In two reports, the HQN Report (not yet seen by Cllrs) commissioned by East Kent Housing (EKH); and the Pennington Report commissioned by the four Councils, evidence of EKH blaming the four Councils and the Councils blaming EKH is clear and evident.
The HQN report solely focuses on the time line of the Gas contract with P & R going pear shaped. The Pennington report focuses on the failure of the gas contract along with wider non-compliance issues.
P & R overcharged the four Councils £1.5 million. This is broken down into three amounts £530k, £353k and £596k.
It is the first amount £530,000 this blog post focuses on.
In early Dec 2017, East Kent Housing (EKH) management became aware of issues around potential overcharging on the £27 Million P & R contract Gas Contract. At this time EKH staff were not undertaking any pre or post inspections of boiler installations and legionella testing. This continued until the 3rd Oct 2018.
In Jan/Feb 2018, EKH staff looked into overcharging issues. Evidence of overcharging emerged on the P & R contract.
On March 12th 2018, Mark Anderson Director of Property Services at EKH, at the time, at the EKH board meeting did not inform board members of any overcharging, gas safety or fire safety issues, even though he was aware of them. He put everything down to the weather. He never mentioned to the board or the Councils the fact P & R were having difficulty in retaining staff.
In June 2018 we posted Part 2: P & R Installation Company Ltd we confirmed overcharging had taken place along with potential non-compliance around gas safety certificates & fire safety. Our sources informed us that P & R were having issues with retaining staff. Both EKH sources and FHDC sources informed us data was withheld from the Councils and the Board for close to 12 weeks. Why weren’t EKH management more candid with the Councils and the EKH board?
On the 3rd Oct 2018 a report delivered to all four Councils by East Kent Audit Partnership on the Contract Management of Planned Management Contracts stated the the overcharging may be intentional rather than error. No pre or post inspections on P & R boiler installations were undertaken by EKH staff during 2017/18, this continued to be the case until Oct 2018.
The report also “established the Council’s payment processes (invoices being submitted by the contractor (P & R) direct to the councils finance departments) did not reflect the process set out in the contracts (with each of the councils). This resulted in contractor (P & R) submitting invoices which are not valid under the contract”; and being paid
In Dec 2018, Folkestone & Hythe take the steps to place a tender into the public domain to procure a new gas maintenance & installation company.
In Dec/Jan 2018/19, P & R representatives sat down with the Chief Executive Deborah Josephine Upton & Director of Property Services Mark Anderson of EKH. At this meeting P & R offered to repay £530,000 and wanted a 10 to 15% uplift on the contract as they were making no money on the contract. If the Councils did not accept this offer they’d walk away. The Councils were informed of this by the end of Jan 19.
At the meeting with P & R the following amounts were proposed to be repaid to each council for the overcharging.
CCC – £128,457
FHDC – £111,569
TDC – £105,000
In March 2019, the number of non compliant Gas Safety Certificates begins to rise as evidenced in the table below. This shows that performance deteriorated extremely quickly from March 2019
onwards, but was quickly recovered by July 2019 after considerable resources were thrown at the problem.
Between Jan and March 2019, P&R started to experience internal staff recruitment and retention issues which appears to be one of the underlying reasons for the rapid decline in Gas Safety Certificate non- compliance.
Late March 2019: emails both internally and between EKH and the Councils, make it clear that EKH had identified the gas servicing situation had deteriorated to such an extent that alternative measures may be needed. P&R had not given notice to terminate the contract with the Councils at this time.
April 2019: P&R gave notice to terminate the contract on 2 April 2019
4 April 2019: Three of the four councils met with EKH management (DDC was not present) to discuss engaging interim contractors to sort out the rising non compliance with gas safety certificates. There was a reluctance from the councils to engage interim contractors whilst the councils were still formally in contract with P&R during the notice period. This was because the Councils were afraid that P & R would bring a potential legal action against them for loss of earnings, if the Councils engaged new contractors.
April 12 we report that P & R had terminated their contract.
May 2019: Between the 10th and 14th of May, the formal approval from the four councils was given to engage interim suppliers to resolve the rising number of non-compliant households without valid Gas Safety Certificates. The four councils required five weeks to approve the use of interim suppliers. However, as late as 22 May, at a meeting at EKH’s head office, it was made clear that a number of councils wanted to continue following the default process within the P & R contract.
EKH had by the time of the meeting on the 22nd May developed a Gas Safety Certificate recovery plan in advance of the meeting. Following this meeting three interim contractors were engaged on 23 May 2019. This engagement of interim contractors enabled EKH to recover the outstanding landlords gas safety certificate position within six weeks.
