A civil engineering company which had a major contract cancelled by Limerick City Council five years ago has been awarded €32 million in compensation.
The council has been told by an independent arbitrator to pay the award to Uniform Construction, which was removed from work on the city's main drainage scheme in 2001. It has been precluded from tendering for work in the State sector since then.
The dispute between the council and the company means a project initially budgeted to cost €9½ million could cost the State more than seven times that amount.
Uniform secured a contract for work on the scheme in 2000, but was removed in November the following year by the council, which claimed the project was neither on time nor on budget.
Welcoming the award last night, the company said in a statement that its professional competence had been "completely vindicated". It said it had encountered site difficulties when carrying out the work for Limerick council that had not been anticipated in the original tender.
The arbitrator had found the company was justified in suspending tunnelling to carry out ground investigations and that it should have been granted an extension of time to complete the project.
Findings at both conciliation and arbitration had confirmed that the company was progressing all sections of the work with due diligence and that it was not in breach of contract, the company said.
An arbitrator's award in its favour had also been upheld by the High Court in 2005.
In a statement yesterday, however, Limerick City Council defended its decision to terminate the contract, which had been taken on the basis of both legal and engineering advice.
"At the time of termination, Uniform Construction Ltd (UCL) had only carried out 34 per cent, by value, of the works, with 85 per cent of the contract already expired.
"Following the termination of the UCL contract, a new contractor was appointed. This contractor did not consider it necessary to carry out the additional site investigation or extensive ground treatment that UCL had stated was essential.
"The new contractor completed the project in time and on budget," the council said.
It expressed disappointment with the arbitrator's award, but claimed its decision to pursue arbitration had been vindicated given the claim lodged by the company was for €85 million.
The potential final cost of the project, as a result of the dispute, was raised in 2004 at a meeting of the Dáil Public Accounts Committee. TDs expressed concern on being told that a project which had been due to cost under €10 million could end up costing the State €50 million.
In its statement yesterday, Uniform Construction said the actual final cost to Limerick City Council was likely to be in excess of €70 million. The council could not be contacted for comment on this claim.
