In his latest assault on DSOs, environment minister Sir Paul Beresford warned the councils that they had just four weeks to set out how they intend to rectify the failure of their DSOs to meet statutory financial targets.
The notices served on the authorities relate to a total of 52 blue-collar CCT contracts. One of the errant authorities is Westminster City Council, the Tory tendering flagship, which has been upbraided over the performance of a grounds maintenance contract.
Sir Paul said: 'Where authorities carry out work in-house it is important that they keep to their financial targets.
The DoE now requires written responses from the authorities concerned by 11 February. The minister warned that the government had no qualms about using its wide-ranging powers to tackle DSOs it believes are failing to deliver value for money.
These include the power to order an authority to re-tender a package of work and even to ban the in-house team from bidding for the contract.
This power was used last year against Oldham MBC over a building maintenance contract - a decision the council unsuccessfully challenged in the courts in November.
Oldham is one of the 36 and received statutory notices concerning the financial performance of three DSOs in highways and sewers, building maintenance and vehicle management.
Council leader John Battye said he was 'bitterly disappointed' that the council had been sent the notices.
But he added: 'There is no question of us responding positively and swiftly to the DoE to explain the position on the losses . . . because we have taken the necessary action to move to a surplus in the future.'
Mr Battye said: 'In a number of working areas there are good years and bad years. Industry balances one with another yet by the government's rules we are not able to do that.'
Sir Paul insisted that the 'vast majority' of local authority DSOs were able to meet their financial objectives for 1995-96.