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City Hall could face financial blow

PUBLISHED: 15:00 23 February 2010 | UPDATED: 08:21 02 July 2010

Sarah Hall

Cash-strapped City Hall could face a huge financial blow after a High Court judge impose an injunction to stop the award of a multi-million pound buildings contract.

Cash-strapped City Hall could face a huge financial blow after a High Court judge impose an injunction to stop the award of a multi-million pound buildings contract.

The decision by Mr Justice Arnold is a huge blow to the cash-strapped council, which was tonight due to agree its budget and council tax levels for the next 12 months - a budget partially based on money they hoped to save through the re-letting of the controversial CityCare contract.

The council, which is already trying to make £8m worth of cuts in the next two years, claimed in court it will have to spend £1m a month, from the end of March, to pay for an alternative provider to fix and maintain 18,000 council homes in Norwich while the injunction is in place and a challenge goes through the High Court.

The injunction was sought by Morrison Facilities Services Ltd, which missed out on the Housing Services Building Maintenance contract during a tendering process last year for parts of the 10-year long £334m City Care contract, which comes to an end next month and will be split up among other providers.

Morrison, the parent company of CityCare, made a £23m bid for the Housing Services Building Maintenance contract, but was beaten by Exeter-based Connaught Plc which bid £17.5m for the five year contract.

Morrison launched a legal challenge against that decision and successfully asked Mr Justice Arnold to impose an interim injunction preventing the contract being awarded to their rivals until a five-day High Court hearing in June which will resolve the dispute.

The other contracts can be awarded and an injunction which would have prevented the city council from awarding one for refuse collection and recycling was withdrawn - easing fears that bins around Norwich might have gone uncollected.

Mr Justice Arnold said Morrison had a “seriously arguable” case that Connaught's bid for the housing maintenance contract was “abnormally low” and the council had not properly investigated it.

He also said that it was “seriously arguable” that the council had applied criteria to the tendering process which had not been fully disclosed in advance to potential contractors.

Granting the injunction, he rejected arguments made on behalf of the council that, if the High Court eventually finds in favour of Morrison, the company can be “adequately remedied” by a payment of damages.

The council, which was last week given the go-ahead for unitary status to take on a sheaf of extra responsibilities for people in Norwich, estimates it will cost it £1m-a-month to find a replacement service provider while the injunction is in place.

Philip Hyde, head of legal, democratic and regulatory services for Norwich City Council, said the council was “disappointed” at the injunction but “pleased” one which, if granted, would have prevented the award of the contract for waste, refuse and recycling service had been withdrawn.

A spokeswoman for Morrison said: “We are pleased that we have been successful in our application for an injunction because it confirms that our concerns regarding Norwich City Council's failure to conduct a proper procurement exercise for its public services within the city were justified.”

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