We recently attended Built Environment Networking Ltd's National Framework and Procurement conference where our Director of Procurement, Alan Heron spoke about our new Major Projects Framework 2 launching soon.
In case you missed it, you can catch up with all that was said here and find out all the opportunities the next generation of our major projects framework will bring as well as our innovative approach to procurement and frameworks.
Innovation is a phrase often over-used, but never under-sold. We live in challenging times; Brexit, COVID, Supply Chain Shortages, Spiralling Energy and Commodity Costs, and not to mention a tsunami of legislative changes. Now more than ever procurement needs to be innovative to mitigate these challenges.
When we were developing the tender documentation for our new Major Projects Framework – we wanted to ensure innovation was at its core. So, before we even put pen to paper, I decided to review the Tender documents for every single one of the major construction frameworks issued in the last 12 months. Why would I do that? Because Pablo Picasso thought it might be a good idea! Picasso famously said, “Good artists copy, great artists steal!”. What he meant by that is that good artists simply take any ideas they see and duplicate them exactly – whereas great artists or visionaries will see something they like but re-purpose or re-frame it to make it better than it originally was.
So, I spent days scouring the tenders for something interesting that I could “steal” and re-purpose. However, I found nothing. Given the significant impact of the challenges we currently face from Brexit, spiralling commodity prices, COVID, supply chain constraints, huge swathes of legislative change (both now and upcoming) – I was amazed that all these tenders from very prominent consortia – did not seem to reflect where we are today at all. In fact, most of them could have been written in 1984 and you would not have known any different.
We are in unique situation at this point in time. This categorically is an anomalous period in public sector procurement. The perfect storm of all the challenges we currently face make this a completely unique timeframe – but there was almost no recognition of that in any of the tenders I read! Not one iota. They could all have been photocopies of the previous iterations of their frameworks, with a new date written at the top of the page.
So given all the above, we decided to put together a framework that addressed all of this.
We created the Major Projects Framework 2 - A fully compliant framework for construction projects within the public sector with three lots, Scotland, England & Wales, and Northern Ireland.
Ethical, Honest, and Transparent
The first thing we wanted to ensure was that the Framework was ethical, honest and transparent.
Embedded within the ‘Transforming Public Procurement’ green paper, and the more recent National Procurement Policy Statement is a strong underlying message of Ethical behaviour.
The proposed legislation mandates that any fees charged by a consortium must be transparent, proportionate, and used ‘solely in the public good’. Most procurement consortia charge fees to the suppliers on their frameworks or DPS’s for any contracts you award to them. This means that although you are not directly charged by the consortia – indirectly you will be, because the supplier will have incorporated the fee to the consortia in their pricing to you.
Unfortunately, many consortia still describe their services as completely free with no customer charges. However, as my mother wisely drummed into me as a young boy in Glasgow – “There’s no such thing as a free lunch”. Consortia that charge fees to the supplier are fully aware that it is incredibly likely that the customer will indirectly incur the charge. However, the actions of some consortia that play Victorian parlour games of misdirection and subterfuge with regards to their fees and public money are archaic, and quite frankly insulting. We live in a time where transparency and ethical behaviour are paramount. This simply is not good enough anymore.
All fees – either directly or indirectly paid by the customer – should be clearly and openly stated to all parties. Not denied or hidden away on page 73 of a downloadable document somewhere on their website. What’s wrong with clarity and honesty?
The type of procurement consortia we engage with as a sector reflects upon us all. Do you want your organisation to be seen to be working with a private or quasi-private procurement consortium precariously piggy backing on the contracting authority status of another public sector body? Or working with a consortium that doesn’t declare its fee structure, or struggles to justify why they are charging 4, 5, or 6% fees when others in the market are charging less than 2%?
The new legislation also dictates that all fees generated should be used solely in the public interest. That is music to my ears, although I fear many other consortia will be burying their heads in the sand over that.
As part of the public sector, it’s critical we protect our reputations by being careful about who we associate with. It can have lasting and damaging consequences if we don’t – just google recent news stories about Prince Andrew if you’re not yet convinced.
