Francis Maude
The Cabinet Office is expected to take urgent action to give SME contractors’ access to smaller works procured by the Education Funding Agency following a complaint from an SME contractor submitted via its ‘Mystery Shopper’ anonymous complaints service.
The unnamed contractor, a member of the National Federation of Builders, had complained that the criteria set by the EFA for applicants for its 2014-18 Regional Frameworks ignored the government’s own guidance on SME inclusion.
A Cabinet Office Procurement Policy Note from February 2013 on “Supplier Risk Issues” states that “a potential provider should not be deselected on the basis of turnover size alone” and that business insurance requirements “should be proportionate to the size and nature of the contract and represent vfm [value for money].”
There are six regional frameworks of seven contractors each, which kicked off in July 2014 and are due to run until 2018. The list is exclusively made up of large, national contractors, including Kier, Willmott Dixon and Bouygues, which are being offered packages valued at £200,000 to £12m.
It is understood that Francis Maude, the Cabinet Office minister in the previous coalition administration – and now secretary for trade and investment at BIS – resolved to take remedial action at a meeting attended by the NFB held shortly before the General Election.
That decision will now be implemented by education secretary Nicky Morgan, although it is not clear exactly how the SMEs will be offered work, as it is understood that the existing Regional Frameworks will remain in place until 2018.
An announcement had been expected at a Constructionline event on 3 June, although that is now deemed less likely.
Paul Bogle, head of policy and research at the NFB, said: “It started with a complaint via the Mystery Shopper service, and I believe there were other complaints too, but the frameworks were allowed to proceed – so people were frozen out of the market for four years. The Cabinet Office has now decided this is unacceptable.
“The problem was there were contracts for refurb jobs for as little as £200,000, but the minimum turnover threshold was £25m. So now the EFA is finding that the major contractors [on the framework] are saying ‘this is not worth our while’, whereas if they had engaged with SMEs, they wouldn’t have this problem.”
Bogle said that so far the NFB had only been approached about the EFA framework, although it was possible that other public sector frameworks had suffered from the same bias towards major firms.
“We have acted in our members’ interests, although of course other non-member firms have also complained. We haven’t so far picked up complaints about other [public sector] frameworks, although we’re always open to approaches.”
“We do have these mandatory guidelines and they haven’t been enforced, so it is an interesting case and hopefully we will see more engagement with SMEs in the future.”
Jamie Barrett FCIOB, managing director of project management consultancy Evolution5, who has this week written about his firm’s experiences of tendering for public sector work in this Comment article, welcomed the news.
“My reaction is that it’s great, it’s really positive that they’re going to do something about it. But the issue is far greater than just one EFA framework.
“The government has championed the issue of SMEs and public procurement, but it’s about putting that into practice. It’s a shame someone had to realise the rules were contravened before they took action.”
