Islington Housing Scrutiny Committee: Capital Programming
Recommendations for consideration
· Promotion and facilitation of Tenants & Residents Associations prior to consideration of works in order to facilitate and enhance subsequent involvement of ‘tenants’ in consultation.
· The size of each project and therefore each contract should be smaller.
· Cyclical maintenance to be undertaken block by block with the occasional aggregation of two or more blocks into single projects but never such as to risk infringing the EU procurement thresholds.1
· Projects to be undertaken with the pre-project scoping consultation as now intended as universal practice well before and in addition to statutorily required ‘Section 20’
Consultation
· Irrespective of the size of contract a clause should be written to the effect that there is to be no sub-contractor without the prior approval of the Council’s contract.
Administrator
· The practice of allowing contractors a specific clause prohibiting the photo-copying or otherwise making generally available of the Schedule of Rates to be terminated.
· The Schedule of Rates used for major works projects and responsive repairs to be made available to the public on the internet in the interest of transparency and to pre-empt time absorbing enquiries.
· Contracts to be JCT Contracts of the current edition and as appropriate for the size and nature of each project.2
· Contracts once signed should be made available to the public on the internet. Personal names and signatures should be redacted.
· Frequent and adequate inspection and supervision of the works during construction, incorporating, where possible, involvement of ‘tenant inspectors’.
NB ‘Tenants’ includes both tenants with long leases and those with periodic tenancies.
Islington Leaseholders’ Association
Islington Housing Scrutiny Committee: Capital Programming
1. Contention
Leaseholders contend that the procurement process as currently operated by the London Borough of Islington works against the interests of Leaseholders and by implication against the interest of secure tenants and the electorate of Islington.
The choice of contractor is limited to those that are big enough to tender for the work through the EU procurement process.
The contractors who actually do the work on site are typically not the contractors that have been selected but their sub-contractors.
Once the work on site is embarked upon leaseholders are faced with what amounts to a campaign of attrition and exercise of forensics if they are to ascertain from their bills whether they have been charged correctly against the scale of charges that the contractors have agreed with the Borough and it may be that the degree of secrecy that is being applied by the contractors is being applied following prior collaboration between the contractors in what amounts to a cartel arrangement.
2. Evidence
Attendees to the meeting on 2015 September 07 heard repeated the allegation that the JCT Contracts are “adversarial”. The allegation that the construction industry had become to adversarial has been made repeatedly since the early 1990s and the recommendations of the Latham3 and Egan4 Reports were directed at eliminating the adversarial aspects and the excessive amount of litigation being experienced by promoting ‘partnership’ as an alternative to contractual relationships.
However now that we have the benefit of hindsight we can see that the changes that have been wrought have not delivered us to the promised land. We may not have the litigation that we had previously but this is only because we do not have the benefit of robust contracts under which to seek redress and cannot contemplate the expense of needing to go through the performance of going out to tender again.
What we manifestly do experience is a lack of performance resulting in the need for works of reparation that the client has to pay for without recourse to the contractors who, for their part have been denied the incentive to produce quality work.
“It must never be forgotten that architects who cause their clients to suffer loss through ignorance in administering a contract may be liable for professional negligence.” Should the fashion for partnership provide a defence?
So are the JCT contracts essentially adversarial and were they to blame for the litigation that used to be experienced?
It is the very essence of the JCT contracts that they were devised, and revised over the years, such that it could not be argued in the courts that their terms were unfair or prejudicial to any one of the various parties to any construction project.
To this end The Joint Contracts Tribunal, to give it the name from which ‘JCT’ emanates, following recommendations in the 1994 Latham Report, currently the operational structure comprises 7 members who approve and authorise publications. They were listed by the JCT in 2014 as the British Property Federation, the Contractors Legal Grp Limited, the Local Government Association, the National Specialist Contractors Council, the Royal Institute of British Architects, the Royal Institution of Chartered Surveyors and the Scottish Building Contract
Islington Leaseholders’ Association
Islington Housing Scrutiny Committee: Capital Programming
Committee. In 1998 the JCT became a limited company. Thus all aspects of the construction industry have agreed the terms of the contracts and any contractor would have they work cut out if they were to attempt to argue that the contract is unfair.
We should ask whether the degree of litigation prevalent at the end of the last century had more to do with the economies that were being through reduction in the degree to which work was laboriously specified and inspected during construction.
EU Procurement:
In parallel with the move away from robust contracts we have, perhaps out of some misguided impression that an economy of scale will necessarily be beneficial, been uccoured into undertaking projects of work of such size that EU procurement rules require advertising work in the Official Journal of the European Union (OJEU).
However we see time and time again that whilst those that tender for the work are large companies those that actually do the work on site are comparatively small sub-contractors the choice of which is out of the clients direct control.
It seems that a sub-contractor can be considered large enough to do the work despite not being large enough to tackle the EU procurement process.
The net result is a lack of control for the client who can find themselves with work being carried out by sub-contractors that they would not have chosen to employ and subcontractors who are actually doing the work can not be guaranteed to be rewarded for their efforts by being considered again. Someone is paying the cost of expensive EU tendering for all the projects that the contractors do not win and someone is paying for the administrative cost inherent in the multi-layered nature of the contractor and this can only be the client.
Further as to the sizes of the contract, it should be noted that aggregating works into larger contracts can in some circumstances be readily demonstrated to have been detrimental to the treatment of the buildings. This was the case with the Merryweather Court and Brennand Court, Tremlett Grove contract that was subsequently the subject of a Leasehold Valuation Tribunal. It was upheld that all the roofs were treated the same despite the fact that they had not all been inspected and that some having been protected with insulation and concrete slabs had almost certainly not required replacement.
Transparency:
We are given to understand that the London Borough of Islington has received legal advice to the effect that it does not have to release information on the costing of housing projects. The exact nature of that advice is not known. It is not know what question was asked nor do we know what answer was given.
Was the loaded question asked as to whether it would prove in time that the Borough had to release the information and was the answer given that leaseholders would be unlikely to win a case against the Borough or was some other question asked?
It is recommended that no further contracts be entered into with the clause prohibiting disclosure of the full schedule of rates. It is to be anticipated that the council will be told that the inclusion of such a clause is standard practice. For this reason the Council may have to work with other councils to counter a practice for which there can be no justification once contracts have been signed. What do we call contractors who are conspiring together and how could this fit with the concept of free competition?
Islington Leaseholders’ Association
References:
1 EC Procurement Thresholds
http://www.ojec.com/threshholds.aspx
2 The Joint Contracts Tribunal
3 Latham Report (1994 July):
https://en.wikipedia.org/wiki/Latham_Report
4 Egan Report (1998)
http://constructingexcellence.org.uk/wp-content/uploads/2014/10/rethinking_construction_report.pdf
“Latham’s report: Did it change us?” By Joey Gardiner, Building Product Search (2014 June 27th)
http://www.building.co.uk/lathams-report-did-it-change-us?/5069333.article
Housing Grants, Construction and Regeneration Act 1996 (1996 Chapter 53):
http://www.legislation.gov.uk/ukpga/1996/53/pdfs/ukpga_19960053_en.pdf
Local Democracy, Economic Development and Construction Act 2009:
http://www.legislation.gov.uk/ukpga/2009/20/pdfs/ukpga_20090020_en.pdf