We decided to ensure the Major Projects Framework was different. The fees we charge to our suppliers on the Framework are 0.5% of the project value but reduce down to as little as 0.15% for larger projects.
Furthermore, every single penny from those fees, will either be donated directly to charities (we’re partnering with Children in Need to ensure monies raised will be delivered back into the region the project was delivered in), used to fund Social Value Projects, or reinvested into delivering quality social housing throughout the UK. Every single penny.
We’ll also ensure that these fees are clearly communicated on our website, supporting literature, and everywhere we can, as we currently do with all of our frameworks and DPS’s. It’s my firm belief that Procurement Hub are the only Procurement Consortia in the UK, currently meeting the transparency, proportionality, and public interest demands of the forthcoming procurement legislation.
Financial Robustness & Integrity
It was also of paramount importance to ensure the financial robustness of the bidders. To do so, we started by mandating a minimum turnover for each of the three lots in the Framework. In doing this we ensured that only suppliers of a meaningful size and financial credibility could apply.
But that was just the first step. Then we put in place several key measures which allowed us to ensure the ongoing financial credibility of the suppliers. We mandated that each month, the awarded suppliers would provide a range of key financial information to allow Procurement Hub to truly understand the ongoing financial strength of each supplier. These include, D&B reports, Revenue Reports, Budget Reports, Cashflow Statements, and more.
Mandating the ongoing openness and transparency of financial information with the awarded suppliers is fundamental to ensuring that our customers can have confidence in using any of the appointed suppliers to the framework.
Speed of Procurement
A couple of the key recommendations from Professor Mosey’s recently published ‘Constructing the Gold Standard’ report were around the speed of procurement, and the avoidance of a race to the bottom in price evaluations. By designing the framework in a 3-lot structure, with a single supplier in each lot, allowing for immediacy of project starts, and also using a nominal bid price evaluation model (which I didn’t see in any of the other frameworks I reviewed) we also meet these key recommendations.
The innovation in our Major Projects Framework doesn’t stop here though, we’ve tried to embed it in every aspect:
- Social Value
- Our Suppliers have all committed to contribute to our charitable donations
- They have committed to creating up to 8 Jobs per £5m of contract value
- They’ve also committed to up to 35% Social return on investment
- Modern Slavery
- We’ve worked closely with Unseen, one of the UK’s foremost Modern Slavery Charities to create a Modern Slavery training program specifically tailored for the construction sector. This training will be mandated at every site, on each and every project delivered via the Major Projects Framework
- Supporting the Supply Chain
- A minimum of 85% of the value of each project will be awarded to local and regional subcontractors and SMEs
- 100% of all payments will be made within 19 days to all primary sub-contractors
Fundamentally I’m a buyer. I’m the Procurement Director for a public sector organisation. I’m a customer. So, we designed this framework from the perspective of the customer. We talked to several public sector organisation about what a good innovative construction framework would look like. We listened. We considered. And we built it.
We also asked other public sector organisations to evaluate the bids for us. This framework isn’t just for our exclusive use, it’s for our customers so, it was only right that they decide who we appointed. Robertson Group were appointed in Scotland, Willmott Dixon in England and Wales, and Farrans in Northern Ireland.
The framework will launch in April this year, and it’s my belief that it will one of the most innovative, ethical, greenest, and robust construction frameworks available anywhere in the UK.
Share this story
We will be exhibiting at Local Government Association's Annual Conference 2022
Join us in Harrogate on Tuesday 28 June, Wednesday 29 June and Thursday 30 June 2022 at stand number Q83.
Join us at Housing 2022!
We’re excited to be back at the Chartered Institute of Housing’s annual conference.
We will be at Built Environment's UKREiiF 2022
Join us on Tuesday 17 May, Wednesday 18 May and Thursday 19 May 2022 at stand number E26.
Catch up on the action from this year's National Framework and Procurement conference.
In case you missed it, catch up with our director of procurement, Alan Heron's speaker session at Built Environment Networking Ltd's National Framework and Procurement conference.