'£13m overcharge' for housing body
The Housing Executive was overcharged by up to £13 million for property maintenance in Northern Ireland, it has been revealed.
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.
The public housing body did not individually check most jobs carried out by four private firms but paid out an estimated figure which did not vary when less work, or more, was required.
Staff levels at the Executive fell when the deals were signed, causing the loss of experienced people.
Only a tenth of projects were inspected, for quality rather than the amount of work done, a review found.
"This created a situation where contractors could take advantage of the situation," it said.
And the Executive failed to act decisively when shortcomings first emerged in 2010.
The report said: "When concerns about potential over-charging were first raised in early 2010, the reaction amongst some managers was one of denial.
"To a limited extent this can be understood because the received wisdom was that the quality of the specification had increased whilst unit costs had reduced, and levels of tenant satisfaction had improved dramatically.
"It could also be that over-charging was accepted, but we have no proof of that."
The Investigation into Planned Maintenance Contracts by consultants Campbell Tickell was issued to the Executive's board at the end of last month and found the value of overcharging to be between £9.5 million and £12.9 million.
The exact figure may never be known because many schemes cannot be remeasured.
The contracts ran from January 2008 to January this year, with some work ongoing.
Four contractors were organised through five contracts for each of the Executive's then administrative areas.
Total expenditure was £172 million.
Problems would arise if a firm began installing a new kitchen and found the tenant had already laid, for example, a tiled floor which they wanted to keep.
The contractor would complete the rest of the work but bill for the standard entire kitchen price, with no remeasurement based on the actual amount of work done.
Some contractors have argued that they lost money in some contracts where extra work was required, but the exact sums owed to the Executive or their private partners is under discussion.
Initial overcharging estimates of up to £18 million were released but revised downwards in this report because the first property sample was unrepresentative.
Problems were exacerbated by a lack of understanding within the Executive and contractors of the fundamental change of culture necessary to make partnership work, the review said.
Other findings noted:
:: Lack of meaningful management information within the Executive to allow for effective monitoring;
:: Distrust and antagonism between different elements of the Executive;
:: A cost-saving programme caused the departure of skilled and experienced staff needed to make the contracts work;
:: Incomplete information was passed to the board and audit committee of the Executive, meaning they could not challenge the situation.
While acknowledging improvements, the report called for the resolution of negotiations with contractors about repayments for past over-charging and the creation of less complex management systems for creating future contracts.
Executive chairman Donald Hoodless said: "The Housing Executive's reputation has been damaged because of its handling of contracts.
"We must now turn this situation around to ensure that adequate controls, more robust contracts and systems to monitor contractors' performance are in place so that this cannot happen again.
"The Board has asked that a new department is established to focus solely on maintenance contracts and that a separate task force is set up to deal with the overpayments."
Housing Minister Nelson McCausland said he had been advised by the Executive's chairman that the board, having considered the results of the external independent review at its October meeting, has accepted the findings which estimate the sum of overcharging is in the region of £9 million to £13 million.
"While this remains a substantial amount of taxpayers' money, I am somewhat relieved the level is slightly reduced," he said.
"I have also been pleased to learn from the chairman that contractors have already agreed to repay any overpayments. The next step is to quantify the agreed amount."
The chairman has created a separate specialist management team to deal with this issue and conclude the existing planned maintenance contracts negotiations, allowing the new programmes to proceed.
Mr McCausland added: "It is clear there are significant issues to be addressed in relation to the Housing Executive's management of contracts and I welcome the chairman's decisive action to establish a dedicated team to deal with these issues and also his proposals moving forward to create a new department focusing solely on maintenance contracts management.
"I have assured the chairman that he and the board have my full support to deal with this situation and to take forward the wide-ranging programme of change and transformation which is required. I already meet regularly with the chairman and will continue to keep this item on the agenda."