Grenfell Tower Inquiry: Phase 2 Report · 2024
Chapter 52: The appointment of Studio E
Chapter 52: The appointment of Studio E
¶52.1 Although the TMO appointed other professionals engaged on the KALC project to act on the Grenfell Tower project (Artelia, Curtins, Max Fordham and Exova), at this stage we concentrate on Studio E's appointment because it provides some context in which to judge its performance. It also illustrates the TMO's general approach to the appointment of its professional team, which was to prioritise saving cost over other considerations.
¶52.2 Peter Wright284 Project Manager for Capital Projects in RBKC's Corporate Property Department. met Andrzej Kuszell, one of the founding directors of Studio E and lead partner on the KALC project, on 9 December 2011 at RBKC Town Hall to discuss the Grenfell Tower refurbishment.285 Kuszell {SEA00014271/9} page 9, paragraph 34; {TMO10000965/4}. The agenda for that meeting included a review of the scope of the works to be carried out,286 {SEA00003557} at Item 2. although Mr Kuszell told us that it was not certain that the works to the tower would be commissioned and that he had understood it to be merely an exploratory meeting.287 Kuszell {Day6/43:18-25}.
¶52.3 Mark Anderson's recollection was that the TMO had formally engaged Studio E in February 2012.288 Anderson {Day52/59:16-19}. He said that RBKC had expressed a strong desire for the TMO to make use of the original KALC professional team, which included Studio E and Artelia.289 Anderson {Day52/60:2-7} Artelia was previously known as Appleyards. He said that the drive to use the KALC team had come from the portfolio holder, who at that time was Cllr Coleridge, and also from all the RBKC officers with whom he had had dealings.290 Anderson {Day52/60:17-22}. Mr Anderson said that he had not been told that the TMO was required to use that team, but there had been a very strong message that that was RBKC's earnest wish.291 Anderson {Day52/61:16-22}. Mr Anderson said that he thought the TMO would have been challenged by RBKC if it had not instructed them.292 Anderson {Day52/61:1-4}.
¶52.4 Laura Johnson said that she was aware that such a wish might have been expressed by RBKC293 Johnson {Day128/59:2-14}. and that the dominant reason for using the same professional team had been to harmonise the appearance of the two projects and co-ordinate them so that there was an understanding of how they were to work together.294 Johnson {Day128/60:6-14}. Like Mr Anderson, she accepted that the TMO would have been challenged by RBKC if it had decided not to use the KALC team.295 Johnson {Day128/63:10-14}
¶52.5 Grenfell Tower was Studio E's first residential high-rise cladding project and yet Mr Anderson told us that no steps had been taken before it was appointed to find out whether it had any experience of a project of that kind.296 Anderson {Day52/64:5-9}; Kuszell {Day6/63:16-20}. He accepted that that was an obvious question and could not explain why no one had asked it.297 Anderson {Day52/64:10-11}.
48¶52.6 The first formal communication from the TMO to Studio E, which set out the TMO's requirements for Grenfell Tower, was sent by Mark Anderson to Andrzej Kuszell on 29 February 2012.298 {SEA00000007/1-2}. Mr Anderson identified the principal objectives of the project and stated that the work would be separate from, but complementary to, the KALC project. He also said that it must not in any way compromise the KALC project, by which he meant that RBKC did not want the Grenfell project to impede the KALC project.299 Anderson {Day52/91:20-25}.
¶52.7 Mr Anderson went on to state that all commissions on the project would be paid by the TMO and were subject to OJEU limits. He accepted that his intention in saying that was to direct Studio E to produce a fee estimate that would fall below the financial threshold for services contracts300 See Regulation 8 of the Public Contracts Regulations 2006 (as amended). in order to avoid a public procurement process.301 Anderson {Day52/92:20}-{Day 52/93:4}. Mr Anderson said that no discussion had taken place at that time with Studio E regarding the OJEU limit or the effect it would have on Studio E's fees.302 Anderson {Day52/93:21}-{Day 52/94:8}. He recalled a discussion about OJEU limits with Bruce Sounes on 6 March 2012 and agreed that they effectively capped Studio E's fees, but he also said that there had been no indication from Studio E or from any other members of the professional team that they saw it as a cap or that their fees were likely to approach it.303 Anderson {Day52/96:1-8}.
