A Surrey council missed several “red flags” when it appointed a contractor with which it had already massively overspent, according to a new report.
Warnings from a whistleblower and auditors “should have been visible” to Guildford Council’s senior management before it later appointed the contractor to a separate contract, law firm Heminsley concluded last month.
Separately, police are investigating the issues for “potential criminal activity”, the report for the council added.
The council appointed an undisclosed housing maintenance contractor to assess electrical systems in October 2021 on a £2.4m contract.
Less than a year later, the council had spent £9m within that contract. It also paid the firm £6m for work on kitchens and bathrooms, a figure “which broadly matches the…overspend”, which it had never officially contracted out, the report concluded.
Heminsley wrote: “We have not seen any evidence to suggest that there was any meaningful (or effective) monitoring of contract spend, by senior management or indeed anyone, on [this] contract from 6 October 2021 onwards.”
Four council departments then signed off a second contract with the same contractor in June 2023. However, an email to the council’s whistleblowing email address in 2022 – referenced in the Heminsley report – alleged the contractor had fraudulently duplicated invoices and performed unnecessary works.
Heminsley’s report said that an investigation by the council did not find any evidence of fraudulent behaviour.
A report into the allegations was seen by the corporate management board in February 2023, although one of its findings – that the average cost of voids in Guildford was £32,000 compared to £4,000 in neighbouring Waverley – was removed from the final version.
Heminsley wrote it did not consider that there has been “an effective and material follow up to the concerns on spend and the contractor” before the second contract was awarded.
Furthermore, a procurement specialist had by this time raised the £6.6m overspend on the original contract with another procurement specialist in an email. Neither had escalated the issue.
In January 2023, audit firm KPMG submitted a draft audit identifying a “need for more stringent tracking and monitoring” of procurement activity within the council, flagging a 150 per cent overspend on contracts on a separate project, the Weyside Urban Village.
Heminsley’s report also revealed long-standing concerns about the council’s primary contact with the contractor, Officer B.
Officer B led procurement for both contracts. Officer B had pushed for a special urgency notice both times, which Heminsley wrote was either “due to a misunderstanding of, or because they were seeking to expedite, the process”.
The whistleblower report also raised concerns that he had appointed one of their children, Officer D, to the procurement team which signed off the second contract.
Five council contractors – including Officers B and D – were fired, and two technical services staff were suspended in September 2023 for their role in the events.
The police investigation is ongoing.
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Joshua Stein