Firms hit back at cost claims

A LAW firm which handled the privatisation of a government computer agency has hit out at National Audit Office claims of soaring legal costs during the sale.

Dibb Lupton Broomhead is smarting at last Thursday's report on the sale of the IT agency DVOIT which saw legal costs rise to u545,000 from an initial Department of Transport estimate of between u30,000 and u80,000.

It says it is unfair of NAO head Sir John Bourn, who was advised by Denton Hall, to conclude the DoT had failed to “adequately control” the costs and claims it gave good value in a highly complex sell off.

Theodore Goddard, which was acting as legal adviser for the Government Centre for Information Systems (CCTA), was originally hired for the job but it was completed by Dibbs following the defection of Theodore Goddard's core IT team led by David Barrett.

At the outset Theodore Goddard was not asked for an estimate of its costs, but a DoT bid to seek a cap on legal expenses when it had reached u144,000 was rejected because of the complexity of the work.

A Dibbs offer of a fixed price of u75,000 to finish the job, however, was turned down by the DoT for being too expensive, although the eventual bill, which included unforeseen litigation, cost u277,000.

Dibbs managing partner Paul Rhodes says: “The fault lies with the original DoT estimate – the legal costs didn't spiral, they only appeared to because the original figure was wrong. Whoever came up with that estimate had no idea as to the likely costs involved.”

Theodore Goddard says it is difficult to comment on the detail of the report as David Barrett and the team which undertook the majority of the work had moved to Dibbs.

But managing partner Simon Stubbings adds: “It was agreed that services would be charged on the basis of time spent on the assignment and that the charging rates would be discounted rates for government work agreed with the CCTA.”

Denton Hall IT specialist Nick Higham would not comment on the firm's role as adviser to the NAO except to say it was an “intriguing” brief.