A "buy British" policy, bullying by the construction manager and "misconduct" by an official seals victory for cladding contractor Harmon and raises questions over best-value procurement.
Last Week, US Curtain-walling contractor Harmon successfully sued the House of Commons for picking a more expensive UK rival for the contract to clad the new £250m parliamentary building. But the industry is only just waking up to the impact of the judgment on the Hopkins-designed Portcullis House. Mr Justice Humphrey Lloyd's landmark ruling places the whole future of best-value procurement in the balance.
The judgment calls into question the way best value is assessed and deals yet another blow to the controversial scheme, which, at £1.2m per MP, is one of the most expensive buildings ever built in Britain. The judge said that the US curtain-walling firm's bid for the bronze cladding was not treated fairly or equally by the MPs and civil servants overseeing the project, and accused them of adopting a "buy British" policy. He also said that construction manager Laing Management employed bullying tactics to persuade Harmon to drop its three-year legal fight against the decision to award the contract to a British rival.
In letting the contract to joint venture Seele/Alvis for £34m – £2.4m more than the Harmon bid – the MPs and civil servants were judged to have broken European procurement rules. Harmon has been awarded legal costs estimated at £2m, its tender costs of £420 000 and the profit it would have made on the contract, estimated to be £4.5m-5.4m (subject to appeal). The figure could amount to £7.8m.
In the 300-page judgment, Mr Justice Lloyd said: "There was cogent evidence of misconduct on the part of one senior public official, a civil servant in the Parliamentary Works Directorate." He said the House of Commons was therefore guilty misfeasance in public office. Andrew Smith, partner in Harmon's solicitor Wragge & Co, says this means that the MPs were "reckless about checking the law".
The civil servant referred to in the judgment is project sponsor Andrew Makepeace. The judge said Makepeace "gave no satisfactory explanation for not telling Harmon the true reasons for his decision and why they were not awarded the contract". The judge also called Makepeace's evidence "incredible", "disingenuous" and "profoundly disquieting". Makepeace refused to comment on the judgment, but said an appeal is being considered.
There was cogent evidence of misconduct on the part of one senior public official
Mr Justice Humphrey Lloyd
Philip Brand, project manager for Laing Management, was also criticised. The judge said: "Mr Brand successfully conveyed the impression of a Teflon man, which may account for his position within Laing Management, as otherwise he did not display a grasp of the project." The judge also said that Laing Management tried to bully Harmon into dropping the action. Giving evidence, Harmon's sales director Ed Boyle said: "Ron [Kerr, Laing Management's procurement co-ordinator] informed me that filing the writ would do irreparable damage to Harmon, going as far as to say that Harmon would never work in the UK again."
Boyle said Laing Management threatened to get involved in a legal battle over another of its projects, for SmithKline Beecham, if the writ was not dropped. "I told Ron that I understood from both him and Tony [Aikenhead, joint managing director, Laing Management] that the two projects were separate. Ron said the two projects were not directly linked but indirectly they were. He indicated that it would also impact on what we are doing on Daiwa and Scottish Widows [two projects that Laing Management and Harmon were working on]".
In a statement issued by the House of Commons Commission, Archy Kirkwood MP said: "The commission is concerned by the judge's findings that the project team unlawfully promoted a 'buy British' policy." But the statement also defends the choice of cladding contractor, pointing out that if Harmon had been appointed, its liquidation in 1998 would have caused delay and financial loss on the project.
