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Welsh Government orders review after £1.25m payout in procurement arbitration

The Welsh Government has ordered a review after paying compensation to a failed bidder for a furniture contract over flaws found in a procurement.

According to the BBC, the case has cost the government £1.25m.

A Welsh Government spokesperson said: “Following a procurement process, which was subject to the Public Contracts Regulations 2006, the Welsh Government issued a notice of its intention to award a contract for furniture and design.

“Legal proceedings were issued by an unsuccessful bidder challenging the award decision. Following mediation, a settlement was reached. 

“We are taking this issue extremely seriously and a number of measures have already been introduced to further strengthen our procurement processes and protect taxpayers money.”

Legal proceedings were brought by Triumph Furniture after it challenged a contract awarded to Richard H Powell and Partners, the BBC said.

Welsh Government permanent secretary Sir Derek Jones told the Welsh Assembly in October: “I’m deeply unhappy about this payment.

“This was…a large procurement, decided on some very narrow margins in favour of one tenderer, and so the contract was awarded.

“A disappointed tenderer challenged the judgment, the Welsh Government initially defended the allocation but subsequently received legal advice that the cost of continuing to defend the action taken with the prospects of success were such that it would be better to enter formal arbitration with the claimant, which was done. This is a compensation payment under a court order, following the arbitration.”

Sir Derek added that the dispute had been avoidable and arose in part from “poor record keeping and some ill-judged naïve administration, and I’ve been taking action, subsequently, to improve the procurement systems and training and delegations to minimise the risk of anything happening similarly”.

Mark Smulian