EKH wanted to engage alternative contractors early to ensure gas safety certification compliance was in place and the landlords were not at risk of sanction by the Regulator of Social Housing. They wanted to recover the growing number of outstanding Gas Safety Certificates as quickly as possible. However, the councils were anxious to ensure that contractual procedures were followed before engaging alternative contractors. This is in despite of the risk of continued outstanding non-compliance of Gas Safety Certificates. The Councils feared potential of legal action for loss of earnings by P & R.
The number of outstanding gas safety certificates at the end of May 2019 was 457.
By the end of July 2019 there were no outstanding gas safety certificates and 100% compliance was reported.
Sept 2019: In a report to DDC’s cabinet on 2nd Sept it it is clear there have been “Problems… with a number of contracts including those for external decorations and gas maintenance and installations (P & R). These problems have included a failure to detect and challenge poor performance by contractors, a failure to challenge overcharging by contractors, and a failure to detect and challenge a pattern of charging that appears to be a systemic fraud.”
According to the contract each Council signed with P & R, Clause 3.1.1 makes it clear that if the contractor – P & R – fails to meet the Key Performance Indicator of 100% Gas Safety Compliance and has not proposed adequate alternative measures, the employer (the Councils) may award work to other contractors. It is difficult to fully understand the Councils concerns; and delay, to engage interim contractors, as the contract is unequivocal on this matter. This is why EKH engaged alternative contractors without giving the seven day break clause notice, as per the contract, as it was in their view permissible, given the terms of the contract.
It would appear from all the evidence available, EKH’s perspective was that non-compliance with Gas Safety Certificates posed such a significant risk, one which the Councils could not sensibly ignore, having regard to the nature and gravity of the feared harm to their legal obligations to their tenants health and safety, allowed them to engage Clause 3.1.1.
The five week delay (April 4th to May 14th 2019) by the Councils, to agree to engage interim contractors contributed to the deterioration in the numbers of outstanding gas safety certificates. Furthermore, had these delays not occurred mobilisation of the interim contractors would have taken place at an earlier stage and recovery to the current position of effectively 100% compliance would have been established sooner.
So the Councils in general wanted to adopt a process driven by their understanding of the contract and how to minimise/negate any legal claims against them by P & R. EKH wanted to adopt a process driven by ensuring compliance and gas safety. The lack of a shared understanding by the Councils and EKH of what needed to be done slowed things down. There in part lies the dilemma
The HQN Report was commissioned by East Kent Housing. It reports on EKH’s response to the failure of the P&R contract. The report gives a record of the timeline of events leading up to the P & R contract termination only. EKH set out their analysis of the reasons for decisions focusing on the four Councils delay of five weeks.
The Council’s Pennington Report, commissioned by them, reports on all the known issues, Asbestos Safety; Legionella; Fire Safety; Gas Safety; Electrical Safety; Role of the Councils;and Staff Matters among other matters.
Both reports spin their narrative and perspectives around the non-compliance of Gas Safety Certificates issues of April, May and June of this year.
The Pennington Report states at Para 4.2
The relationship between the parties is dysfunctional. Trust is in short supply.
As a ‘four’ [The Councils] they do not speak with one voice in relation to EKH. The presence of four separate ‘council client officers’ makes this more of an issue. Each brings their unique, individual perspective as to their role and undoubtedly each interacts with and asks for different things from EKH.
The data held by EKH is not in a state of health that would reflect a robust, mature organisation that has a solid grasp of what is needed to deliver services. We believe this to be a longstanding issue and would appear, at least in some instances, to track back to the quality of data originally handed over by the councils at the inception of EKH.
Records… discarded during the process of reorganisation, (in early mid 2017 we understand), … such as surveys cannot be found (electrical safety inspections) or are of such limited usefulness as to be unreliable (asbestos communal management surveys)
Both reports set out to deceive and spin a web of blame by presenting evidence supporting their claims. Both reports are bias. Both EKH and the four councils are responsible for this fiasco. Rather than working harmoniously for the benefit of tenants Health & Safety, they were working acrimoniously, as such, they placed lives at risk unnecessarily. The Cover Your Arse mentality is evident throughout both reports.
We cannot forget all three sums owed to the Councils £530,000 £356,000 and the £596,0000, as they were not fully recovered prior to the termination of the contract by P & R on the 2nd April 2019.
Finally, on Dec 12th 2019 all four councils Chief Execs took over the EKH Board. Since Friday Dec 13th 2019, Deborah Josephine Upton (pictured) has not been seen at East Kent Housing headquarters. She could be on holiday, or she could have been given her P45 by the board. We hope if she has departed she was NOT given a payout, nor a non disclosure agreement. People need to know the four councils who gave Deborah the top job at EKH, allowed her and themselves to reach their levels of respective incompetence, which placed tenants lives at significant risk over a substantial amount of time.
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