The seven-year saga over the contract for the UK’s most expensive cladding
June 1992 The Parliamentary Works Directorate declares that it will “not discriminate between contractors to be invited to tender on the grounds of nationality”. July 1993 Harmon hears about the contract to clad Portcullis House. October 1993 Andrew Makepeace, the PWD’s project sponsor, produces guidelines that are circulated to the project team. These say that procurement must comply with EC advertising requirements, but that the “building should be a showpiece for the British construction industry”. November 1993 Ron Kerr, procurement co-ordinator of project construction manager Laing Management, advises Harmon to front the bid through its French company CFEM Facades rather than its US parent company, because a European company would be more attractive to the client. December 1993 The Official Journal advert for the cladding contract makes it clear that US companies can bid. January 1994 Only one “truly British” firm responds to the advert. Laing Management is directed to find a UK consortium capable of taking on the contract. February 1994 Harmon returns prequalification documents. March 1994 Laing Management is given the names of UK companies that might be interested in the contract, including defence contractor Alvis. April 1994 Prequalifiers attend seminar at the Institution of Civil Engineers to be briefed about the project in detail. May 1994 Malcolm Dodds of the DOE’s Construction Procurement Group, a body that offers procurement advice, contacts the project team to encourage it to buy British. August 1994 Makepeace circulates a letter saying the lowest bid will win unless there are very good reasons otherwise. In court, Makepeace denies that the letter is important, but Mr Justice Lloyd says: “For Mr Makepeace to say that his letter of 17 August 1994 was ‘to my mind … not one of any particular significance’ is a typical but a striking instance of his ability to omit from his evidence that which did not assist him or the defendant’s case … His excuse … is frankly disingenuous.” August 1994 Alvis joins the race, but only after a shortlist of bidders was drawn up earlier in the year. September 1994 Building reveals that the cladding package may be broken up to encourage British firms to bid. September 1994 Jerry Mumford of Laing Management warns that large curtain-walling contractors might be dissuaded from bidding because of the exacting requirements of the architect, described in the judgment as the “Hopkins factor”. November 1994 Harmon wins the tender to build a £218 273 mock-up of the facade in Greenwich. Nov-Dec 1994 Firms return tenders. January 1995 Minutes of a meeting of a House of Commons Accommodation and Works Committee, which oversees the PWD, reveal a “buy British” policy. January 1995 Ron Kerr of Laing Management warns that the Hopkins factor is a problem and that Arup Facade Engineering, which is designing the facade for a fee of £1.1m, has a less sophisticated fenestration design facility than Harmon – the world’s largest curtain-wall contractor. February 1995 Alvis forms a joint venture with German company Seele for the fenestration package. April 1995 Laing Management presents a shortlist of contractors to Makepeace. The names on it are Gartner, MBM, Harmon and Seele/Alvis. Laing Management says it is concerned about Harmon’s handling of a contract for SmithKline Beecham. June/July 1995 Tenderers are interviewed. 31 July 1995 Tenders are opened. All are above the £22m allowed for by project QS Gardiner & Theobald. Harmon bids £40m, Seele/Alvis £41m, MBM £56m and Gartner £59m. August 1995 Laing Management holds discussions with all the bidders to reduce tender costs. Harmon knocks bid down to £35m. September 1995 Arup Facade Engineering changes its design to reduce costs. On a like-for-like basis, Harmon bids £37.9m, Seele/Alvis bids £38.5, Gartner bids £44.9m and MBM bids £49.8m. October 1995 Further revisions to the specification brings Harmon’s bid down to £31.4m, and Seele/Alvis’ to £37.2m. November 1995 Makepeace chooses Seele/Alvis even though its final bid of £34m bid is £2.4m more than Harmon’s. May 1996 Makepeace declares Seele/Alvis the winner. July 1996 Harmon asks why it was unsuccessful. Laing Management explains that Alvis offered better long-term maintenance, a better factory, better welding and better staff. Harmon’s pricing is acknowledged to be competitive. August 1996 Harmon decides to start legal proceeding against the House of Commons. Laing Management tries to head off legal action by threatening that “all bets are off” regarding a claim at the SmithKline Beecham project, another large office job. October 1999 Mr Justice Lloyd declares that Harmon’s bid for the bronze cladding of the building was not treated fairly or equally. Harmon wins legal costs, tender costs and the profit it would have made on the job (subject to appeal).
