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Fri October 23 2020

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BSF cuts: construction firms could pursue compensation claims

9 Jul 10 Construction companies which had been appointed preferred bidders on axed Building Schools for the Future contracts could pursue compensation claims.

Construction companies which had been appointed preferred bidders on axed Building Schools for the Future contracts could pursue compensation claims, as fall out from the cuts announced earlier this week continues.

Despite yesterday's apology from Education Secretary Michael Gove for mistakes in his original list of cuts, anger among schools and contractors affected is mounting.

Contracts had not been signed for the BSF schemes axed, but construction companies could pursue claims over bid costs, while local authorities may want compensation for the costs of hiring architects and construction consultants to work on the projects.

"If there has been any detrimental reliance by local authorities, there could be a basis for a claim in 'legitimate expectation'," Richard Gordon QC, a public law barrister at Brick Court chambers, told The Guardian. "The local authorities would have to show that the government's statements were clear, unequivocal and that they relied on them, but it seems there could certainly be a basis for a claim."

One of the worst councils affected is Kent, where 40 secondary school and eight academy construction projects worth £650m were cancelled.

Conservative leader of Kent County Council Paul Carter (Con) said he would push the Department for Education to compensate council and contractors who have suffered losses in the bidding process.

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He estimated that the tendering costs for construction firms who reached preferred bidder stage was between £4m and £6m.

"We played by the rules of the Labour government and managed to attract some £400million investment in a highly complex and bureaucratic way of doing things,” he said.

"That has obviously delivered us costs that have yet to be met. We will have to have a dialogue with the government about how we get compensated for that expenditure.

"That is not just in the public sector but contractors and architects who have designed buildings that are now not going to get built."

Kier had been named preferred bidder for the first wave of Kent's BSF scheme.

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