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Council contract not confirmed when work started on scheme

Created on 08/08/2019 @ 12:29
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A construction company on the edge of collapse was allowed to start work on the £3.5 million Powys County Council social housing scheme before the contract had been confirmed, it has emerged.

The speed with which Jistcourt had been allowed to start preparing the former Bowling Green site in the centre of Newtown was to make sure PCC qualified for the £2.2 million Innovative Housing Grant from the Welsh Government.

It has been confirmed that this funding is secure and can be used for the development in future when a new contractor is appointed.

The county council’s Audit Committee probed the demise of Jistcourt, the company that was supposed to build 26 flats in the middle of Newtown.
It went into administration at the end of June.

The Bowling Green scheme in Newtown was much trumpeted by PCC as the first social housing scheme they would build in over 30 years.

It would contribute to its ambition of building 250 homes by 2023.

The day after the turf cutting ceremony in May, attended Council leader Cllr Rosemarie Harris, Jistcourt Chairman Rob Norman and Cllr Joy Jones, PCC found out that the company had been refused a performance bond by a bank for exceeding its limit.

A performance bond is an insurance against non-completion of a contract.
Interim commercial services lead, Vincent Hanly, said: “As far as the performance bond is concerned, we did try and take one out.

“We hadn’t entered into a contract with Jistcourt.

“They were allowed to start on site as that was really critical to us in terms of the grant we were getting from the Welsh Government, we have not paid a penny.

“We chased and chased and then we heard the news that Jistcourt had become insolvent.

“We were at the point where we were not taking it any further until we had that performance bond in place.

“Sometimes companies are unable to get a bond until they have a signed contract.”

Audit committee vice chairman and independent member, John Brautigam, had investigated Jistcourt and said that the firm had more liabilities than assets.

Mr Brautigam said that although the construction firm was solvent, the parent company would not have been able to pay £1.1 million owed to its construction firm wing.

He believed this should have been picked up and would have “changed the spreadsheet” putting “a huge question mark on the contract."

Treasury manager Ann Owen said that they were only given the accounts for Jistcourt South Wales Ltd and not the group accounts for the year ending June 30, 2019.

“There were some potential issues which is why a performance bond was suggested,” said Ms Owen.

Mr Brautigam added: “When looking at individual companies we  need to go right the way back to all the information at Companies House.

“There’s a wealth of detail in there about directors histories, shareholdings and structure as well as debts they have taken on. It’s a necessary part of the process.”

Cllr Tim van Rees added:  “No bond no contract it’s as simple as that.”

The Audit Committee recommended several changes be implemented to the way procurement contracts are dealt with by PCC.

Photo: The Bowling Green site at Back Lane, Newtown

By Elgan Hearn, Local Democracy Reporting Service


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