New questions over Norwich contract with Connaught

Fresh questions have been raised about the controversial �17.4m contract between Norwich City Council and stricken firm Connaught after it emerged a key part of the deal was to safeguard the jobs of workers.

City Hall has long come under fire for the tie-up which was beset with teething problems and was widely regarded as 'too good to be true' because it was at least �5m lower than bids put in by other firms.

Now a city council probe looking at how lessons could be learned from the tendering process has revealed how the firm was expecting to make a loss in the first year by keeping staff on, because it was actually expecting to gain an additional �7.6m of work further down the line.

The authority insists it followed the right processes in securing the deal and it was only the collapse of Connaught at a national level which derailed the contract.

And in assessing the deal, the council were also aware of six other loss making contracts, whose value ranged from �230,000 to �20m which had been successfully delivered.

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Other bidders were looking to make job cuts at an earlier part of the proposed five-year contract.

Yet such were the risks involved that Connaught officials told the council's head of procurement that it had to seek boardroom clearance before pressing ahead.

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The decision is sure to raise questions about the balance struck between getting a good deal for residents and protecting the jobs of workers.

The investigation, which was looking at the 'due diligence' processes followed is proposing a series of changes to the way the city council tenders its contracts including a general framework covering due diligence points instead of the existing evaluation processes followed.

But Lib Dem councillor David Fairbairn said the revelations were further proof of why a public inquiry was needed into the saga.

He said: 'As I understand it they bid �17.4m, the idea of that low bid was that we would save money, and we accepted that bid. It now appears from this that we were going to give them more work, once they got the contract going, so they could make �25m. I am just incredulous if that appears to be what happens.'

But Alan Waters, cabinet member for resources, performance and shared services, told the meeting the deal was a 'positive story' which secured jobs while also getting a good deal for residents.

'One of the things we didn't want to do was to have a shed load of people made redundant,' Mr Waters said. 'The procurement process was rigorously tested to make sure it added up,'

Around 300 workers lost their jobs after Connaught went into administration last September, while dozens of local companies were left out of pocket.

A meeting of the council's scrutiny committee heard how Connaught stated they could carry out repairs and maintenance of the city's council housing stock for �17.4m and avoid laying staff off in the first 12 months.

But they also warned that if the extra work was not forthcoming they would not be able to afford making people redundant.

However, Connaught believed the deal would come good in later years because it knew that City Hall actually had �25m set aside to spend on housing repairs and maintenance and it was also expecting to get that work, despite the fact that no details were specified in the contract.

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