Wirral fined for ‘unlawful’ Floral Pavilion contracts

WIRRAL Council has been fined more than £220,000 for breaching European Union procurement rules with the construction of the Floral Pavilion in New Brighton.

The conference and theatre complex was completed in 2008 by Liverpool-based Neptune Developments at a cost of £11.4m, with £4.6m coming from the European Regional Development Fund (ERDF) and £3.7m from the Northwest Regional Development Agency (NWDA).

An audit of the scheme by the Government found that Neptune was awarded the job correctly through an open competition advertised in the Official Journal of the European Union (OJEU).

But this procedure was not used by Neptune to hire professionals such as architects, quantity surveyors and mechanical and engineering consultants.

A report to Wirral’s executive ahead of a meeting on January 13 says the total value of these fees was £552,000 – more than the £144,000 threshold at which public service contracts must be advertised in the (OJEU).

The report said all but one of the contacts fell below the threshold and they were treated as a series of mini commissions by Neptune.

But the auditor found this approach was in breach of EU procurement regulations as the work was not, “competitively tendered as an aggregated single contract and therefore was unlawfully awarded”.

A fine of £223,355, nearly 5% of the original ERDF grant, was contested by the council which argued that the individual contracts were above board because they fell below the threshold.

The one that didn’t was Neptune’s project management fee which could not be competitively tendered because of its “specialist nature”, said the council. It has spent the past six months fighting its corner but its own lawyers have now told it to pay the fine in full.

A spokesperson for Wirral Council said: “Neptune Developments was the proposed developer of the Floral for a long time and as such prepared designs and costings for the original planning application that was subsequently refused by the then Secretary of State as well as the eventual revised plans that were finally granted planning permission.

“Throughout this process the professional contractors used by Neptune remained unchanged. Once planning permission was granted, an application for public sector funds was successfully made and at that time the council was clear that it had complied with the relevant regulations. 

“However, the law on public procurement has developed considerably over recent years and subsequent case law varied the scope and application of the regulations. Unfortunately, and despite efforts to mitigate any adverse impact upon the council, the change in interpretation of the regulations has resulted in the claw back payment becoming payable.”