Lancashire County Council partner 'added £1.4m to tender deal'
- 8 November 2013
- From the section Lancashire
A company brought in to save Lancashire County Council money actually intended to charge an extra £1.4m on a deal it negotiated, the council claims.
One Connect Ltd added a 20% mark-up to the tender price, a report by council (LCC) treasurer Gill Kilpatrick said.
Labour's deputy council leader David Borrow, said the firm was "not acting in LCC's interests".
But, Tory group leader Geoff Driver, leader when the contract was developed, said the report had "no evidence".
Tunstall Healthcare Ltd was selected for the contract to provide homecare alarm systems for the elderly and people with disabilities, in April.
'Lack of transparency'
But, it did not sign the deal and instead raised concerns with the council about the way the contract had been put together.
Following a review, councillors put the deal on hold and the authority's in-house provider continued to provide the services.
The report said there was "little evidence the deal offered best value for money".
It concluded One Connect had marked up costs on Tunstall's tendered price by an average of 20%.
It also stated there was a lack of transparency in procurement processes operated by One Connect and a failure by the firm to secure best deal financially for LCC.
"It is of concern that, on the face of it, One Connect had used this position to secure financial benefits for itself... at the expense of LCC," the report said.
"This is evident from the mark-up of prices tendered by Tunstall and One Connect's inflexibility to address material concerns raised by Tunstall over the contracting process."
Mr Borrow said the report showed One Connect was not working "in the interest" of the council.
"It appears One Connect Ltd... have been having a mark-up of about 20% from all the products from Tunstall Healthcare," he said.
"So [the council] would have been paying an extra £1.4m had the contract gone ahead."
A council spokesman confirmed Tunstall had been "in no way at fault".
'Incomplete and biased'
The contract was revoked on 15 August with immediate effect by current LCC leader Labour councillor Jennifer Mein.
However, Mr Driver said: "I've read the report and it is incomplete and biased and seeks to sensationalise rather than to explain.
"There is absolutely no supporting evidence in the report to substantiate the figures or the claims than it makes."
Mr Borrow said the county council was holding urgent talks with One Connect to ensure LCC will be "getting the best deal possible".
The authority is already looking into the tendering process of a £5m fleet contract and the authorisation of a £500,000 payment to David McElhinney who ran One Connect Ltd until he resigned in August.
Police are also probing allegations of financial irregularities at LCC.