Council blames court costs and risk of £4m payout for parking contract settlement

Westminster City Council has blamed expensive court costs and the risk of potentially having to pay out £4m for its decision to agree a £600,000 settlement with an unsuccessful bidder for the UK’s biggest parking contract.

The local authority originally named Mouchel as the preferred bidder for the £50m contract during the initial procurement process in March 2010.

However, it emerged during the cooling off period when bidders were de-briefed that the initial contract document was flawed. Westminster's in-house lawyers said the council had evaluated the preferred bidder on "price criteria that went beyond what was originally published to tenderers".

Westminster then decided to start an accelerated procurement process and NSL Services, not Mouchel, was handed a four-year deal in June 2010. Mouchel subsequently launched a legal challenge.

Arguing that a settlement with Mouchel was “the only responsible course of action to take”, Westminster stressed that it had not admitted liability.

Its Cabinet member for parking, Cllr Lee Rowley, argued that the council would have had a good prospect of success, had the matter gone to court.

Cllr Rowley said: “The council’s new parking enforcement contract will save the taxpayer more than £10m over four years when compared to our previous enforcement contract.

“We are disappointed that Mouchel were unhappy with the way this contract was awarded and that we have been forced to reach a settlement with them, despite the fact that the loss will inevitably impact frontline services.

“I would like to stress that this decision was not taken lightly…. But when faced with expensive courts costs and the risk of an outcome that could have seen the council having to pay out up to £4million in compensation, we felt a £600,000 settlement was the only responsible course of action to take.”

Cllr Paul Dimoldenberg, Leader of the Labour Group at Westminster, warned that the settlement as a result of “this massive blunder” would result in cuts elsewhere in the council’s activities.

Philip Hoult