Lawyers predict flood of claims after government abandons 719 projects

More than 拢100m has been wasted in bidding costs on scrapped schools projects, it has been estimated.

Stephen Ratcliffe, chief executive of the UK Contractors Group, said he believed 鈥渨ell in excess of 拢100m鈥� had been spent by consortiums bidding on the 719 school schemes cancelled this week by the government.

Education secretary Michael Gove announced 拢7.5bn of cuts to projects approved by the last government on Monday, at the same time abandoning future waves of the 拢55bn 好色先生TV Schools for the Future programme.

A total of 14 schemes at close of dialogue stage - either preferred bidder or just before - hang in the balance, as do 123 academy projects. Further cuts in construction spending were also made or threatened this week in housing, rail and defence.

The scale of wasted bid costs emerged as lawyers predicted that construction firms would attempt to recoup the costs from the government to try to help mitigate the huge financial hit they will take from lost work.

Rupert Choat, partner in law firm Cameron McKenna, said: 鈥淎 lot of people have invested good money in the bidding process, and I鈥檇 be surprised if there weren鈥檛 a number of disputes.鈥� John Hart, infrastructure lawyer at Pinsent Masons, added: 鈥淭he halt of the programme has created a mire of legal and contractual uncertainties.鈥�

Choat said companies that had reached preferred bidder stage would be most likely to claim. There is no duty on procuring authorities to pay bid costs, he said, but there were still a 鈥渞ange of legal routes鈥� that bidders could use to make a case for costs to be refunded.

Ratcliffe said: 鈥淐learly there鈥檚 a bill to pick up here, which would normally have been picked up by the future work. Inevitably companies will be talking to their lawyers.鈥�

Choat said the government might be storing up trouble for future PFI deals if it took a hard-line stance against refunding bid costs. 鈥淚f it doesn鈥檛 look favourably on bid costs, it may be hard to attract the quality and number of bidders it wants for PFI deals in future,鈥� he said.

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