Last edited 02 Nov 2015

Procuring steel in major projects

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On 2nd November emergency government measures to address the fledgling UK steel industry were introduced, requiring that main contractors reveal the sources of their steelwork when bidding for major projects.

Such measures come in the wake of the Tata Steel plant closure in Scunthorpe and in response to concerns that projects such as HS2 will incorporate large quantities of cheap steel imported from China, thereby casting doubt on the long-term viability of UK steelwork fabricators and suppliers.

Clients like HS2, Network Rail and Highways England will require that contractors set out details of how and from which supplier their steel will be sourced. Public works contracts will stipulate that if a supplier has not been selected at contract award, the main contractors and relevant steelwork firms must advertise openly for steel supply opportunities.

The ‘Procurement Policy Note: Procuring steel in major projects’ guidance is intended to support UK steel suppliers in competing for government contracts, and applies to all infrastructure, construction or any major procurement project with a total steelwork content valued at over £10m.

The key actions introduced by the guidance are:

  • Signaling future pipelines of demand for steel: The aim is to give suppliers greater confidence to plan for the future, and support a more strategic approach to the management of supply markets.
  • Effective pre-procurement engagement: It is thought that this will help to stimulate increased competition and give potential suppliers a better understanding of the nature of the requirement, intended approach, committed volumes and scale.
  • Supply chain transparency and advertising supply chain opportunities.
  • Assessing potential suppliers in the supply chain at selection stage: The aim is to ensure that all key subcontractors responsible for the delivery of steel are compliant with the relevant health and safety and employment legislation of the country in which they are based.
  • Ensuring value for money is calculated on a whole-life cost basis: The award of contracts should be on the basis of the most economically advantageous tender.
  • Evaluating social and environmental benefits and impacts.
  • Managing contractors’ obligations.

Paymaster General Matthew Hancock said: “By asking procurers on major UK projects to consider social and environmental impacts, we are building a Britain that is happier, healthier and better off.

"We will always strive to get the best value for money for taxpayers and we are going to do so in a way that strengthens our economy and bolsters the long-term prosperity of people across the country.

I don’t want contracts going abroad if the best bid is a British bid with all the social and economic benefits that brings.”

You can read the government's guidance report here.