Council Tax Payers warned of potential extra £60 million bill if Cambs lose guided bus arguments
PUBLISHED: 15:43 29 October 2010
COUNCIL tax payers in Cambridgeshire were warned today they could be left nursing a whopping £60 million bill if they lose all legal arguments against guided bus contractor BAM Nuttall.
It follows news that BAM Nuttall has told the county council their “potential final account” for building the guided bus between Cambridge and St Ives could be as much as £151million.
The county council has already deducted millions of pounds from the contractor but may still have to claim back around £40 million through the courts as by the end of the contract the contractor will have been paid substantially more than the £87 million they are due to receive.
The shock figures were disclosed by county councillor Roy Pegram, Cabinet member for infrastructure and strategic planning.
Cllr Pegram says £60 million is the amount tax payers would have to pay “should the council lose all of its arguments on this case.
“It should be emphasised, however, that is a technical figure as the council is of the view that it has a very strong case in defending itself against claims from BAM Nuttall and our view of where the final target price plus pain share will settle is £90,793.259”.
Council officials explained that the formula for making payments to BAM Nuttall was agreed at the outside and even though the contract is well behind schedule, monthly payments still need to be paid.
“As we go through the project they bill us, we pay the bill,” said the spokesman. “We have already gone past the £87 million target price sometime ago but we always said the pain is the contractors and that will come at the end of the contract. Effectively they should write us a nice cheque”.
Another element in the equation, explained the spokesman, is the liquidated damages claim by the council (the amount charged to BAM Nuttall for late delivery) and this is clocking up damages of £14,000 a day, and will total £9 million by the time the bus way is finished. This sum is being withheld from the contractors’ invoices and has been so since February 2009.
The council says in effect they borrow the extra contract price and if the legal opinion goes their way the money will be repaid, with interest.
“We are confident of our position but we expect we are going to have to get our money back through the legal process,” the spokesman added. “However I have to say our legal advice is pretty robust in this respect”.
BAM Nuttall has prepared a financial statement which details their belief that the extra costs incurred are “compensation events” which should be the responsibility of the council.
However the council says that although BAM Nuttall has sounded “early warning notifications” of their claims they are yet to provide detailed evidence to support them.
Cllr Pegram added that BAM Nuttall had been asked on a monthly basis to provide an explanation for what in affect are their counter claims but each time “have advised that they will do so in due course”.
BAM Nuttall believes the project should have been opened last year and regrets entering into the contract which has been hit by delays and a £45million overspend.
Until this week the firm had not spoken publicly about the problems with the scheme, but BAM Nuttall’s chief executive Stephen Fox has broken the silence and said the busway could have been in use last October.
He said: “The six alleged defects... we don’t believe, in our eyes, have actually stopped the busway being open.”
“There’s nothing in them that in any way affects the performance of the busway, or the safety of the busway, and the ability of the busway operators to use it.”
According to Cambridgeshire County Council, the six defects have prevented it from taking the completed northern section of the busway as it has firmly stated it does not want to use taxpayers’ money to rectify them.
The defects, CCC says, include a cycle lane built in a drainage ditch, a car park which does not have adequate drainage, and a water dripping onto bridge supports, need to be tackled by BAM Nuttall.
However, Mr Fox denied the firm had made any mistakes during construction.
He added that the firm had done everything asked of it, and late running was down to county council amendments and additions.
Mr Fox also said the council was unwilling to tell them how to fix the ‘defects’, and said they had not been able to counteract negative press because of their contract which said they needed permission to speak to the media.
“We said: ‘If you tell us what to do we’ll see if we can even do it for you’, and the county council won’t even tell us what they think the solution is.”
He added: “If you wound the clock back four years, we would have never have entered into it [the contract] if we’d have thought it would go like this, even though we’ve constructed it well.
“It’s not in our interest to enter into something we know that’s going to go wrong.”
BAM Nuttall and CCC will be going to the High Court to sort out the dispute and to decide who should pick up the bill for the massive overspend.
CCC is adamant it will fight its corner and believes it has a strong case.
Graham Hughes, director of growth and infrastructure at CCC, dismissed the Mr Fox’s claims as ‘laughable’.
He said it was standard the contractor should approach them first if they wanted to speak to the media, and BAM Nuttall had never previously done so.
Mr Hughes said the council had been clear that the design and build project had to be completed to the specification and standard, and to their £87million budget, before the project was accepted and used.
Mr Hughes said the cycleway had flooded, the park and ride at St Ives was in standing water, and experts had said water running from the bridge deck on to a steelwork underneath would shorten the bridge lifespan from 125 years to just 10 or 20 years.
“At a common-sense level these are problems that need to be put right,” he said. “BAM Nuttall have simply refused to accept these are problems.”
Mr Hughes said they could not accept the project until it was completed or it would have to be closed again to be fixed.