Last edited 10 Oct 2016

Public procurement


[edit] Introduction

The Government Construction Strategy (available from the Cabinet Office website) was published in May 2011. It was prepared by the Efficiency and Reform Group, working with the Construction Sector Unit of the Department for Business Innovation and Skills (BIS), and Infrastructure UK (IUK now the Infrastructure and Projects Authority).

It is a relatively short document that replaces many hundreds of pages of guidance previously published by the Office of Government Commerce (OGC now absorbed into the Efficiency and Reform Group). This guidance had set out in great detail the procedures for procuring public projects, including definitions of roles, gateway review processes, and guidance for key tasks. OGC guidance has now been archived.

The Government Construction Strategy states that …..

The right model for public sector construction procurement in the UK is one in which:

  • clients issue a brief that concentrates on required performance and outcome;
  • designers and constructors work together to develop an integrated solution that best meets the required outcome;
  • contractors engage key members of their supply chain in the design process where their contribution creates value;
  • value for money and competitive tension are maintained by effective price benchmarking and cost targeting, by knowing what projects should cost, rather than through lump sum tenders based on inadequate documentation;
  • supply chains are, where the programme is suited, engaged on a serial order basis of sufficient scale and duration to incentivise research and innovation around a standardised (or mass customised) product;
  • industry is provided with sufficient visibility of the forward programme to make informed choices (at its own risk) about where to invest in products, services, technology and skills; and
  • there is an alignment of interest between those who design and construct a facility and those who subsequently occupy and manage it.

It was reported in November 2015 that a revised Government Construction Strategy was being prepared under the leadership of Cabinet Office minister Nick Hancock. Ref Building 18/11/2015.

[edit] Procurement route

The Government Construction Strategy suggests that '… Procurement is best looked at as part of a broader asset life cycle, rather than as a stand-alone process...' and that... '“Procurement” is therefore part of a system that commences at the inception stage of a project, and is concluded only when the facility has been brought into use with proper arrangements made for asset management'.

Whilst the strategy does not itself propose which procurement routes should be adopted, the Common Minimum Standards referred to in the strategy state that '...Procurement routes should be limited to those which support integrated team working (PPP/PFI, Design & Build, the Prime-type Contracting approach and framework arrangements consistent with the Construction Strategy).'

It states that 'Traditional, non-integrated procurement approaches should not be used unless it can be clearly shown that they offer best value for money – this means, in practice they will seldom be used'.

[edit] Contracts

The strategy states that early supply chain involvement should be sought by inviting tenders from integrated supply teams on the basis of an output-based specification and that procurement should be streamlined through the use of a standard pre-qaulification process such as PAS 91.

It also recommends the use of standard forms of contract, and as GC Works contracts are no longer being updated, the strategy recommends the New Engineering Contract (NEC) contracts.

It also proposes that incentivisation and competitive tension should be introduced through procurement routes other than lump-sum tendering to encourage innovation, supply chain integration and to align the interests of designers and contractors with occupants and operators.

Standardisation and off-site fabrication should be encouraged where appropriate.

NB In December 2013, Enterprise Minister Matthew Hancock set out how a range of measures intended to make it easier for small businesses to grow in Small Business: GREAT Ambition. Measures were announced to tackle late payment and to remove the barriers to public contracts by abolishing pre-qualification questionnaires (PQQs) for low-value contracts and mandating the use of core PQQs for high value contracts.

[edit] Building Information Modelling

The strategy proposes the phased roll-out of Building Information Modelling (BIM), resulting in a requirement for fully-collaborative 3D BIM on all centrally-procured construction contracts by 2016.

[edit] EU Procurement Rules

The European Union Procurement Directives establish public procurement rules throughout the European Union and apply to any public purchases above defined thresholds. The directives are enacted in the UK by The Public Contracts Regulations.

The regulations set out rules requiring that such contracts must be advertised (contract notices published) in the Official Journal of the European Union (OJEU). This is of particular importance because, unless OJEU rules are considered in the very early stages of a project, the time taken to advertise contracts can cause significant delays (up to 52 days).

See OJEU for more information.

In January 2014, new rules were agreed by the European Parliament that will:

  • Introduce a new criterion of the "most economically advantageous tender" (MEAT) in the award procedure.
  • Introduce "Innovation Partnership" to allow public authorities to call for tenders to solve a specific problem without pre-empting the solution.
  • Introduce a "European Single Procurement Document" based on self-declarations so that only the winning bidder will have to provide original documentation.
  • Introduce new rules on sub-contracting and tougher provisions in relation to "abnormally low bids".
  • Make clear there is no requirement for the privatisation of public enterprises providing services to the public.

Member states have 2 years to implement the new rules into national legislation. Ref European Parliament News 15 January 2014.

[edit] Major projects

The Major Projects Authority is part of the Cabinet Office's Efficiency and Reform Group (ERG) and replaces the Office of Government Commerce's (OGC) Major Projects Directorate.

The Major Projects Authority has been established by the government to '..bring about the successful delivery of major projects across central Government by working with departments to ensure the fitness and quality of major projects throughout their life...' (ref HM Treasury, Major project approval and assurance guidance).

A project is defined as a 'major project' if it meets any of the following criteria:

  • It requires HM Treasury approval.
  • It could lead to a breach in departmental expenditure limits.
  • It involves significant levels of unplanned spending.
  • It could set an expensive precedent.

There are approximately 200 major projects.

Procedures set out by the Major Projects Authority are mandatory for all major projects. They focus on a series of reviews and approvals at key stages in the development of a project.

Generally, the Treasury Approval Point process reviews projects outside the departmental delegated authority but below the level required for Major Projects Review Group scrutiny (usually £1bn).

See Major Projects Authority for more information.

[edit] Payment.

The 2015 Public Contracts Regulations require that public bodies in England include a 30-day payment clauses in supply chain contracts. In October 2016, a guidance note was published by the government making clear that this is 30 days from the issue of a payment notice.

[edit] Find out more

[edit] Related articles on Designing Buildings Wiki

[edit] External references