From construction projects to waste disposal, facilities management and care for the most vulnerable, councils are increasingly outsourcing services. But how many are awarding contracts to companies who regularly break UK regulatory law, even laws directly related to the work they are bidding for?
There are rules that govern public sector procurement. The Most Economically Advantageous Tender (MEAT) criterion mandates councils to select bids that offer the best value for money. But local authorities are permitted to exclude bidders where they can demonstrate prior environmental, social or labour law violations in the last three years.
By bringing together enforcement actions from 50 different government agencies, Violation Tracker UK can help councils determine which companies have committed these types of offences.
Safety
Large building project contracts often go to big corporations, and some of these have better track records on safety than others. Over 50 different councils have contracted Kier Group for construction projects in the last few years despite the firm having paid out over £9m for repeated health and safety breaches, including a recent fine for hitting overhead powerlines twice, causing cables to land in the path of moving vehicles.
Balfour Beatty is another construction firm that has earnt millions from contracts with local authorities. It has been fined 19 times for safety-related offences. Its bad reputation extends to the US, not only for safety breaches but also fraud.
Care quality
When choosing providers of residential care, safety risks could be reduced by choosing to award contracts to companies without care quality violations. Three HC-One Limited care homes for instance were rated inadequate and placed in special measures last year by the Care Quality Commission (CQC). The health and safety executive also fined HC-One over £900,000 for breaches, including where a resident died from choking. Despite this several councils have entered into contracts with the company, as recently as last month.
CareTech also continues to be handed contracts to provide services to vulnerable people, despite multiple poor Ofsted reports and care quality violations.
Environment
Councils seeking waste management services may wish to take into account the repeated environmental infringements of providers such as Veolia, FCC and Biffa.
The environment agency has taken enforcement action against Veolia 28 times and FCC 27 times since 2010. Last month Veolia was handed contracts totalling £419 million to provide waste services to Hammersmith and Fulham and Brent councils.
In 2021 Biffa was fined £1.5 million by the agency for exporting rubbish disguised as waste paper, having been found guilty of the same offence the year before. It has had at least 40 contracts with local authorities since 2015; this month it has been awarded contracts with both Milton Keynes and Wolverhampton City councils.
Employment
Some councils include a commitment for the supplier to pay fair wages in their procurement policies; they could also consider track records of employee mistreatment. Mitie has had dozens of contracts with both Labour and Tory councils across the country. Since 2017 it has committed 32 employment-related offences including disability, age, sex and race discrimination as well as unfair dismissals, breaches of contract and failure to pay minimum wage.
Fraud
While there is no specific agency to tackle procurement fraud, councils should be wary of companies who engage in other fraudulent behaviour. Serco, who last year signed a contract worth £118 million with Lambeth Council, were fined almost £23million in 2019 by the Serious Fraud Office. Between 2010 and 2013 Serco hid the true extent of profits made from electronic monitoring to continue to extract large sums from the Ministry of Justice. G4S was found guilty of the same crime in 2020 for which it was fined over £44 million. They still enjoy lucrative contracts with local authorities.
Many of the large accountancy firms who make millions from local government contracts have poor records when it comes to accounting fraud or deficiencies.
Conclusion
Central government funding cuts mean councils often end up contracting larger companies who are able to put in competitive tenders; but this can come at the expense of workers, service users and the environment. Local Authorities should be aware of their powers to exclude bidders and can use Violation Tracker UK to avoid companies who repeatedly break regulatory laws.
Residents too have an important role to play in corporate accountability. You can call on your council leaders to use their powers of discretionary exclusion, particularly when a contract with a recidivist company is up for renewal. You can search a company’s record at https://violationtrackeruk.goodjobsfirst.org and follow us on Twitter @VT__UK (two underscores).