NIHE settles overpayments dispute

Published Tuesday, 05 August 2014
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The Housing Executive has agreed a deal worth almost £700,000 with three of its contractors on over-payments of maintenance work carried out on its properties which was first estimated to have cost the public purse around £18m.

In June last year the Housing Executive ordered a review and started legal action after massive over-spending was found for planned maintenance work.

Evidence of substantial overcharging was found in relation to the contracts to replace kitchens, fit double glazing and make external improvements to housing stock.

Social Development Minister Nelson McCausland, at the time, told the Assembly the situation was "astounding" and a "scandal".

He said it was unclear if the over-spending was due to "incompetence" or "corruption".

Following the review, the Housing Executive has said the actual over-charging amounted to closer to £12m.

However, it has estimated that £10m of that work had actually been carried out but had not been properly billed at the time it was undertaken.

It has also agreed with the Department of Finance and Personnel and the Department of Social Development to write off £2.075m of money from its accounts which it cannot properly substantiate for.

The organisation has agreed a sum of £670,000 will be paid from three of its contractors, Bann Ltd, PK Murphy Construction and Mascott Construction.

Another contractor, Dixons, was not over paid at all and will instead receive an amount roughly equal to what the other contractors will have to pay - £670,000.

However, the Housing Executive said £200,000 of the Dixons payment lies outside the negotiated settlement announced on Tuesday.

The Board is confident that there will be no repetition of these failings as new rigorous procedures have been put in place to ensure that value for money is achieved with regard to maintenance contracts.

Donald Hoodless, Housing Executive

Donald Hoodless, chairman of the Housing Executive said: "The Board is pleased that an agreement with four planned maintenance contractors relating to payments has been reached and that this settlement has also been approved by the Department for Social Development and Department of Finance and Personnel.

"The organisation became aware of concerns about suspected overpayments in 2010. These were reported to the Board in September 2011 which directed that the concerns warranted a full investigation.

"In May of last year the Housing Executive Board was advised that the investigations had revealed an estimated overpayment of £18m for planned maintenance. Further work was done to refine this estimate and also to recognise the contractors' entitlements.

"As a result of this negotiated settlement, three of the four contractors have accepted that there were significant overpayments on a number of projects completed during the early years of the contracts but not to the level initially estimated by the Housing Executive.

"The Housing Executive accepts that one of the contractors, Dixons, was not overpaid."

The Housing Executive must now fully account for the financial consequences of these failings in contract management.

Donald Hoodless, Housing Executive

Mr Hoodless continued: "Three of the contractors have agreed to pay a sum of £670,000.00 to the Housing Executive for the overpayments.

"The Housing Executive and contractors will now work constructively together to deliver new programmes of improvement work for the benefit of tenants across Northern Ireland.

"The negotiated settlement, while agreed and accepted by both parties, does not fully address our overall financial position.

"Our estimate of payments that we have made, but that we cannot properly substantiate, amounts to some £12 million.

"Against this we recognise that contractors undertook work which was not properly verified and costed at the time it was undertaken.

"Our best estimate of this is that the costs could amount to some £10 million.

"In order to satisfy the public sector accounting requirements we sought and have now received formal approval from the Department for Social Development and the Department of Finance and Personnel to write off £2.076 million being the difference between the payment we cannot properly substantiate and our estimate of the contractors entitlement.

"We are committed to delivering the highest possible level of service to our tenants. We are disappointed, and apologise, that these events over recent years have been a major distraction to maintaining and improving the 88,000 homes which we manage.

"Our new management team is now working hard with all our 3,500 staff to get back to delivering top quality services to all of our customers."

It is quite clear that the NIHE oversaw a much too laissez faire approach to contract management based on swings and roundabouts.

DSD Minister Nelson McCausland

Social Development Minister Nelson McCausland welcomed the agreement.

He added: "My concerns about historic contract management failings within the Housing Executive are well documented, and indeed, have also been a focus of the Comptroller and Auditor General and the Public Accounts Committee.

"These arrangements were totally inadequate and were not sufficient to protect the interests of tenants, the public purse, nor indeed those of the contractors.

"I believe that the conclusion of these negotiations marks a turning point. It is now time to move on and to put this experience behind us," the DUP minister said.

© UTV News
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4 Comments
paddy in belfast wrote (57 days ago):
The NIHE are a shambles,,not only do they waste hard earned taxpayers money but their attitude is appalling,,I suspect this is only the tip of the iceberg,,get rid of this wasteful public body
John in crumlin wrote (57 days ago):
and Nelson strikes again. he is starting to look like the most incompetent politician at stormont
alan in Enniskillen wrote (57 days ago):
This is another outrageous waste of public funds, why are these contractors not removed from the NIHE framework. As a sub-contractor we were asked to tender through one of these companies I thought great we will have steady work, no they wanted the work carried out to NIHE schedule of rates -35% which was an insult. This is not the first time the tax payer has lined the pocket of large companies. Please let the smaller companies do the work who just want a fair rate for work carried out, they would give all they can to get the work completed at the best rate possible to the benefit of all.
Belfast in Belfast wrote (57 days ago):
Dose this mean that people living in nihe houses will get double glazing now??
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