Welsh government pays ‘discretionary’ £13.1m to road contractor 

The Welsh Government has made a “discretionary” payment of £13.1m to an unnamed contractor delivering parts of its Strategic Road Network (SRN) project. 

The payment has been detailed by the Senedd’s Public Accounts and Public Administration Committee in a report published on Monday (15 September), after it challenged the Welsh Government on the payment earlier in the year. 

In a letter sent to the committee in April, civil servant Andrew Goodall, who is permanent secretary at the Welsh Government, admitted that the payment was “discretionary”.

He added there was “no guarantee the contractor would have commenced formal dispute proceedings for amounts that were considered due”. 

However, he said that not settling the claim “would have left the Welsh Government open to the risk of unsettled claims being leveraged by the contractor at a later date,” with the contractor “com[ing] back to seeking to recover their position, over and over”. 

He added that non-payment “would have more than likely seen a delay to the programme” which would have impacted the Welsh Government’s ability to secure funding for the European Regional Development Fund for the roadworks.

Goodall admitted that the three road contracts had standard Welsh Government terms and conditions which included “provisions that allocate risk around general inflation, with most of this risk being borne out by the contractor”. 

However, he said the terms contain “more nuanced” clauses dealing with other specific issues which may impact inflation and prices, such as changes in legislation, conflict, or rules around site operations. 

“Events such as the conflict in Ukraine has seen contractors become laser focused on the risks they hold – [and] they have caused contractors to push back on certain risk positions that have been longstanding,” he explained. 

“Such events have also resulted in contractors looking at every possible opportunity to recover their financial position on projects. The Welsh Government schemes in this case are an example of this.” 

The Welsh Government has not responded to an inquiry about the name of the contractor which received the payment. 

In a written statement on 17 July, it valued the SRN at £20bn as the “most valuable infrastructure asset” in the principality.