Agenda item

To consider a report by Councillor Barry Mellor, Lead Member for the Environment and Transport (copy enclosed) regarding termination of the contract between Denbighshire County Council and R L Davies Ltd (RLD) for RLD to be the main contractor for the Waste Depot Phase 2 on the Colomendy Estate, Denbigh.

RESOLVED that Cabinet note the urgent delegated decision referred to in paragraph 2.1 of the report.

Councillor Barry Mellor presented the report on the termination of the contract between Denbighshire County Council and R L Davies Ltd (RLD) for RLD to be the main contractor for the Waste Depot Phase 2 on Colomendy Estate, Denbigh.

The Corporate Director: Environment and Economy guided members through the report.  In summary, at their last meeting (under urgent matters) Cabinet had been informed that RLD had gone into administration, and that the Corporate Director: Environment and Economy had made an urgent decision, under 2.9 of the Council’s constitution, to terminate the contract between the Council and RLD for them to act as the main contractor for the Waste Depot Phase 2 on Colomendy Estate, Denbigh.  The constitution allowed for an urgent delegated decision to be made where such a decision could not wait until the first available meeting of Cabinet.

In addition to formally reporting on that urgent delegated decision, the report also set out how the contract award was made, including the delegation of the decision to award the contract to the Chief Executive by Cabinet on 12 April 2022 given the impact of the local elections and timescales for awarding the contract, together with the tender process and evaluation, including the necessary financial checks, and management of risk.  RLD had legitimately ranked first in the tender process and there had been no valid reason to discount it.  Given the medium risk of utilising the company the contract had been monitored more closely and some of the more significant sub-contractors had been paid directly to mitigate the risk.  Reference was also made to the options for taking the project forward, with submission of a report back to Cabinet in May on the preferred option for completing the construction of the project.  In the meantime, work continued on the site with key sub-contractors directly appointed under the management of the Project Team.  All the necessary procurement approvals would be put in place for that work.

Cabinet reiterated their sadness that RLD, a local and longstanding business, had gone into administration and thoughts were with the employees and all affected.  During the ensuing debate, Cabinet sought further clarity regarding the time pressures in delivering the project, particularly the impact of any delay to Phase 2 in terms of project roll out and cost implications.  Assurances were also sought regarding the continuation of work on-site in the interim period.

In response to those issues and further questions raised by members, the Corporate Director: Environment and Economy and Project Manager advised that –

·         it would not be possible to roll out the new service until the depot was in place, therefore any delay in completing the depot would result in a delay in rolling out the new service.  It was considered that the depot could still be delivered on schedule with no current plans to delay the roll out

·         any delay in delivering the project would have cost implications both in terms of the depot build itself given the rises in inflation and the operational cost to the service.  The current system also required mixed recycling to be taken to an off-site facility for sorting at an increasing cost to the Council; once the new model was introduced an income would be received from the recycling

·         following termination of the contract with RLD, the Council had directly appointed key sub-contractors to ensure works continued to progress on site in the interim to deliver the programme.  A finance check had been carried out on each of the sub-contractors with all scoring above the minimum threshold applied in the tender process with no cause for concern.  Prompt payments were being made directly to sub-contractors to ensure no issue with cash flow

·         with regard to the contract award to RLD following the medium risk score, it had been acceptable to do so within the procurement processes in place with steps taken to mitigate any risk.  RLD had legitimately won the tender with no sufficient grounds not to award the contract under the procurement procedures.  Not awarding the contract meant the whole process would need to be restarted with a different approach and there remained a time pressure to deliver the project with any delay resulting in financial pressures to maintain the current model and increased construction costs.  All things considered, the decision had been the reasonable and right decision to make at the time

·         the financial impact on the Council as a result of RLD going into administration formed part of the assessment of options being considered for completing the project which was currently being worked on with a view to reporting back to Cabinet in May with a recommended preferred option.

Cabinet noted the complexities with the project and were pleased that work continued to progress in the interim period with the direct appointment of the sub-contractors.  The environmental benefits of the new waste model and new system of separating and recycling were highlighted and supported, and the increasing cost of continuing with the current system was noted.  Cabinet looked forward to receiving the options report for taking the project forward and the necessary procurement approvals required.  The Leader took the opportunity to thank the Corporate Director and Lead Member for all their hard work.

RESOLVED that Cabinet note the urgent delegated decision referred to in paragraph 2.1 of the report.