Decision details

Bond or Parent Company Guarantee for the Contract to Renovate the External Fabric of Cornish Type Properties

Decision status: Recommendations Approved

Is Key decision?: No

Is subject to call in?: No

Decision:

To not require a bond or parent company guarantee for the contract to renovate the external fabric of the Cornish type properties within CBC’s housing stock. 

 

In accordance with the Constitution, the requirement for a bond or parent company guarantee for contracts over £1m in value can be waived if the Section 151 Officer following consultation with the Council’s Solicitor considers it to be inappropriate.

 

Reasons for the decision:

The purpose of the bond or parent company guarantee purpose is to provide a financial contribution to the expense of bringing in a new contractor if the contractor is in breach or goes bust.

 

This project is for the external renovation of 43 properties (1 GF & 1 FF flat = 1 property) and will be delivered in two phases, the first in 2019 & the second in 2020.  The pre-tender estimate is £2.4m and whilst this exceeds the contract value where a bond or parent company guarantee is required, the value of on-site works will not exceed approx. £250k and as a consequence it is the opinion that a bond or parent company guarantee is inappropriate.  This is because the project will be let under the JCT Intermediate contract which provides similar protection through the ability to employ others to complete the works and to reclaim expenses properly incurred when a contract is terminated due to contractor insolvency.  It is considered that after the first few months, retention money held will be adequate to cover the cost for re-procuring/novating the contract. 

 

With regard to finishing any properties uncomplete at the time of contract termination, it will be possible to use other existing contracts for completing the re-roofing works and for replacing windows and doors.  A general contractor would need to be engaged to finish off the concrete repair element of the works and retention monies are also likely to cover any extra over cost.

 

Alternative options considered:

To require a bond or a parent company guarantee. This normally is for 10% of the contract sum, which for this project would be approx. £240k.  This is considered to be excessive for this project as it is considered retention money and the protection provided by the JCT Intermediate contract will be appropriate.  There is also a cost for bonds and parent company guarantees.

 

Wards Affected: (All Wards);

Other reasons / organisations consulted

Supportive of the decision not to request a bond in this instance.

 

Consultees

One Legal

 

Contact: Paul Jones, Deputy Chief Executive (Section 151 Officer) 01242 264365 Email: [email protected].

Publication date: 10/12/2018

Date of decision: 10/12/2018