MEARS GROUP, TDC AND A SCANDAL IN TDC's HOUSING REPAIRS & MAINTENANCE WORK?

I have looked at Audit matters for some time now and so far we have had the following:

1. TDC's inept management of Ramsgate Harbour through Maritime Services.

2. Contract Procedure Rules (CPRs) being blatantly ignored by TDC Officers.

3. The recent farce and waste of tax payers money concerning TDC's Vehicle Insurance. (vehicles insured when not held and a vehicle held but not insured!)

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The next issue I would like to look at is a 'cover-up' within TDC concerning problems with its Housing Repairs & Maintenance arrangements which involves Mears Group and the 'partnership' that requires the spending of over £1,000,000 per year. The Mears Group has had amazing growth in the past 12 years under Bob Holt and has recently announced a £290 million contract for 10 years with Brighton & Hove Council. To see more about Mears, visit:

http://www.mearsgroup.co.uk/home_1.aspx?id=1:29669

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The story behind what went wrong in Housing Repairs & Maintenance is obscure because of a veil of secrecy drawn over it by TDC. I have had to glean snippets from TDC's own documents to realise that something serious was brought to light.

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It would seem that TDC's audit team, East Kent Audit Partnership (EKAP) reported to Governance & Audit Committee on 27 Sep 2007 that Housing Repairs & Maintenance had a 'reasonable level of assurance'. However on 12 Dec 2007 , EKAP reported to Committtee its 'special investigation' into Housing Repairs & maintenance would need 18 days and not the agreed 10 days. What special investigation?

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We now move to Governance & Audit Committee of 25 Mar 2008. Here EKAP show they have now spent 20 days not 18 on a 'Repairs Special Investigation'. There is no mention about what is going on but this snippet:

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'Councillor Peppiatt raised his concern that there was no mention of contractors such as Mears not performing; Nikki Morris confirmed that this issue was contained in theme 4.'

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At this stage the veil of secrecy and confusion descends! There is a Committtee Meeting shown as taking place on SUNDAY 8th June 2008 with an agenda for 26th June 2008 and for some reason the EKAP quarterly report is not attached or accessible! Then we find out that a 'Special Meeting' of The Governance & Audit Committtee was held on 11th March 2008 that was not even shown on TDC's website as having happened!

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In the Agenda for 26 June 2008, this item is shown with an exclusion notice of public and press:

12.MINUTES OF THE SPECIAL MEETING OF THE GOVERNANCE AND AUDIT COMMITTEE HELD ON 11 MARCH 2008
'To approve the confidential minutes of the Special Governance and Audit Committee meeting held on 11 March 2008, copy attached for members of the committee.'

The minutes of 26 June 2008 also reveal this:

'Councillor Green had concerns that Mears had their contract renewed for a year and the amount of time needed to make alternative arrangements. Sue McGonigal explained that the problem had been dealt with so it was not detrimental to the Council, and that the contract extension was a necessary interim measure.'

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You will need to grasp at this stage, that by June 2008, we have Mears being mentioned as not performing; concerns with Mears' contract being renewed; special secret meetings of The Governance & Audit Committee on 11 March 2008 and possibly on 8 June 2008 and public excluded from the meeting of 26 June 2008. What was going on?

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The Agenda of the Committtee Meeting of 24 Sep 2008 starts to give an insight into what was going on regarding the contract with TDC and Mears acting in 'partnership'. Fuller details are shown at:

http://tdc-mg-dmz.thanet.gov.uk/Data/Governance%20and%20Audit%20Committee/20080924/Agenda/$Agenda%20Enclosure%207.doc.pdf

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This is the Business Objective for Housing Repairs & Maintenance:
'To ensure that the housing stock is well maintained, providing a good level of
service to Council tenants, in partnership with the Council’s contractors and in
accordance with Council policy and procedures.'

