Officials ‘told builder what to bid to win tram contract’

A FIRM bidding for multimillion-pound tram contracts was told how much to offer to be in ‘pole position’ to get the work, an inquiry heard yesterday.

Officials from Transport Initiatives Edinburgh (TIE) – the group set up to run the project – made Bilfinger Berger aware of how much to bid to secure the lucrative deal, according to the contractor’s former managing director.

Richard Walker told the Edinburgh Tram Inquiry he did not believe this to be proper professional practice from the council-owed, arm’s length body, which was potentially passing on confidential information.

He said: ‘TIE would tell us how much we needed to take off the price to put us in pole position to win the contract... It was TIE trying to set the price rather than us telling them how much we believed i t would cost.’

Asked by chairman Lord Hardie if this was appropriate, Mr Walker said: ‘Not appropriate really, no my Lord, because it was the client giving us potentially confidential information.

‘It’s not a professional way of working, in my opinion.’

TIE signed a contract in May 2008 for infrastructure construction with a consortium of builders, with Bilfinger Berger’s share reportedly £170million.

Mr Walker said he had been assured by TIE that the council was aware the price would go up after the deal was signed.

When it was signed, there was a delay in the design work. As a result, Bilfinger Berger could not set a fixed price. Mr Walker said TIE’s former chief executive, Willie Gallagher, told him that everyone, including the council, was aware the price would therefore rise.

He said: ‘The price we had put in was on the assumption the design would be 100 per cent complete. It became apparent this was not the case, so of course we had to rethink it.’

He added: ‘[Mr Gallagher] responded by saying everybody knows that.’

Mr Walker had concerns about whether the council was fully aware of the situation and drafted a letter to inform them – but it was not sent.

He said his chief executive told him not to send the letter because it would ruin his relationship with Mr Gallagher.

He added: ‘Had I signed it and sent it then I would be able to sit here and say I had done absolutely every single measure I could have to ensure the ultimate body in City of Edinburgh was aware, whereas in the end I took a verbal say-so.’

Mr Walker also said there were clauses in the contract which clearly underlined that the price was not fixed, adding: ‘ It’s absolutely clear what it says.’ He also said a false picture of circumstances was given to the public through the Press.

He was denied a chance to speak out but did meet John Swinney, then Finance, Constitution and Economy Secretary.

Mr Walker said: ‘I repeated the story that we had a contract, we’d started working in a goodwill fashion to try to overcome difficulties.

‘We were stonewalled... No one would listen to us.

‘It was constant dispute and someone needed to read the words and euphemistically smell the coffee.’

The inquiry, in its eleventh week, aims to establish why costs soared from £375million to £1billion and why the project was three years late.