Anger after new housing project is delayed following legal challenge

Shetland’s largest building firm DITT has reacted angrily after the SIC unexpectedly abandoned plans to award it a lucrative contract to build 76 affordable homes at Hoofields in Lerwick.

DITT director Peter Tait said the company felt aggrieved having been led, over a period of several months, to believe it had been successful in winning a £7.5 million contract to build the homes.

After the contract was challenged by a rival bidder, Fife-based building firm Lomond Group, councillors this week abandoned the existing process and asked head of housing Anita Jamieson to come up with alternative options for funding the development.

The immediate consequence, Mr Tait said, would be that five apprentices who DITT had intended to take on would not now be employed by the company. That in turn will affect student numbers at Shetland College.

The SIC said yesterday that the abandonment had been prompted by the Scottish government’s introduction of various new initiatives and incentives aimed at increasing the country’s housing supply.

There will be an as-yet undetermined delay in building the homes, which in the short term is a blow to the council’s efforts to tackle a 1,000-strong waiting list for housing, with demand predominantly in and around Lerwick.

Ms Jamieson said she believed the delay would be worthwhile as “considerable savings” could be found. In particular, it is hoped that substantial external funding can be levered in.

Another local construction firm, Tulloch Developments, is on site at Hoofields having won the contract to install initial ground works. DITT had initially expected to be on site two months ago, with 14 houses due to be completed and handed over by December this year. A further 36 homes were to have followed by Christmas 2012.

“We’ve turned away other work in the meantime and hadn’t explored other opportunities in the full expectation that this job was going ahead,” a hugely frustrated Mr Tait told The Shetland Times.

“We carried out interviews for apprentices earlier in the summer and we held off making a decision on those appointments until now. The immediate consequence is that there will be five school leavers that won’t be employed.”

He continued: “We tendered in good faith back in February. We were advised we had submitted the most economically advantageous bid and, subject to normal EU procurement rules, the usual 10-day cooling off period, that the contract should follow.

“In the past four to five months we’ve spoken to officials regularly and been led to believe the formal contract was only a couple of weeks away. There was no indication during that time that something else was happening. It came completely out of left field.”

It is understood that Lomond Group had submitted a cheaper tender for the contract, but it was to have been awarded to DITT because the Lerwick firm offered the best mix of quality and price.

The council’s political leader Josie Simpson said yesterday: “We have the possibility now of meeting our housing needs more effectively and cheaply, perhaps in partnership with other housing agencies and private companies. It would be foolhardy and irresponsible not [to] take advantage of this.”