Contractual dispute relating to an outsourced council contract

A NIFA expert provided advice in respect of the quantification of a loss from allegations relating to an outsourced contract dispute between two councils.

In summary, a council wished to subcontract a service it had historically delivered in-house. The council considered that there would be financial savings and service improvements if the service was outsourced. The contract was put out to tender. The council awarded the contract to another council who already operated the same service in its own council.

As part of the tender process a budget and savings over the course of the period of the contract were agreed. The negotiation included setting out how to assess the contract performance. The contract was to be assessed at regular meetings. These meetings were to include the presentation and discussion of financial summaries and key performance indicators, together with future plans for the service delivery. The Claimant paid for this service on a quarterly basis, but these payments were subject to adjustment. The reasons for the adjustments were not always clear from the documentation provided.

The Claimant considered that the Defendant had retained more monies than it was entitled to retain and were claiming for these monies to be repaid.

The expert reviewed the Defendant’s loss quantification and compared this to contemporaneous documentation. As part of this work the expert also prepared an alternative loss quantification based upon the information provided. The expert reviewed the progress meeting reports and financial summaries provided during the duration of the contract. This documentation was compared to the tender documentation and the agreement at the time the contract was awarded. There were limitations in the expert’s work. This was due to the lack of detailed information in support of information included in the Defence and the incomplete / conflicting contemporaneous documentation.