¶52.8 The Studio E witnesses, on the other hand, told us that they had been concerned about the capping of their fees at the OJEU limit.304 Kuszell {Day6/71:4-24}; {SEA00003567}. Mr Anderson sent his email of 29 February 2012 to Bruce Sounes305 {SEA00000007}. as well as Andrzej Kuszell, which prompted a discussion within Studio E about the challenge which the limit on the level of fees would present for the project. Mr Sounes replied directly to Mr Kuszell that evening saying that he was concerned about the emphasis of working at risk (i.e. pending a formal agreement) while also being subject to OJEU limits.306 {SEA00003567}. On 7 March 2012 Mr Sounes mentioned to Mr Kuszell that he (mistakenly) thought the OJEU limit was £99,000, which Mr Kuszell said in his reply would be "problematic".307 Kuszell {SEA00014271/12} page 12, paragraph 44; {SEA00014272/2}. Mr Kuszell told the Inquiry that he had thought that even a limit of £174,000 would result in Studio E doing more work than the fee would cover.308 Kuszell {Day6/87:13-19}. Mr Sounes also thought the overall fee to deliver the project would be more than £174,000,309 Sounes {SEA00014273/32} page 32, paragraph 63. but there is no evidence that either he or Mr Kuszell raised their concerns with the TMO.310 Sounes {Day7/38:23}-{Day7/39:7}.
¶52.9 On 12 June 2012 Bruce Sounes sent Mr Anderson a fee proposal and draft letter of appointment.311 {SEA00004561}; Bruce Sounes chose to put forward the RIBA standard form contract terms. Sounes {Day7/56:7}-{Day7/57:4}; The covering letter {SEA00004562} attached: The RIBA Standard Conditions of Appointment for a Consultant (2010) {SEA00004571}, The Standard Conditions of Appointment for an Architect Amendment 1 (1 October 2011) {SEA00004564}, A Memorandum of Agreement {SEA00004570} and appendices A-E {SEA00004565}, {SEA00004566}, {SEA00004563}, {SEA00004567}, {SEA00004568}, {SEA00009827}. The proposal was for Studio E to provide architectural services under the Standard Conditions of Appointment for a Consultant (2010) published by the Royal Institute of British Architects (RIBA). (We refer to these as the RIBA Standard Terms.) However, no agreement was signed at that stage and in the event discussions about the terms on which Studio E was to be appointed continued until November 2013.312 Sounes {Day7/57:8-25}; {SEA00009820}. Both parties contemplated that the refurbishment would be carried out under a design and build contract and that if Studio E were appointed by the TMO as architect its services would in due course be transferred to the principal contractor by what is known as a "novation".
49¶52.10 The proposal was for a fee of £323,000 for all stages of the work (including work to be done after the novation) but only £161,000 for the work to be done before the novation that the TMO had said should be subject to OJEU limits.313 {ART00000148}. Although Mr Sounes attempted to persuade us that it was a fairly typical breakdown of fees314 Sounes {Day7/42:7}-{Day7/43:17}., Artelia advised the TMO in a meeting on 18 July 2012, attended by Mr Sounes, that working to OJEU limits would probably involve deferring some of Studio E's fees to the period after novation, when the contractor would become liable for them.315 {ART00000168}; Sounes {Day7/44:14-18}.
¶52.11 In the event, that is exactly what happened. Studio E produced a further fee proposal on 27 July 2012 which showed the fees for the pre-novation design work as £190,000.316 {SEA00007386} under the Studio E tab of the spreadsheet. However, in his covering email to the TMO Mr Sounes proposed deferring 50% of all Stage D fees to keep the total Stage D fee below £174,000.317 {ART00000981}.
¶52.12 The TMO board met on 15 November 2012. In advance of that meeting Mr Anderson prepared a report on the Grenfell Tower project,318 {TMO10001766/90}. in which he advised the board that the design team had been engaged by the TMO under its own contract regulations. He also told the board that the fees had been capped at the EU procurement threshold of £174,000 because the procurement process for the design team on KALC did not cover the Grenfell Tower Regeneration project.319 {TMO10001766/91} paragraph 5.2. That represented a change from the position he had reported to the board in March 2012.320 {TMO10001095/3} paragraph 5.2. The report went on to state that the novation of the Grenfell Tower design team to Leadbitter (the principal contractor for KALC and at that time the proposed principal contractor for the Grenfell Tower project) after the planning stage would be compliant with EU procurement rules because the Grenfell Tower project had been included in the OJEU notice relating to the KALC project.321 {TMO10001766/91} paragraph 5.3. However, that statement was wrong, as no mention of the Grenfell Tower project had been made in the OJEU Notice relating to the KALC project.322 {TMO10005215}; {RBK00068762}.
