Public project: PFI tender
The Government Construction Strategy proposes that publicly-funded projects adopt either a design and build, private finance initiative (PFI) or prime contract procurement route. These routes involve contracting an integrated supply team to design, construct and sometimes finance, operate and maintain the development. Traditional procurement routes that separate design and construction should not be used unless it can be demonstrated that they offer better value.
 Starting the work stage.
The client arranges a stage start-up meeting with the internal client team, independent client advisers and project manager to issue any amendments to the project execution plan, confirm the procurement route and to to agree the programme and procedures that will be adopted for tendering. The client gives instructions relating to lists of approved contractors, OJEU requirements, preferred form of contract, contract conditions, and the allocation of risk.
If it is necessary and has not already been done, OJEU or other adverts are prepared and placed.
The client may organise a bidders' conference to promote the project and provide additional information to potential bidders.
- Public sector contracts may subject to fair payment practices.
- Public sector contracts may be subject to requests under the Freedom of Information Act.
- Public sector contracts are increasingly likely to include requirements for building information modelling (BIM). This may affect consultants’ appointments, pre-construction services agreements and the main contract and sub-contracts in relation to the supply of design information and ‘as built’ or ‘as manufactured and installed' information.
 Preparing the invitation to negotiate.
If it has not already been done, the client develops the project brief into an output-based specification. They then select the form of contract and contract conditions (perhaps with advice from independent client advisers) and co-ordinate the preparation of the invitation to negotiate.
The client co-ordinates the preparation of pre-construction information, and if it has not already been done, the client prepares or arranges for the independent client advisers to prepare a site waste management plan (if required).
 Identifying potential bidders.
From responses received to any adverts placed, or from recommendations received, the client co-ordinates the preparation of a long list of potential bidders.
The client issues pre-qualification questionnaires (which may include an invitation to submit outline proposals) and information packs, if they have been prepared, to the long list of potential bidders.
The client carries out financial checks on potential bidders (ideally the contract should not be more than 20% of the annual turnover of the potential bidders) and considers potential bidders' competence to act as principal contractor.
The client co-ordinates any advice from independent client advisers, the project manager and internal client team on the long list of potential bidders and prepares a short list of pre-qualified bidders. The short list of pre-qualified bidders may be further reduced (to just 3 or 4) by pre-tender interviews or by an invitation to submit outline proposals if this has not already been done.
 Identifying the preferred bidder.
The client collates the invitation to negotiate and arranges for its dispatch to and return from the short-listed bidders. They then compile queries from bidders and co-ordinate responses (which should be issued to all bidders). If necessary, the client arranges mid-tender interviews and/or site visits for the bidders.
If queries from the bidders or discussions during the mid-tender interviews result in significant clarification of, or changes to, the invitation to negotiate, the client may wish to extend the bidding period.
The client receives the bids. They may follow a formal procedure for opening and recording bids. The client then co-ordinates assessment of the bids (including assessments by any the independent client advisers or the project manager). This may include further interviews.
The client may decide to deselect some of the bidders and request a best and final offer from the remaining bidders (no more than 2). The client then selects the preferred bidder. A reserve bidder should be retained in the event that negotiations with the preferred bidder are unsuccessful.
 Entering into negotiations with the preferred bidder.
The client co-ordinates negotiations with the preferred bidder. Negotiations may be led at different stages by the client's in house team, independent client advisers, a contract administrator or by a project manager. This process of negotiation may involve development of, or changes to, any outline proposals prepared by the preferred bidder to ensure a best value solution is adopted. NB It is paramount in any negotiation that the individuals negotiating either have authority to fully negotiate terms or make it clear from the start the limits to their authority. This may mean re-convening with the right people empowered to make decisions.
 Gateway review 3: investment decision.
The senior responsible owner (SRO) commissions an independent peer review of the project, gateway review 3: investment decision, which re-assesses the business case and the governance arrangements prior to the decision to invest. Gateway reviews are mandatory for central civil projects and best practice for the health sector, local government and defence projects.
The review team issues a confidential review report to the senior responsible owner who then implements any actions necessary.
 Appointing the integrated supply team.
The client collates the contract documents and arranges for the printing (engrossment) and execution of two copies, one for the client to retain and one for the preferred bidder (from hereon called the integrated supply team). Alternatively, the client might retain one executed contract, with certified copies being issued to the integrated supply team, this can avoid potential errors in preparing two contracts for execution. The integrated supply team may be required to provide a performance bond, warranties and evidence of insurance cover.
The client informs other bidders that they have been unsuccessful.
Featured articles and news
Urban Heritage, Development and Sustainability: international frameworks, national and local guidance.
What will the General Data Protection Regulations (GDPR) mean for you when they come into force in May?
Business Secretary chairs a new taskforce to monitor and advise on mitigating the impacts of Carillion’s liquidation.
Sir John Armitt is appointed the new chair of the National Infrastructure Commission.
High quality and high density homes - is it what we need or is it storing up trouble?
Government announces its intention to strengthen planning rules to protect music venues and neighbours.
National Audit Office reports that there is little evidence that PFI offers better value than other forms of contracting.
What is liquidation and how does it apply to contractors in the construction industry?
Scrutiny is placed on Carillion's controversial 2013 decision to extend subcontractor payment terms to 120 days.
RSHP unveil their involvement in a boundary crossing which will provide a new entry point into Hong Kong.
With PFI currently under the spotlight due to Carillion, this introductory article explains what they are.
Estimates suggest that up to 30,000 small firms could be at risk of non-payment as a result of Carillion's collapse.