A special meeting is to be held by Powys County Council to review its procurement procedures following the collapse of a construction company building a multi-million social housing development in Newtown.
The meeting of the Audit Committee will be held on Wednesday.
It will also consider how another company, Dawnus which was constructing a new primary school in Welshpool, also went into administration after being awarded a contract by the county council.
It has emerged that the council did not have a “tracker” on Dawnus through Companies House that might have raised some questions.
A report to the committee on Jistcourt, states: "The estimated delay to the project is approximately six months to appoint a principal contractor and a further three months mobilisation for the contractor to commence on site.
"Questions have been raised around the procurement process, which for the Bowling Green site in Newtown involved an assessment of the contractor's experience, and suitability.
"This assessment included a requirement to demonstrate Constructionline Level 2 Silver registration, which incorporates a contractors financial ability and established track record for successfully delivering contracts to the anticipated value of the contract being awarded."
"In addition to this, and prior to award of the contract, an assessment of Jistcourt’s finances was undertaken by the Council as final due diligence.
"Due to the contractual requirement for the principal contractor to put in a performance bond of 10% of the value of the total contracted works, and their failure to do so, the Council has made no payments to Jistcourt South Wales Ltd on this scheme."
It added: "The expenditure figures that have been quoted (£695,000) are the costs incurred to get to this stage of the development process, and are not payments made to Jistcourt.
"It has been confirmed by Welsh Government that the Innovative Housing Grant awarded to this scheme is secure and not at risk.
"The Council continually reviews its processes for financial and tender analysis, particularly since the collapse of Dawnus and Jistcourt.
"Updated financial analysis based on a Pass/Fail basis is now being used. With ongoing concerns affecting the UK construction industry, the Council will continue to monitor the situation and how it assesses the suitability of companies to bid for Council contracts."
Councillors will discuss the report at their meeting.
