Princes Parade: Financial mismanagement of Faithful & Gould contract

Updated 6 March @ 07:40am

According to the Council’s procurement guide under Value for Money it states:

Value for money is a balance of quality, price and delivery and does not mean that the contract will necessarily be awarded on the basis of the lowest cost. Chief Officer and Responsible Officer should note the requirement for “active” contract monitoring. It is only by active and on-going participation in contract monitoring that the Council can ensure that contracts continue to represent good value and meet the Council’s requirements. This can help drive through efficiency savings and improvements, and ensure that poor contract performance can be
addressed promptly. [Emphasis ours]

It would appear though there has been little to no “active” monitoring of the Faithful & Gould contract, by the Chief Officer or the responsible officer, as the Council’s published data shows they have been overpaid close to £350,000.

Add this to the “lost £5m“, and the amount of “lost” money grows ever larger.

On the 2 April 2019, Faithful & Gould were awarded a contract for:

Project management and multi-disciplinary services for the design and development of the leisure centre to be located at Princes Parade.

The contract began on 29 April 2019, and was to run for 43 months with no extensions. The awarded value of the contract was £1,132,309, according to the Council’s published data.

On the 17 April 2019, a purchase order (SD00462) was raised for £1,132,309, according to the Council’s purchase order data.

When one does the maths, and adds on 20% for VAT, to the sum above one arrives at £1,358,771. So can somebody please explain to us, how according to the Council’s payment to suppliers data, Faithful & Gould have received £1,706,817, between 9 May 2019 and 22 Dec 2022. This means Faithful & Gould have been paid £348,046, more than the original sum, with VAT.

Of course, as is customary, no explanation has been forthcoming voluntarily from Folkestone & Hythe District Council, regarding this 31% overpayment on this particular contract.

This overpayment is in clear breach of the Council’s contract standing orders and financial procedure rules and its Constitution. As we know the Council have little regard for these matters as is made clear in Report Number AuG/21/22; which states among other things

From 14 suppliers with a current or expired contract, expenditure on only 5 contracts was found to be in line with contract sums, in all other cases expenditure exceeded contract sums.

Payment requests from contractors not being scrutinised resulting in duplicate payments being made to suppliers.

What the £348,046 overpayment to Faithful & Gould shows is, poor internal controls with regards to payments to the Council’s suppliers. These poor internal controls have been highlighted by the internal auditor and the Council in Report Number AuG/21/22

Now the Chief Officer, the statutory officer, the s151 officer, the Chief Financial Officer, Charlotte Spendley is leaving the Council at some point in March 2023. There has been no explanation as to how, this 31% overpayment happened, since she took over the role in Jan 2020. And according to the Council’s CSO, she is one of the people responsible for “active” monitoring of all contracts, not just this one.

A legal challenge under her fiduciary duty owed to the taxpayer might well be the only way to shake the Council into understanding that ALL contracts need to be actively monitored, as it is a requirement of the Contract Standing Orders

We have sought legal advice on this potential breach of duty. The advice which has come back to us put simply, makes it very, very clear there is a fiduciary duty owed by the Council’s Chief Finance Officer (CFO) to the taxpayer. The duty was established in law under Attorney General v De Winton 1906, when the judge determined that the treasurer [that what a CFO is] of a local authority held a fiduciary duty to the local taxpayer. It was strengthened by subsequent acts of parliament but remains at the core of the chief finance officer’s role.

We cannot guarantee we’ll win, or even have sufficient material to get it into court, but we’ll try, because if somebody doesn’t, this failure of “active” monitoring may well mean, we’ll end up with a deficit which is far greater than £16m, if we continue as before.

Nobody needs to see further cuts in our Council services, due to poor financial management, or lack of “active” monitoring by a Chief Finance Officer, or any other responsible officer, during a cost of living crisis.

The inclusion of Faithful & Gould in this blog post is not intended to suggest or imply that they have engaged in illegal or improper conduct.

The Shepway Vox Team

Save Princes Parade