Why didn’t Powys County Council learn from the past experience of dealing with firms who went bust a senior lay member has asked

At a meeting of the council’s Governance and Audit on Thursday, April 18 committee members receive an internal audit report into the issues surrounding the housing development on the former Red Dragon public house and Maesyrhandir Youth Centre site in Newtown.

The project was completed last year, but before it was finished, developer R L Davies and Son went into administration – leaving some sub-contractors who worked on the scheme out of pocket.

Committee vice chairman and lay member John Brautigam recalled similar incidents around the demise of companies Dawnus and Jistcourt back in 2019.

At the time this left several school and home building projects for the council, in Welshpool, Machynlleth and Newtown in limbo.

Mr Brautigam said: “This isn’t the first time we’ve down this road.”

He recalled that members of the former Audit committee had “looked very closely” at the lessons to be learned from the collapse of Dawnus and Jistcourt.

Mr Brautigam said: “We examined a guidance document issued by the Welsh Government which was a very detail assessment of the way projects ought to be managed.

“That was fully accepted by the committee at a meeting on December 19, 2019.”

“Committee then had assurance everything would be all right in the future and proper procedure would be followed.”

He explauned the new procedures for contract management from 2019 would see the councilkeep a closer eye on firms, and that their financial sustainability would be reviewed annually: “at least.”

Their work would be monitored against the specified contract criteria and if there was any change of circumstances during that time, the firms were expected to tell the council.

Mr Brautigam, said: “Were these procedures followed?

“If not, why not?

“What assurances have we this time, that lessons will be learnt.”

Since the problems surfaced with the Red Dragon project, the council has put together an internal commercial performance and risk board to better manage these contracts.

Director of corporate services, Jane Thomas said: “The regime that exists now in terms of the board absolutely picks up on those elements – the framework has been put in place.”

“Questioning the financial standing of suppliers is routine.

“It’s fundamental in terms of the board’s responsibility to monitor.”

Ms Thomas explained that if a contractor runs into problems – it would be up to the board to find ways to mitigate and protect the council.

Ms Thomas added that she would like to “reflect” on some of the points made from the meeting in 2019 and explain where those now sit in the new process framework.

Mr Brautigam said: “I would appreciate that.”

Some of the agreed actions following the SWAP report include:

• Installing a centralised electronic contract management system for all contracts and any related changes to the contract.
• Setting a financial threshold for a project for when a project bank account would be necessary.
• Contract management training for staff in the council’s housing and commercial services departments.
• More checks on the commercial viability of developers.
• Improved communication across council departments.