News

Government floats controversial plan to tear up frameworks

18 February 2011

Government plans to end the “procurement oligarchy” of major contractors consistently winning framework deals have provoked strong reactions in the industry, Construction News reported.

SMEs welcomed the plans, outlined by Cabinet Office minister Francis Maude, which are designed to help smaller firms win more work. But larger contractors fear the consequence will be an increase in suicide bidding and ultimately a higher cost to the public purse. 

The proposals, which follow a Cabinet Office review of contracts with 34 major  suppliers, were launched at an “SME summit” held by Prime Minister David Cameron and Maude, attended by Construction News.

The government plans could lead to the dismantling of large, long-term contracts and a move away from frameworks which have squeezed out smaller firms.

David Cameron said the changes would provide billion of pounds of opportunities for SMEs, making the system more transparent.

“Too many contracts are signed off behind closed doors with little or no public scrutiny. That can be good for the contractors who can charge over the odds without being properly challenged but it is not good for the taxpayer who is being shortchanged and denied value for money,” he said.

The plans include proposals to eliminate pre-qualification questionnaires for all public sector contracts under £100,000 and introduce a single PQQ form for all procurement of common commodities, emulating construction's PAS91 scheme.

The Prime Minister also launched the Contracts Finder website and announced the appointment of Crown commercial representative Stephen Allott to build dialogue between government and smaller suppliers.

One colourful idea is for “Dragon’s Den” style product surgeries where SMEs can pitch innovative products to public sector buyers.

Francis Maude told Construction News that the measures would end the “procurement oligopoly” that shuts out small firms.

Construction SMEs claimed the measures would help “level the playing field”. “There is a real benefit for SMEs who can deliver better value as it gets away from national contractors with massive overheads,” said Steve Hale, Crofton Design managing director.

But the director of one larger SME said: “If they are thinking about splitting up frameworks it would be disappointing - it would just mean bottom price, poor service.”

National contractors also voiced concern, arguing framework agreements and large contracts provide economies of scale that help keep down costs.

“The notion of backroom deals is just political point-scoring,” said one. “I sympathise with opening the market to SMEs, but it runs directly counter to getting best value.”

Comments

About time , having experienced frameworks from the prospective of a National Contractor and also an SME I welcome the news that frameworks might be discontinued. For too long contracts have been placed not on the basis of quality or cost but the slickness of the marketing team involved in the PQQ.
The real benefit will be to locally based contractors who will be more responsive and provide better product.

Carl Scholes, 21 February 2011

This is a very welcome move indeed.

Gradually through successive governments, SME's have been shut out completely.

Despite the necessary skills, no small company can possibly start from scratch as the pre-qualifications are prohibitively expensive.

Equally, one of the main criteria is usually stated as "Minimum of 3 years experience in contracts of this size", thereby locking-out the Entrepreneur.

Banks will not lend money to enter the pre-qualification process.

By locking-out small companies, true invention and enterprise is stifled.

It is not true that small companies work to lower standards of quality, as a small business depends on being better in order to win work.

Richard Herron, 21 February 2011

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