Latest Public Sector News

23.01.18

County council pays out £10m to get out of Carillion contract

Oxfordshire County Council has agreed a deal to terminate its contract with Carillion this week after the company’s collapse earlier this month.

The agreement involves a £10.6m net payment for all the services already completed by Carillion LGS Ltd – a smaller company run by Carillion – which has and will bring forward the end of the work between the two to 1 February 2018.

Council officials said the deal was easier for both parties because of a previous agreement to end services earlier than the original 10-year plan agreed in 2012.

Carillion was providing a number of services on behalf of Oxfordshire County Council including school meals and cleaning, maintenance of council buildings, property services, and construction work.

However, the company – which was involved in public sector contracts for both the government and local organisations – went into liquidation in mid-January 2018.

Oxfordshire CC reacted quickly to the announcement, initially ensuring that all former Carillion staff would still be working immediately after the collapse.

“We brought the process forward and legally terminated our contact and will be taking over those services to ensure continuity,” said Cllr Lorraine Lindsay-Gale, cabinet member for property, cultural & community services.

“Carillion’s financial problems were not the original reason we wanted to end the contract. But as the scale of the company’s problems became apparent we are very glad we ended the contract when we did.

“The reality is that if we had not ended the contract and settled with the liquidators, we would now be tied up in lengthy negotiations to end our involvement with the company. This early exit deal means we can get on with finding better ways to deliver services that Carillion provided.”

The council also said it would be working to find the most cost-effective way to complete work begun by Carillion and would be taking over the commissioning on future construction projects, as well as taking control of service delivery.

In total, it is estimated that Oxfordshire council has paid £148m to Carillion since 2012 for services, construction and maintenance.

Top image: PA Wire

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