Eleven out of 13 contractors hired by the Housing Executive (NIHE) to carry out fit out and maintenance work on a £455million contract dramatically agreed last week to cancel each other’s agreements, like it can be revealed.
A source said: “Never in my life did I think 11 contractors would pull out of multi-million pound contracts”.
Work has been split between contractors across 13 regions and was expected to last seven years from early last year. Now only two of the original 13 companies remain on board – in the South Down and North Down and Ards areas.
It’s unclear why these contractors chose to walk away, but sources say it’s due to “unrealistic” performance targets that have led to companies facing significant fines for failing to meet those targets, as well as working to specifications , which were developed for England, are “unsuitable” here.
Already in 2020, the £455m public sector employment contracts have been advertised. Early preliminary work had to be suspended after the outbreak of the Covid pandemic effectively halted all non-essential work being undertaken on NIHE properties. NIHE is the landlord of 85,000 homes across Northern Ireland.
At the time, the NIHE said the contracts would allow it to “make major improvements to our housing stock” and “give the sector a much-needed boost, securing employment, apprenticeships and training opportunities”.
“Due to Covid-19, we suspended all tendering activities at the end of March. That included our major planned maintenance procurement,” a spokesman told the Belfast Telegraph at the time.
“With the easing of some of the Covid-19 restrictions allowing maintenance to resume, we have reviewed our requirements and are now in a position to proceed with procurement for our major scheduled maintenance.
“The value of this work is approximately £455 million over seven years. We are currently working with the construction industry on our proposals.”
In relation to the latest news of the mutual termination of the 11 contracts, there will now be a massive void that will need to be filled to ensure much needed maintenance and other work can be carried out on NIHE properties.
According to a source, interim measures need to be taken to keep the homes from falling into disrepair while new contractors are found.
“These are lucrative contracts and the companies holding them felt they were given no choice but to really walk away, the KPIs (Key Performance Indicators) they set just weren’t practical and there was one Bunch of other issues,” the source said.
“I don’t know what’s going to happen, you know, housing management needs to find some sort of transitional measure to ensure some of the work can continue as much of the housing stock is old and derelict.
“These houses need constant maintenance and repairs to keep them from deteriorating. Something must be done. This is a serious situation – it takes something extraordinary for a number of contractors to simply walk away from guaranteed work and lucrative money.”
In response to an inquiry on the matter, a housing administration spokesman said: “This matter is a priority for us as it relates to essential services for tenants.
“We proactively participate in ongoing discussions with contractors and cannot comment further until these are concluded.”
The news comes after the Belfast Telegraph revealed that the NIHE has spent more than £1.2 billion on maintenance and repair work on its properties over the past decade.
A report compiled by Savills estate agents for Stormont Town Hall was published about seven years ago. It found that NIHE had to spend £1.5bn on maintenance between 2015 and 2020 – a target that was clearly missed.
The report found that “significant investments are being made [circa £1.5bn] required in the next five years. In addition to the financial challenge this poses, there is also a significant practical challenge in terms of the capacity of the market to deliver such a large program…a lead time of three years is likely to be required before the investment level is delivered on site can be completed and current investment programs have been completed”. This “delay” leads to an increase in liability [from £1.5bn] in the following five years.
“In the short term, the most pressing priorities are the interior finishes of the properties, particularly the bathrooms and wiring, but an increasing amount of work will be required on the exterior structure, particularly the roofs. This is inevitable given the age profile of the properties.”
Plans to reform the NIHE have been discussed for years, which would include the corporation becoming “mutual,” meaning it would be jointly owned by employees and tenants. This would allow it to borrow money without hurting the public balance sheet and pave the way for the NIHE to start building again after stopping building houses about 20 years ago.
To date, none of these plans have come to fruition.
https://www.belfasttelegraph.co.uk/news/northern-ireland/concern-as-raft-of-contractors-walk-away-from-455m-housing-executive-contract-41937986.html Concern as raft of contractors walk away from £455m Housing Executive contract