Council blamed for botched procurement that cost taxpayers £6m

Martin Shipton

Cardiff council’s procurement team has been blamed for a botched tendering process that has cost taxpayers more than £6m.

The Cardiff Capital Region abandoned its defence to a legal challenge over the awarding of a £30m contract to demolish Aberthaw Power Station in the Vale of Glamorgan, and agreed to pay £5.25m to the losing bidder, the Brown and Mason Group. Legal and other professional costs pushed the sum to over £6m.

The city region, made up of the 10 local authorities of south-east Wales, acquired the former coal-powered station – which occupies a 500-acre site between Barry and Llantwit Major – from energy giant RWE in 2022 for £8m.

Through its subsidiary business, CCR Energy, it then entered a competitive procurement process, which saw Erith winning the contract to demolish the plant, as part of plans to eventually turn the site into a green energy park.

A summary has now been published of an independent review undertaken into the matter by management consultants Deloitte.

The summary states: “The Independent Review has identified several significant findings that highlight procedural shortcomings and areas for improvement in the Aberthaw Demolition Procurement and litigation process. During the Aberthaw Demolition Procurement, there were instances where the processes followed deviated from the process set out in the Invitation to Tender (ITT).

“The Independent Review concluded the decision to accept the Late Bid had the potential to create risk as a result of departing from the process in the ITT. Additionally, inconsistencies in the scoring methodology applied were identified, which did not fully align with the methodology set out in the ITT.

“Events were identified which raised potential concerns about the impartiality and perceived independence of the evaluation process: the sharing of scores among evaluators prior to moderation meetings, and attendance at the moderation meetings by evaluators not involved in that element of the evaluation.

“The Independent Review found that this prior knowledge had the potential to introduce bias into the evaluation process and that, as a number of the evaluators had prior public sector procurement experience, they should have been better positioned to recognise the potential risks associated with score sharing. Furthermore, during the 17 May 2023 meeting, a number of the evaluators with such experience were aware that their scores had not yet been shared with the moderator. Given their experience, the Independent Review concludes that they ought to have given greater consideration to the potential implications of score sharing prior to the moderation meeting and the importance of maintaining independence to mitigate any perception of bias or undue influence.

“In addition, there were errors and inconsistencies in the scoring methodology and final calculations performed by Cardiff Council’s procurement team after the moderation meetings, which resulted in the incorrect calculation of scores, albeit it did not result in a change to the first placed bidder.

“ Furthermore, insufficient documentation of key decisions, as well as the lack of formal training and guidance for evaluators, further undermined the robustness of the process and is indicative of the procurement process having been conducted in a manner below that expected for a project of the size, significance and profile of the Aberthaw Demolition procurement.

“While no evidence of any deliberate wrongdoing or misconduct by individuals involved was identified, the findings suggest that improvements are required in governance, training, documentation, and adherence to established procurement protocols to ensure greater transparency and perceived fairness, and compliance in future exercises.”

Review

Cllr Mary Ann Brocklesby, Chair of South East Wales Corporate Joint Committee and leader of Monmouthshire Council said, “To maintain transparency and impartiality, SEWCJC has commissioned this review as the sole shareholder of CCR Energy Ltd, and to establish the circumstances surrounding the procurement and legal challenge.

“Plainly, there are many lessons to be learnt, and I have confidence that every effort will be made to fully implement the recommendations of the review.”

Councillor Rodney Berman, leader of the Liberal Democrat group on Cardiff council and lead Liberal Democrat Senedd candidate for Caerdydd Ffynnon Taf, said: “It’s important that the Deloitte report is published in full so we can be sure that all the relevant lessons have been learned.

“While some of the explanation about what went on under the Labour-run council’s watch with regard to this badly handled procurement is a bit on the technical side, it is clear that there were significant failings in a number of regards.

“Those involved in evaluating the bids clearly lacked the relevant level of training and then failed to follow the proper procedure. As such, the way matters were handled was nothing less than a botched job.

“I am concerned to read that staff were sharing their scoring inappropriately at too early a stage in the process and that this then brought into question whether the evaluation was being carried out in a sufficiently impartial way.

“As the report notes, the independent review by Deloitte suggests the procurement process was conducted in a manner below that which would be expected given the size and significance of the contract being awarded. Given that this has led to a loss of around £6m of public funds, once court costs are included, that is nothing less than a devastating outcome as a result.

“I am also hugely concerned that Cardiff council failed to provide sufficient oversight of the process. There is nothing in the report to suggest that sufficiently senior council officers were checking that matters were being handled correctly. Given the amount of cash that has been lost, that simply isn’t good enough in my view.

“And while we now have more insight into what went wrong, what we don’t know is if there have been any consequences for those staff who badly mishandled this whole process. That is something I would be keen to know.

“We now need to make sure this catalogue of failure isn’t allowed to happen again. I will be looking for reassurance that steps are now in place to ensure any future procurement exercises of this scale are handled properly, and that the lessons from this report have therefore been learned.”