The Dumfries and Galloway Council roads contract that lost £3m

It was a deal which was expected to return a financial surplus to Dumfries and Galloway Council.

Instead, the trunk roads maintenance contract ended up producing a deficit of £3m.

It prompted an internal investigation which has blamed a culture of being "an organisation within an organisation" at its former trading arm DG First.

Further inquiries are now taking place under the council's anti-fraud and anti-corruption strategy.

What was the background?

The contract was for trunk road maintenance across Dumfries the Galloway

Dumfries and Galloway Council operated as a sub-contractor to Amey between 2002 and 2013 on trunk road maintenance across the region.

DG First returned an operating surplus on the two contracts secured during this time.

However, a £29m deal with Scotland Transerv covering 2013 to 2018 failed to reach the same level of performance.

Instead, it returned a deficit of £3.25m over its five-year operation.

What went wrong?

Much of the work on the roads contract was sub-contracted

An investigation has blamed the culture at DG First - more recently called Enterprising Services - which the council subsequently removed from its organisation in a restructure last year.

It said there had been a determination to brand it as a "different entity" to the council.

This led to what was described as an "organisation within organisation" culture of being self-reliant and independent.

The probe concluded that meant the service did not always seek appropriate professional advice and entered into the contract "without fully understanding" its complexity.

Increased reliance on sub-contractors and "limited written contracts" meant the "majority of risk of performance failures lay with the council".

Other findings included:

• No formal risk assessment being carried out prior to entering the contract

• A "lack of engagement" with other council services

• "Insufficient advice and guidance" was sought as it was anticipated the success of previous deals would be repeated

• Poor oversight and management of the contract

What has been done?

DG First was removed from the council's operating structure last year

As soon as the problems emerged, a "thorough investigation" was promised into what had happened.

DG First has also been removed from the council's operating structure.

A report to go before council said that practices now in operation provided a "high degree of assurance" there could be no repeat of the issues experienced under the road contract.

It also highlighted an updated procurement strategy and improvements to financial controls.

Police Scotland has been informed of the progress of the investigation into the handling of the contract.

The council has promised its "full support" - including progressing to potential prosecution - should any evidence of illegal activity be found.

What has been said?

The council said changes to the way it worked meant the situation should not be repeated

Council leader Elaine Murray said the council was a "transparent and accountable organisation".

She said changes meant it would not be entering into arrangements like the roads deal in future.

Depute leader Rob Davidson said the findings took a "bit of digesting".

"Plainly speaking, the contract should not have cost us money," he said.

However, he said that as soon as the issue came to light it had taken "swift action" to investigate.