Birmingham City Council is locked in dispute with private over allegations of sub-standard repairs to roads and pavements.
Officials are considering enforcing penalty clauses in the 25-year long contract, potentially punishing the company by effectively fining them.
It has emerged talks have been ongoing throughout the autumn and, if not resolved, the dispute could ultimately end up in the courts.
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The council is unhappy with the quality and durability of some of the road repairs and councillors say they are inundated with complaints from residents about potholes and damaged roads.
Council highways officials and Amey management have been locked in arguments over whether the resurfacing works, paving and road repairs are up to scratch and whether penalty clauses in the £2.7 billion 25-year highways contract should be activated.
When the deal was signed in 2010 it was heralded as a new era for the city’s roads which Coun Len Gregory, then cabinet member for transportation, described as “the envy of the rest of the country”.
As well as the repairs dispute the council’s Labour leadership is also negotiating a reduction in service with Amey in a bid to shave £2.8 million year from the annual £42.5 million budget for the contract by 2017/18.
Details of the dispute emerged as Labour cabinet member Coun Tahir Ali appeared before the city’s transport scrutiny committee to face questions on road works and traffic chaos across the city.
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He admitted: “The performance is not at the level it should be. Currently we are in a dispute resolution process, we’re at the arbitration stage.
“That arbitration process has started. Both sides are around the table with a huge amount of documents.
“There are huge issues, we know about them they have been raised. Has work been done to the standard as laid out in the contract? On occasion not. Has work been missed? Absolutely.”
His chief highways officer, John Blakemore, who is overseeing the talks for the council, told an earlier committee meeting that inspectors had found repairs were not up to scratch.
But he stressed that the dispute covered a small part of the wide-ranging contract and there remained a strong relationship between the council and contractor.
“There are,” he said, “a few differences of interpretation” but added the council was trying to ensure “value for the taxpayer”.
He said the council used what he referred to as ‘financial adjustments’ to recover money when the work was sub-standard and had taken several million pounds in performance deductions since the start of the contract.
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The contract, which began in June 2010, was front-loaded for the first five years with major infrastructure investment in roads, including the recent Queensway tunnel upgrades, and new LED street light installation.
The rest of the contract concerns maintenance of Birmingham’s 1,500 miles of roads for the next 20 years.
The issue is being looked at by the transport committee and the contracts scrutiny committee and is overseen by cabinet members Coun Ali, responsible for transport, and Coun Stewart Stacey, in charge of contracts.
It is this crossover which opposition Tory shadow cabinet member for transport, Coun Timothy Huxtable, partly blamed for the problems.
Coun Huxtable (Bournville), who was cabinet member when the contract started in June 2010, said: “It was a good contract but has been allowed to go bad through political mismanagement.
“I am not happy with the quality of works and the time it is taking to get it rectified.
“We have works which were marked out several months ago and they still haven’t got around to the repair. The service is just not adequate.”
Backbenchers also raised complaints.
Coun Rob Pocock (Lab Sutton Vesey) said residents had been waiting for Melrose Avenue in his ward to be resurfaced since June.
He said: “We have reached a ridiculous situation where road repair schemes like Melrose Avenue have been abruptly abandoned and no-one will say whether or whenever they will now be done, because Amey and the council seem to be locked in this interminable dispute.
“This has been going on since last summer but no-one will publicly explain what the problem is.
“The public are paying for these services and yet the public and ourselves as local councillors are being kept in the dark.
“This has been going on long enough, it’s time we had a proper account of the problem. We are not going to let this matter drag on any longer.”
Coun Ewan Mackey (Cons, Sutton Trinity) added: “Since May the standard of service from Amey has been deteriorating rapidly, with communication to councillors of late virtually ceasing. I can only put this down to the current administration’s revision and mismanagement of the Amey contract.”
A Birmingham City Council spokesman said: “This is a £2.7 billion contract and there will always be contractual matters the authority is taking up.
“We are currently in dialogue with Amey about the way the contract is managed and run and will hopefully come to an agreement in due course. We clearly therefore can’t go into any details.”
A spokesman for Amey said: “Amey is committed to providing a high-quality, effective and efficient service to Birmingham City Council and those using the highways network in the city.
“Since the service began in 2010, Amey has met the required criteria for all milestone targets for highways improvements.
“We hold regular dialogue sessions with Birmingham City Council to identify continuous improvements to the service to ensure we meet the needs of the travelling public.”