Balfour Beatty severs ties with labour supplier Danny Sullivan Group

Balfour Beatty has said it is severing ties with labour supplier Danny Sullivan Group after saying the firm “misinformed” it over “the provision of Construction Industry Scheme (CIS) workers instead of PAYE employees”.

In a statement this afternoon (Friday), the country’s biggest contractor said it was “terminating all agreements with the Danny Sullivan Group. They currently supply labour to specific projects within limited areas of our UK business.”

It added: “During an audit of our UK labour suppliers, concerns related to the Danny Sullivan Group were identified. While these concerns were being reviewed, related issues were reported through our confidential whistleblowing channel in regard to our HS2 project.

“An independent investigation, which has now concluded, found that Danny Sullivan Group had misinformed us about the provision of Construction Industry Scheme (CIS) workers instead of PAYE employees, in breach of their agreements.”

Balfour Beatty said it was “facilitating the smooth transfer of Danny Sullivan Group employees to alternative approved labour suppliers or direct to Balfour Beatty to ensure operational continuity and continuous employment for the workforce”.

It added: “Balfour Beatty is committed to the highest standards of ethical conduct. Enhanced controls and governance measures have been implemented to mitigate the risk of future compliance issues.”

In a statement, Danny Sullivan Group said: “After extensive discussions on our commercial arrangements and contractual terms, Danny Sullivan and Sons will cease its provision of skilled trades and labour to Balfour Beatty.

“This decision follows the completion of a review, commissioned by Danny Sullivan and Sons, into the erroneous engagement of a number of Construction Industry Scheme (CIS) workforce operatives. Throughout this review process, no evidence of deliberate wrongdoing involving any employees of our business was identified.

“Individuals affected by this decision will continue to work with Balfour Beatty and we are working to mitigate the impact with minimal interruption.

“Our externally-led review was carried out in conjunction with significant investment in enhancements and transformation to the company’s processes, technology and culture – supporting our ongoing and future partnerships with long-standing clients who trust us to deliver projects at the heart UK infrastructure. Our work continues across UK infrastructure projects and we are proud to be operating at a size and scale not seen before in our business with a renewed focus on the highest standards of governance alongside significant operational improvements.”

Two weeks ago, Danny Sullivan Group said it had completed an external review, led by PwC, ”assessing matters of contractual compliance as well as undertaking an independent review of internal governance and controls. The findings and recommendations of this report have been shared with our trusted clients, and where mistakes have been made, we have and continue to put these right. This includes having taken all the necessary steps to ensure full contractual compliance.”

Balfour Beatty’s move comes after HS2 said at the end of May it had launched an investigation into a labour agency supplier after a whistleblower reportedly accused it of allegedly overinflating rates charged for labour supply.

The allegation relates to Danny Sullivan Group, which is employed by the Balfour Beatty Vinci (BBV) team building large parts of the West Midlands section of the HS2 railway.

At the time, Danny Sullivan Group said: “We are aware of the allegations that have been raised in relation to HS2. As a business with a long and reputable history we take these allegations extremely seriously and are co-operating fully with the ongoing investigation. We have acted swiftly to respond to the information, commissioning a detailed and thorough internal review, which remains ongoing.”