COUNCILS should be protected when companies they commission to build schools and other infrastructure go into administration, Swansea’s opposition leader has said.
Councillor Chris Holley has raised questions in council meetings about the support given by the Welsh Government to Swansea-based firm Dawnus before it collapsed in March, and whether Cardiff Bay officials should have shared this knowledge with local authorities.
Dawnus was the principal contractor for the £12m Kingsway scheme in Swansea, and had also been selected by the council to build an £11.8m pupil referral unit in Cockett.
Work at three schools in Powys has also been affected.
A letter seen by the Local Democracy Reporter Service by a Welsh Government official said it had provided financial support to Dawnus in March 2018.
It said officials often talked to businesses, which sometimes resulted in commercially confidential matters being raised.
The letter said sharing such information with third parties could detrimentally affect that business, and even leave the Welsh Government exposed to legal proceedings.
When told about this letter, Cllr Holley said: “I completely understand, but at the same time there should be a safeguard mechanism for local authorities.”
And the Lib-Dem group leader said he felt the Welsh Government should cover any extra costs incurred by Swansea Council if The Kingsway and pupil referral unit budgets overran.
The official’s letter also said the Welsh Government was only made aware of Dawnus entering administration after its board of directors had made the decision.
Responding further, the Welsh Government said it had worked with the company, HSBC Bank and the Development Bank of Wales for many months to try to keep the civil engineering firm operating.
The amount of money provided to Dawnus has not been disclosed, but the Welsh Government said it was liaising with councils to ensure contingencies were in place to minimise the impact of its demise.
Meanwhile the Assembly’s Public Accounts Committee is looking into the Dawnus issue and has written to a senior Welsh Government official requesting information.
A Welsh Government spokesman said all public sector bodies, including councils, had to ensure they had their own robust procurement, due diligence and monitoring processes when awarding contracts.
He said: “These processes should not be influenced or potentially prejudiced by information provided by third party bodies or organisations, including the Welsh Government, during the procurement process.”