72 people died in the 2017 disaster © Julio Etchart/ullstein bild via Getty Images
72 people died in the 2017 disaster © Julio Etchart/ullstein bild via Getty Images

Grenfell cost-cutting meeting ‘broke procurement rules’

16 October 2020

A “secret” meeting was held between Grenfell Tower’s landlord and a potential contractor to discuss cost cutting despite being warned it would break procurement rules, an inquiry has heard.

David Gibson, head of capital investment at the Kensington and Chelsea Tenant Management Organisation (KCTMO), told the Grenfell Tower Inquiry an “offline” meeting was held with contractor Rydon to agree £800,000 worth of savings during the controversial 2014 refurbishment. 

One of the factors discussed was substituting zinc cladding with aluminium for a saving of £293,368. The cladding has been considered one of the key contributors to the blaze which killed 72 people. 

The unminuted meeting, which took place on 18 March 2014, went ahead despite a warning from KCTMO’s lawyers that any meetings held with tenderers ahead of the contract award would be a breach of procurement regulations.

Advice shared by law firm Trowers & Hamlins with KCTMO on 2 March 2014, shown to the inquiry, said: “KCTMO has advertised the contract as a Restricted Procedure, based on an estimated contract value of £8m to £10m… The Restricted Procedure does not permit a contracting authority to undertake negotiations with the tenderers prior to contract award... To do so would be a breach of the EU Regulations.

“If the contract allows it, you may run value engineering exercises with your selected tenderer, but only once the contract has been entered into.”

Under questioning by Richard Millett QC, counsel to the inquiry, Gibson said he stood by his initial witness statement, which did not mention the unminuted meeting, and stated Rydon had been appointed following a “rigorous tender process” conducted in line with OJEU. 

Millett asked whether Gibson had failed to mention the meeting, which went against legal advice, and conducted an “improper and compromised process” with Rydon because “you knew it was wrong”.

Millett suggested the statement was “utterly misleading”, to which Gibson disagreed.

On 18 March 2014, a letter was sent to Rydon to formally notify them they were the preferred bidder for the refurbishment, but the letter contained no mention of the £800,000 in savings agreed or the unminuted meeting that had taken place. 

Millett said: “Can I suggest to you that there was a good reason for not telling the other bidders that one of the reasons for awarding the contract to Rydon was because they had agreed to reduce their price by £800,000 or so, and that is because if they discovered that the TMO were discussing cost savings on the price with Rydon prior to the award, that raised the risk of a challenge to the award decision.”

Gibson said: “Yes”. 

Last month, it was revealed the Grenfell refurbishment was considered a “case study” by contractors, because the cladding, supplied at a 50% discount, was not known to be used on high-rise buildings.

The inquiry was also told how potential cost savings and miscalculated budgets had contributed to the decision to use combustible cladding in the refurbishment.

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