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Failures and blame culture behind Scarborough sea defence fiasco

Individual failings by senior officials led Scarborough Borough Council to award an illegal engineering consultancy contract for work on the town's sea defences.

COST OVERRUNS, public protests, Audit Commission investigations, technical problems, disciplinary action and rows between the council and its contractors, have dogged Scarborough Borough Council's coastal defence project since it began in early 2002.

More controversy emerged this month with the publication of a council commissioned report into the illegal award of contracts to consultant High Point Rendel (HPR). The firm was responsible for the design and supervision of work on the coastal defence project.

The report identifies internal communication failures behind the award of the HPR contract in breach of the council's own constitution and European procurement law.

It also exposes a culture where individuals are used to blaming each other for the council's failings (NCE 15/29 December 2004).

The report's author, local government expert Richard Penn, criticises the council's inhouse legal team - specifically monitoring officer Philip Newell and corporate services director Trevor Teasdale. The report says they failed to act to prevent the breaches in European law.

'It is clear that there was inadequate legal input into the contractual and tendering arrangements entered into by the council, ' says the report.

But Teasdale and Newell claimed to have known nothing about the contracts because they were not consulted by the procurement team.

Newell also told Penn that his attempts to draw attention to the lack of compliance was met with disdain by his colleagues.

'His concerns were normally met with groans from his corporate offi rs group colleagues and he was sometimes accused of being pedantic, ' says the report.

The individual that let the projects was capital strategy and procurement manager John Riby. He failed to seek legal advice before awarding the work, says the report.

He and technical services director Derek Rowell later blamed each other for the failure to follow EU law.

'The capital strategy and procurement manager claimed that in late 2001 the director [of technical services] knew of the intention to roll forward the HPR contract but that he did not instruct him to put the work out to competition, ' says the report.

'The director claimed that he did not know about the competition requirements as he had no experience of working within the relevant regulations and the matter had not been brought to his attention by the capital strategy and procurement manager on whom he was relying.' Incredibly, the council's external contract lawyer Watson Burton only learned of the coastal defence scheme after HPR had started work, when it saw an article in the local press.

They immediately requested sight of all contract documents and were shown the agreement proposed by HPR and agreed by Riby.

Alarm bells rang immediately and the contracts lawyer warned the council that this arrangement was in serious breach of the council's own constitution. Work had begun, but no contract documents had been signed. Despite this advice no action was taken.

In October 2002 the contract lawyer issued a more serious warning to Rowell and Newell.

'All risk of additional cost is allocated to the council, there is no risk sharing in this arrangement.

'There is no incentive on HPR to fi d added value, to control their cost expenditure or to act in a prudent way.

'In effect they have been handed a blank cheque to charge the council every element of cost no matter how inefficient, duplicated, wasteful or unproductive, ' the lawyer warned.

Despite the fact that Penn's report criticises five officers including the chief executive, only one - Riby - has been punished.

He was given a final written warning and stripped of his procurement responsibilities. The others have either moved on to other employers or retired. Chief executive John Trebble took early retirement at the end of December to avoid disciplinary procedures (News last week).

Rowell is now director of environmental services at the Isle of Wight, and Newell and Teasdale have retired.

Penn concluded that, had Trebble stayed at Scarborough, he could have faced a disciplinary investigation for failing to protect the interests of the council and local and national taxpayers.

The Penn report says that there was evidence that he had failed to ensure he was informed at key stages of procurement and had failed to ensure management control systems were in place that would allow organisational concerns to be raised.

Scarborough Borough Council head of legal services Ian Anderson has told NCE the council has significantly revised its constitution and contract procedure rules and made management changes following the High Point Rendel scandal.

The council's procurement rules have been simplified and all offi ers involved in procurement have been on training programmes.

The council is also introducing electronic systems to manage its procurement spend. In addition, a Procurement Steering Group and Working Group have been set up to champion procurement activity.

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