¶52.13 By December 2012, Studio E had already issued invoices totalling £174,000 and had stopped invoicing the TMO because it had, in Bruce Sounes' words, "reached the OJEU threshold".323 Sounes {SEA00014273/78} page 78, paragraph 162. It follows that Studio E's fees were always going to exceed the OJEU limit and the capping of its fees by the TMO was a way of avoiding a competitive procurement exercise for design services on the project.
¶52.14 The appointment of Studio E as architect for the project involved no element of competitive procurement whatsoever.324 Anderson {Day52/73:22-25}; Kuszell {Day6/64:22-25}. No member of the firm was interviewed as part of a competitive procurement and there was no design competition.325 Kuszell {Day6/65:1-6}. Mr Anderson said he had thought that, because the OJEU notice published for the KALC project had included the term "housing regeneration", the TMO could rely on the outcome of that exercise to appoint Studio E for the Grenfell Tower project, even though that project had not been mentioned in the notice.326 Anderson {Day52/70:15-23}. He also told us that he had asked the council's legal department and those responsible for procurement whether he could rely on the procurement process for the KALC project to appoint the same professional team for the Grenfell Tower project and was told that he could.327 Anderson {Day52/78:25}-{Day 52/79:9}. However, he did not receive confirmation of that advice in writing and in due course it changed.328 Anderson {Day52/79:10-16}. It is hard to see how Mr Anderson could possibly have thought that it was permissible for the TMO to rely on the procurement process undertaken by RBKC for the KALC project to justify its appointment of Studio E on the Grenfell Tower refurbishment, but if he did, he was obviously mistaken.
50¶52.15 On 11 November 2013, Bruce Sounes sent Peter Maddison by email a revised set of contractual documents.329 {SEA00009820}; The family of updated contract documents are {SEA00009821}; {SEA00009822}; {SEA00009823}; {SEA00009824}; {SEA00009825}; {SEA00009826}; {SEA00009827}; {SEA00009828}; {SEA00009829}; {SEA00009830}; and {SEA00009831}. The RIBA Standard Terms were not included in the attachments, but Mr Sounes confirmed that they were the terms on which he was proposing that Studio E be engaged and we are satisfied that that is how the proposal was understood by Mr Maddison.
¶52.16 By 20 November 2013 the terms of Studio E's appointment appear to have been agreed in principle330 {SEA00009993}; Sounes {Day7/58:3-12}. but Mr Sounes could not recall whether a letter of appointment had ever been signed and Studio E was unable to find a copy of an agreement.331 Sounes {Day7/58:3}-{Day7/59:4}; {Day7/60:18-21}; Sounes {SEA00014273/11} page 11, paragraph 26. Given the inability of either party to produce a signed copy of the terms of appointment, we think it very unlikely that a formal written agreement between Studio E and the TMO was ever signed. That does not matter for present purposes, because both parties accept that a contract came into existence between them incorporating the RIBA Standard Terms.332 Sounes {Day7/61:16}-{Day7/62:19}; {Day7/79:2}-{Day7/80:5}; {Day7/80:9-19}. However, it demonstrates a casual approach to the establishment of contractual relations which we have found to exist in relation to other aspects of the refurbishment and which appears to be widespread in the construction industry. In our view a more rigorous and careful approach at all levels would significantly reduce the risks of disagreement about where responsibility for important matters lies.
¶52.17 In the Schedule of Services in Appendix B to the contract documents, Studio E was designated as lead consultant and lead designer for RIBA Stages A to L of the project,333 {SEA00009824/2}. a position that was confirmed by Mr Sounes in a letter to the TMO in November 2013.334 See letter {SEA00009821} and attached contract documents {SEA00009822} and {SEA00009824/2}. In the light of the documents and Mr Sounes' evidence, it is clear to us that Studio E was appointed as lead consultant. As such, it had a duty to advise on the need for, and the scope of services to be provided by, consultants, specialists, sub-contractors or suppliers and to monitor the work of other consultants.335 See Appendix B: Schedule of Services {SEA00009824/5} sent by Bruce Sounes to Peter Maddison on 11 November 2013. The version sent to Mark Anderson on 12 June 2012 also says the same thing {SEA00004566/5}. Bruce Sounes agreed that these services were part of Studio E's role as Lead Consultant. Sounes {Day7/80:9-19}.
