stemmed from the RDA inheriting government procurement contracts, which were designed for purchasing goods rather than consultancy work.
However, Jeff Bearcroft, finance director of RDA Yorkshire Forward, said it did not require consultants to provide unlimited liability or professional indemnity insurance cover. But he added: 'We have a duty to protect the public purse and thus do not believe it is appropriate to limit our potential claims for damages against consultants to the level of their insurance cover.'
There had been very few cases to date where consultants have refused to conform to these requirements, he said. 'We are confident that we are obtaining good value for money from our consultancy arrangements.'