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 OGC guidance has now been archived.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'.

However, PFI has now been widely discredited due to a percieved lack of value for money, and it is no longer permitted on new public projects.

[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 since 2016.

[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] Related articles on Designing Buildings

• Best value procurement.
• Common minimum standards.
• Complex outsourcing.
• Controllable spend.
• Construction project funding.
• Consultancy playbook.
• Creating social value from civil engineering projects.
• Critical service contracts.
• Critical suppliers.
• Crown Commercial Service CCS.
• Crown Representative.
• Dynamic purchasing system under the Single Procurement Document (Scotland).
• Electronic auctions under the Single Procurement Document (Scotland).
• Exclusion grounds under the Single Procurement Document (Scotland).
• Fair payment practices.
• Framework agreements.
• Government Construction Strategy.
• Government procurement post-Carillion.
• Green public procurement.
• Independent review of construction frameworks.
• Infrastructure and Projects Authority.
• Integrated Supply Team.
• Management Consultancy Framework MCF.
• Managing the procurement process.
• Major Projects Authority.
• Mixed economy.
• Model Services Contract MSC.
• Most advantageous tender MAT.
• Most Economically Advantageous Tender (MEAT).
• National Infrastructure Plan.
• OGC.
• OJEU.
• Output-based specification.
• PF2.
• PFI vs PPP.
• Private Finance Initiative.
• Procurement Policy Note 12/15.
• Procurement policy note PPN.
• Procurement route.
• Public.
• Public body.
• Public contract.
• Public project definition.
• Public sector.
• Public sector dependent suppliers.
• Publicly subsidised project.
• Restricted procedure under the Single Procurement Document (Scotland).
• SMEs and government contracts.
• Sourcing playbook.
• Transforming Public Procurement Green Paper.

[edit] External references

• Government Construction Strategy.
• Efficiency and Reform Group.
• Infrastructure UK (IUK).
• HM Treasury, Major project approval and assurance guidance.
• The Public Contracts Regulations.