Firms in running for Midland Met Hospital contract demand reimbursement on bid costs

Contractors bidding to finish off the Midland Metropolitan Hospital job, which stalled following the collapse of construction giant Carillion last year, are demanding that their bid costs are reimbursed.

In a document from a meeting of Sandwell and West Birmingham Hospitals NHS Trust, it was revealed that contractors have warned that bid costs could be up to £1m because of the complexity of taking on the half-finished hospital contract, and are now calling for unsuccessful bidders to be reimbursed.

The bidders day was attended by Balfour Beatty, Kier, Sir Robert McAlpine, Laing O Rourke and Graham Construction.

In the meeting, concerns over bid costs were raised, the length of the bid process and specifically the time and resources required in competition to validate the MEP works.

Balfour Beatty sought clarifications over the procurement route and the amount of time they would be in competition, and the risk profile on the MEP. It said it would bid for the project if the Trust opts for a target costs rather than fixed price bid.

Balfour said it expect bid costs of around £1m to be underwritten in the event that they are not successful.

Kier, Sir Robert McAlpine and Laing O Rourke also attended the bidders day but have yet to confirm whether they will bid.

The meeting documents suggested that Kier might seek to link up with NG Bailey to bid for the job, meanwhile Graham Construction are not expected to bid, according to the document.

Skanska, which already incurred costs in talks to finish the scheme immediately after Carillion’s collapse, did not attend the bidders day.

The document stated: “Skanska did not attend the bidders day and there is some on-going dialogue but the bid investment already made and lost is expected to preclude them from further participation. Whilst we know they are seeking to grow their business in the Midlands it is a very low probability that they would now compete for Midland Met.”