51¶52.18 The RIBA Standard Conditions obliged Studio E to exercise reasonable skill, care and diligence in accordance with the normal standards of the architectural profession when performing its services.336 {SEA00004571/4}. See Condition 2.1 under the subheading 'Duty of Care'. Bruce Sounes confirmed that this condition was consistent with the standard of service required by Studio E's professional indemnity insurance. Sounes {Day7/61:16} – {Day7/62:7}; {Day7/79:24}-{Day7/80:5}; {Day7/80:9-19}.
¶52.19 Studio E did not have any previous experience of providing architectural services in respect of the refurbishment and cladding of an existing residential high-rise building.337 Kuszell {MET00019989/3} page 3; Kuszell {SEA00014271/4-5} pages 4-5, paragraph 17; Sounes {SEA00014273/32} page 32, paragraph 64; Kuszell {Day6/80:5-15}. The process of appointing Studio E as architect for the Grenfell Tower project did not require it to demonstrate that it had the relevant skills, knowledge or experience for such a project.338 Kuszell {Day6/64:14-21}. Mr Sounes said that Studio E had not held itself out as having any such experience,339 Sounes {Day6/194:6-20}. but neither Mr Kuszell nor Mr Sounes could remember ever having informed the TMO or Artelia that it did not have experience of high-rise projects or cladding. Thus, by failing for purely financial reasons to follow the proper procurement process, the TMO deprived itself of the opportunity to appoint a firm of architects with relevant skills, knowledge and experience.
¶52.20 In his email to Mr Kuszell dated 29 February 2012 Mr Sounes described Studio E as a "little green on process and technicality". He therefore suggested "some rapid CPD" (i.e. continuing professional development).340 {SEA00003567/1}; Sounes {SEA00014273/32} page 32, paragraph 64. Mr Sounes said that by "green on process" he had meant to refer to the logistics of undertaking work on an occupied building.341 Sounes {Day6/185:24}-{Day6/186:4-5}. He had noted that overcladding the building formed part of the work, which had struck him as a challenge. He said the challenge lay in the fact that the building was to remain occupied during the work, rather than in the cladding work itself.342 Sounes {Day6/186:22-25}; {Day6/187:1-7}; {Day6/192:12-14}. By "rapid CPD", Mr Sounes said that he had meant nothing more than a consultation to understand the feasibility of how the work could be done, which he said he had undertaken with an employee of Max Fordham, the mechanical and electrical engineers engaged on KALC.343 Sounes {Day6/188:5-8}; {Day6/189:10-12}; {Day6/190:2}-{Day6/191:9}; {Day6/192:18-25}; Sounes {SEA00014273/32} page 32, paragraph 64. Mr Sounes said that his initial concerns about taking on the project had been allayed344 Sounes {Day6/192:15-16}. and that despite his initial uncertainty he had been satisfied that Studio E had the experience and expertise necessary to take on the work being discussed at that stage.345 Sounes {SEA00014273/32} at paragraph 64. He agreed that he had decided that it was possible for him to learn on the job as the project proceeded.346 Sounes {Day6/194:3-5}.
¶52.21 Mr Kuszell accepted that it was necessary for Studio E to carry out some continuing professional development and to conduct research to identify the various challenges the project might throw up,347 Kuszell {Day6/74:15-17}; {Day6/77:21-23}. but he said he had had no reason to believe that the firm was not competent and adequately resourced to do that.348 Kuszell {Day6/76:17-23}. He said that Studio E had experience of undertaking complex projects for the first time and that he had no reason to doubt that it would do the research necessary to do the project properly.349 Kuszell {Day6.75:15-21}; {Day6/76:2-6}; {Day6/80:21-24}.
52¶52.22 Both Mr Kuszell and Mr Sounes accepted that, given Studio E's lack of relevant experience, if a competitive procurement process for architectural services had been undertaken in relation to the Grenfell Tower project, it was unlikely that Studio E would have qualified for appointment.350 Kuszell {Day6/70:10-16}; Sounes {SEA00014273/32} page 32 paragraph 63; Sounes {Day6/196:13}-{Day6:197:23}.
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