Belfast Telegraph

Tuesday 30 September 2014

Settlement for overpaid contractors

Nelson McCausland branded the original Housing Executive overpayment figure of 18 million pounds as a scandal

Three contractors accused of receiving millions of pounds in overpayments from the Housing Executive have settled the case by agreeing to pay back under £700,000.

Serious failings in the planning, preparation and implementation of contracts for planned renovations like fitting new kitchens or double glazing were identified in an independent report.

However, the final settlement is much lower than the £18 million figure which was branded a scandal by Social Development Minister Nelson McCausland following initial investigations.

A joint statement from the Housing Executive and the contractors involved in negotiations said: "Three of the contractors have agreed to pay a sum of £670,000 to the Housing Executive for the overpayments."

The deal between the public housing body and Bann Ltd, Mascott Contruction and PK Murphy Construction took into account overpayments and the firms' entitlement to claim for work not previously charged for. A fourth contractor, Dixons, was not overpaid.

Agreement was reached following the involvement of independent experts and legal advisers.

The statement added: "The Housing Executive and contractors will now work constructively together to deliver new programmes of improvement work for the benefit of tenants across Northern Ireland."

Executive chairman Donald Hoodless said he was confident there would be no repetition of the failings as new rigorous procedures have been put in place to ensure value for money was achieved for maintenance work.

The organisation became aware of concerns about suspected overpayments in 2010 and in 2011 its governing board directed a full investigation.

In May last year the Executive was advised that investigations had revealed an estimated overpayment of £18 million for planned maintenance, a situation Mr McCausland dubbed a scandal - warning heads would have rolled had the sum been overpaid by a private company.

Further work was done to refine the estimate and recognise contractors' entitlements.

Mr Hoodless said: "As a result of this negotiated settlement three of the four contractors have accepted that there were significant overpayments on a number of projects completed during the early years of the contracts but not to the level initially estimated by the Housing Executive."

The total of overpayments which could not be substantiated by the Executive was worth around £12 million. That was set against an estimated £10 million bill for work which contractors did not initially claim for but which was included following the negotiations.

That leaves the Executive with a shortfall of around £2 million between the total of payments which cannot be properly substantiated and the estimate of contractors' real entitlement. The £2 million has been written off.

Mr Hoodless added: "We are disappointed and apologise that these events over recent years have been a major distraction to maintaining and improving the 88,000 homes which we manage.

"Our new management team is now working hard with all our 3,500 staff to get back to delivering top quality services to all of our customers."

Ulster Unionist MLA Michael Copeland said: "The four contractors which were so publicly named by the minister last summer have shown great faith in seeking to resolve this matter.

"Not only did their businesses face significant financial pressure, but they also had to endure the doubts on their professional reputation."

Mr McCausland said historic contract management failings within the Housing Executive were well documented and have also been a focus of the Audit Office and the Public Accounts Committee.

"It is quite clear that the NIHE oversaw a much too laissez faire approach to contract management based on swings and roundabouts," he said.

"These arrangements were totally inadequate and were not sufficient to protect the interests of tenants, the public purse, nor indeed those of the contractors."

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