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EKAP in its report to Committtee covered its work from 1st June-31st Jul 2008 and it was still not happy with things:

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'The follow-up audit review concludes that management can place no
assurance on the controls in place.' (This is a NIL assurance rating!)

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'The previous audit report regarding the alleged fraudulent activities by “Rogue
Traders” employed by the Contractor have been followed up by the EKAP to
ensure that the highlighted major key control failings ........."

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'There remains however significant concern over the level of supervision by
the Council for responsive repairs.'

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"Whilst some recommendations have been implemented and improvements
have been made ......... this has not prevented SOME OVERCHARGING FROM RECURRING. (my capitals). Indeed, it is disappointing to find that whilst the contractor appears to have made efforts to ensure the problems previously experienced are eliminated, the Council’s response is complacent that it will not happen again. In particular, there is a lack of vigorous follow ups, inadequate on site visual post inspections of all categories of responsive works and THE COUNCIL ARE CURRENTLY UNABLE TO PROVIDE ADEQUATE ASSURANCE THAT THE WORKS BEING CHARGED FOR HAVE ACTUALLY BEEN CARRIED OUT. (my capitals) It is therefore suggested that a further follow up of this review be undertaken in six month’s time."

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"The CREDIT NOTE from Mears should be applied to the next available payment and
the correct approach regarding how this is recorded, allocated and accounted for in
the correct year...".

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"It is vital to monitor the contractor; the only control that the Council has to ensure it is
not being overcharged is to physically inspect the works and compare the scheduled items listed on the ticket to the works."

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Readers are now hopefully getting a picture about what went on in Housing Repairs & Maintenance! This is what TDC's Financial Services Manager told the Councillor Committee members on 24 Sep 2008:

"Sue McGonigal informed members of the Governance and Audit Committee that the housing repairs and maintenance post inspection controls were much improved. She added that the follow up audit would be done by the council and not by Mears and that the original audit cost had also been met by Mears."

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So 'rogue traders'; overcharging; lack of supervision and control by TDC; repayments and audit costs being met by Mears? One can picture the situation with just a little imagination. A person was taken out of post but was there a criminal investigation and were Kent Police called in to investigate? If so, what was the outcome? Or has the whole business been covered up even more?

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It seems to be a classic case of TDC not checking properly and paying out tax-payers money for jobs not done. Incompetent management by TDC looks as if it led to fraud ! How big was the loss to the tax-payer? Who has been sacked? Why was Mears' contract extended? Has anyone been held to account?

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On 9 Dec 2008, The Governance & Audit Committtee had a NIL assurance still for Housing Repairs & Maintenance from EKAP despite Sue McGonigals assurances to our Cllrs in September!

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At its meeting on 17th March this year, with yet another NIL assurance for Housing Repairs & Maintenance the Committtee was requested by EKAP to authorise yet more time for investigations as follows:

Housing Repairs Follow up: - 15 days.

Mears Continuing Investigation: - 7 days. The reasons cited were as follows:

' High risk due to whistle blowing, risk of fraud and low assurance of previous audit.'

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The latest report by EKAP to committee , was about 6 weeks ago, on 25 June 2009. EKAP outlined that the simple measures of checking invoiced work before paying had now been implemented with other checks made and at last, Housing Repairs & Maintenance now has REASONABLE assurance! There were no details of the results of their 22 days follow-up or investigation!

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Well, it's nice to know that after 18 months of Audit work by EKAP, the tax-payer can have some confidence that TDC is not wasting our money anymore on Housing Repairs & Maintenance. What I would dearly love to know is how much money does EKAP estimate was lost and for how long was this awful situation running? How much was Mear's Credit note for and was this a repayment for over-charging?

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Well I hope we can look to a better future now that Canterbury Council is going to be involved. Last Friday was the closing date for tenders to be placed for a joint TDC and Canterbury Responsive reapairs contract worth £2,700,000 per year to start on 1st Jan 2010, with TDC's share being £1,100,000. In light of past experience, will Mears be considered?