Cost revealed of Portsmouth City Council’s failed attempt to hire a housing servicing firm

Portsmouth City Council’s failed attempt to hire a housing servicing firm has cost £52,000.

The city council advertised in May 2021 for a servicing, maintenance, installation and compliance contract for gas, water and heating across its housing stock and property portfolio.

Procurement documents said the council was unable to finalise the bid and told firms interested it would be abandoned in February 2022.

A one-year extension was then signed with the supplier at the time, Liberty Gas Services Limited, to March 2023.

In January 2023, the council restarted the process only to be abandoned again in February 2024 – the reasoning behind this decision will soon be revealed in an abandonment notice in the coming weeks, according to a freedom of information request.

A source told the Local Democracy Reporting Service that Mountjoy was the preferred supplier in procurement processes.

Since 2021, the council stated the cost of professional external support incurred to date is approximately £52,500.

This consists of review and restart support, in process support and abandonment support costing £6,500, £16,000 and £30,000 respectively.

The value of the contract would have cost between £6m and £8m per year, which amounts to between £60m and £80m in total excluding VAT. It would have run for an initial five years, with the option to extend for another 10.

The council maintains approximately 16,650 homes made up of 14,900 social dwellings and 1,750 leaseholders in the Portsmouth and Havant council areas.

A Portsmouth City Council spokesperson said: “The decision to discontinue the gas tender procurement process wasn’t taken lightly; however, it’s important that we get the contract right to provide best value and deliver a high service to ensure the safety of our residents. Because this is a £70m contract, the accompanying legal, support, and administration fees are a necessary cost and the right choice to ensure the best possible outcome.

“There were significant changes in the environment, such as inflation and energy costs, that supported our decision to re-evaluate our objectives to ensure we get long-term value for our residents.

“Our priorities are to continue to deliver this statutory service and maintain the safety of our residents, so we have extended our current contract and we’re looking at different ways of delivering the service in the future to meet the objectives that we now need to satisfy.”