Purpose

To determine and approve sign off of additional expenditure in relation to variations and extensions of time related to the Cliffs Pavilion Refurbishment

Decision

That authority be delegated to the Executive Director (Finance and Resources) to pay the sums of £352,071.00 (excluding VAT) and £228,970.00 (excluding VAT), plus contractual interest of £6,076.84 and £1,844.31, to Auburn Group Limited in respect of Certificates for Payment duly issued by the Contract Administrator in respect of Valuations 24 and 25 for the Cliffs Pavilion Refurbishment Project.

That authority be delegated to the Executive Director (Finance and Resources) to make future payments within the approved project budget or subject to available approved capital funding to Auburn Group Limited in respect of the Cliffs Pavilion Refurbishment Project as duly certified by the Contract Administrator.

That authority be delegated to the Executive Director (Finance and Resources), in consultation with the Director of Law and Governance (Monitoring Officer), to contest any adjudications issued by or on behalf of Auburn Group Limited in respect of claims for any sums not duly certified by the Contract Administrator.

Reasons for the decision

To ensure the Council adheres to the Contract in place with Auburn Group Limited and with the Agreement reached in relation to the Adjudication raised by Auburn Group Limited in respect to the late payment of these sums.

A decision is required as a matter of urgency to ensure the Council meets the agreement put in place with Auburn Group Limited to resolve the Adjudication. Continued non-payment will would lead to the Adjudication recommencing, which would incur additional legal costs and the Council would still be required to pay the agreed Certified Sums.

The Council received funding from the Levelling Up Fund, alongside a funding contribution from the Council and partner funding from the Trafalgar Group (Theatre operator) to undertake major improvement and refurbishment works to the front of house facilities at the Cliffs Pavilion.

The project received Conditional Planning Permission on 20 October 2023 (Ref  23/01216/BC4).

The tender opportunity was advertised through Find a tender and Contracts Finder and the above threshold procurement process was conducted electronically via the Council’s electronic Tender Facility ProContract and in accordance with the Public Contracts Regulations 2015 via Open Procedure.

Auburn Group Limited was appointed as Principal Contractor for the works at a Contract Value of £4,848,539.21 (exc vat). It was known that there would be potential issues arising from foundations built in the 1930a and 1960s, whilst the separation and subsequent reconnection to existing systems and services within the theatre, alongside maintaining full operational use of the auditorium created a significant level of risk for the project. As such, a client-side contingency was maintained commensurate with the project’s risk profile. The level of this contingency is set out in Appendix 1.

The project was affected by early delays relating to the discovery of additional areas of asbestos and, more significantly, issues with the 1960s load bearing slab. As a result, the Contract Administrator awarded Extensions of Time in the duration of 4 weeks (asbestos) and 20 weeks (slab). In addition, a further £150,000 was allocated from the Fire and Compliance Programme to address the full replacement and upgrade of the PAVA (Public Address and Voice Alarm) system.

The Council has currently made payments up to and including the Certificate for Payment issued for Valuation 23, which provided a Gross Valuation of £5,220,874.00 (exc vat). A retention of 3% applies so the Council has paid a total sum to Auburn of £5,064,248.00 (exc vat).

Certificates for Payment have been issued by the Contract Administrator for Valuation 24 and 25 in the sums of £352,071.00 (exc vat) and £228,970.00 (exc vat) respectively. Valuation Nr 25 takes the certified works up to a value of £5,819,886.00. The Certificates have been properly assessed and issued by the Contract Administrator as sums payable under the Contract. These sums were Contractually due for payment on 22 August 2026 and 23 September 2026 respectively with Contractual Interest of £6,076.84 and £1,844.31 payable.

The Contractor has raised an Adjudication in respect to the Council’s late and or non-payment of the sums duly certified by the Contract Administrator in relation to Valuations nr 24 and 25. This Adjudication has been placed ‘on hold’ until 20 October 2026 to enable the Council to complete its approval procedures.

There are still works to be completed and certified, which will increase the sum currently certified. In addition, there are now three main areas of potential Contractual dispute, which are set out in Appendix 1.

Alternative options considered

No other options were considered.