Purpose

The purpose of this report is
to seek ratification of the following non-compliant action in
relation to the award of a JCT Intermediate Building Contract
(2016) for a building extension scheme at Towerhill Amateur Boxing
Club (a Youth Investment Fund Grant Scheme) with Sterling Services
(Northern) Ltd:
 

·      
awarding a
contract for the period 25 November 2024 to 17 March 2025 without
seeking appropriate competition, having not sought prior approval
in accordance with Contract Procedure Rule 9.1.3(k).
 
The reason for the
non-compliance was that the council had successfully secured grant
funding in the amount of £3.868m (£3.149m capital and
£0.719m revenue) to enable it to deliver four building
improvement schemes to support the provision of improved and
additional youth engagement.
 
The capital scheme at Tower
Hill Amateur Boxing Club (Shevington Ward) commenced on site in
early May 2024 and was originally anticipated to complete before
Christmas 2024. This was well within the grant funding expenditure
deadline of 31 March 2025. On 25 September 2024 the Council became
aware that the main building contractor, Lyjon Company Ltd, were
experiencing financial difficulties and had submitted a formal
Notice to the Courts to set out their intention to go into
Administration. The Council immediately contacted Lyjon Company Ltd
and they confirmed they had submitted the Notice but their
intention was to secure themselves 10 working days to seek new
investment into the company or to see a buyer.
 
The Courts allowed Lyjon
Company Ltd to continue trading during that period and they had
site operatives on site every day which enabled them to complete
roof works and to progress some of the refurbishment of the
internal areas of the existing building. The Courts subsequently
twice approved the extension of Lyjon Company Ltd’s formal
Notice by a further 10 working days on each occasion whilst they
were progressing discussions with potential investors.
 
Unfortunately, Lyjon Company
Ltd was unable to secure the investment they needed and on 31
October 2024 they formally notified the Council they would cease
trading on 1 November 2024.
 
The grant funder (the
Department for Digital, Culture, Media and Sport) had advised that
no extensions to the funding deadline could be guaranteed at that
time and that any spend after the 31 March 2025 deadline could not
be claimed and would need to be funded by the Council.
 
There was insufficient time to
complete a compliant tender exercise, which would have taken on
average twelve weeks to complete. Due to the exceptional nature of
the circumstances, the Assets Service negotiated with the number
two ranked contractor from the initial tender exercise which
concluded on 21 February 2024.
 
The new contractor Sterling
Services (Northern) Ltd started onsite in advance of a formal
contract award to ensure delivery of the works and the maximisation
of the grant funding available for this scheme.
 

Decision

(i)            
That, in accordance with Contract Procedure Rule 1.7(ii) (Schedule
1), the following non-compliant action in relation to the award of
a JCT Intermediate Building Contract (2016) for a building
extension scheme at Towerhill Amateur Boxing Club (a Youth
Investment Fund Grant Scheme) with Sterling Services (Northern) Ltd
be ratified:
 
·      
Awarding a contract for the period 25 November 2024 to 17 March
2025 without seeking appropriate competition having not sought
prior approval in accordance with Contract Procedure Rule 9.1.3(k);
and
 
(ii)           
That the Procurement Team be permitted to issue the retrospective
contract documentation as appropriate.