Norwich councillors feared Connaught had bid too low on a 拢17.5m housing maintenance contract and have warned that a replacement will be 鈥渇ar more expensive鈥�

Connaught undercut rival Morrison by 拢5.5m to win the contract last December, but was prevented from taking it after Morrison persuaded a court that the bid was 鈥渁bnormally low鈥�.

The council later settled with Morrison, and the contract began in April. It has now emerged that some councillors agreed with Morrison鈥檚 assessment.

Judith Lubbock, the acting leader of the Liberal Democrat group, raised questions at the time about how the company could provide services on such a low budget.

Because the bid was so low, a new one will cost us a lot of money - plus retendering

Andrew Wiltshire, councillor

鈥淚t was raised that we were unhappy about going for such a low offer,鈥� she said.

Niki George, a Conservative councillor on the working party, said he, too, was 鈥渨orried about Connaught鈥檚 very low bid鈥�.

Council officers, who worked with consultant Tribal Helm to evaluate the bids, said Connaught told them it could deliver at the price because personal computer systems would make repair work more efficient.

鈥淭hey were going to use the latest hand-held technology so they wouldn鈥檛 have to go back to a depot to get parts,鈥� Lubbock said.

Commenting on this, a social housing boss said: 鈥淚f true that is laughable - and a worrying insight into the procurement process in Norwich.鈥�

Andrew Wiltshire, another Tory councillor, said social housing maintenance for Norwich would be 鈥渇ar more expensive鈥� now Connaught had collapsed.

鈥淏ecause the bid was so low, a new one will cost us a lot of money. We鈥檒l have retendering costs as well,鈥� he said.

Morrison has said it will take on some Connaught contracts and staff, but said it was too early to say how many.

Connaught share price

 

Rise and fall of Devon firm

A former employee of Connaught talks about the firm鈥檚 rise and fall

Bob Holt, the chairman of Mears, was a rare non-believer in the Topsy that was Connaught - and he may have had the last laugh.

The firm was founded by Mark Tincknell, who was charming in a chubby, crumpled sort of way, with a refreshing self-deprecatory manner. He also had vision, and it was that that took a tiny concrete repair company from Sidmouth in Devon to flotation on the alternative investment market in 1998, and finally to the FTSE 250. This is not an everyday occurrence. But then neither is a FTSE 250 company going bust.

Mark was good at seeing opportunities others didn鈥檛; not only in business but in racehorses and art as well. He also realised he needed help as Connaught grew and grew. Mark hired, as he believed, the best. Mark Davies, formerly of lock maker Chubb, was to run the business and Stephen Hill from Serco was the finance director. There was a hattrick of non-executive directors, and PriceWaterhouse Coopers was the auditor.

So what went wrong? It is reported that the prime issue was the accounting treatment for long-term contracts. The rules allow companies some scope to spread upfront costs over a number of years if the investment gives them enduring benefit - which is fine if true.

In late June, the company said it had 鈥渋dentified 31 contracts within its social housing division where a proportion of the value relating to capital expenditure had been deferred. This will lower revenue by about 拢80m 鈥︹��

Clearly there was not, or at least not as much, benefit as was expected. In April Tincknell had said he looked forward to the future with 鈥渆xcitement and confidence鈥�. Six months later it was over and the government could be contemplating action against the entire board for negligence 鈥�

 

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