Opinion

A new procurement approach

9 June 2011

David Mosey, Trowers & Hamlin

Despite the cuts, huge sums are still being spent on public sector projects, particularly on long-term repair and maintenance contracts, which lend themselves particularly well to supporting apprenticeships and other workplace training. Until now, the problem has been how to ensure that clients seek an affordable response from contractors that is proportionate to the size and type of the project.

The constraints of EU regulations mean that past experience in delivering employment and skills outputs can be evaluated when the client is undertaking prequalification to create a shortlist of contractors. However, when a contractor is then selected from that shortlist, it is not possible to compare different employment and skills commitments offered by each bidder because these are “secondary” requirements not critical to the competitive process for the relevant works. What the client can do is define its employment and skills expectations and then invite contractors to accept these as a given and to state what it will cost to comply with these requirements. 

CITB-ConstructionSkills has addressed this through new guidance known as Client-Based Approach to developing and implementing public sector employment and skills strategies on construction projects, utilising the experience they have gained on more than 40 National Skills Academy for Construction projects across the country. 

The new guidance is being launched on 15 June by Paul Morrell, the government’s construction adviser. However, it has already been tested in practice by clients such as Isle of Wight Council and the London Borough of Barking and Dagenham on a range of project types. With the benefit of this data and through pilot projects undertaken by local authorities, they have built up a range of benchmarks that describe what contractors are expected to provide under projects in band sizes ranging from £1m to £100m. 

The Client-Based Approach walks central and local government clients through a prequalification and tender process, compliant with EU regulations, indicating what can be evaluated by clients and costed by contractors at each stage. 

The activities covered by the benchmarks include work placements, NVQ qualifications, apprenticeships and a variety of training plans for subcontractors and cover 16 different project types. For example, on a residential project worth between £6m and £10m, the benchmarks indicate that it would be appropriate to expect four apprentice starts plus allocation of four existing apprentices and to achieve two apprentice completions. 

These expectations rise to seven apprentice starts, allocation of six existing apprenticeships and achievement of four apprentice completions on a residential project worth between £15m to £20m. For water supply and waste disposal, apprentice starts for a project from £3.5-£6m would be one; for a project of £30-£40m it would be three; and for a project of £90m-£100m it would be five. 

The guidance notes that contractors are likely to cost apprenticeships, but that such costs can be offset against the productivity of the apprenticeships themselves. 

For contractors to respond successfully to procurements that use the Client-Based Approach, it will be important to understand what clients will set out in their own employment and skills strategies, and how contractors are expected to develop these into employment and skills plans. CITB-ConstructionSkills has created corresponding guidance for contractors that does exactly that, and that helps contractors work out how best to apportion commitments among their subcontractors. 

This, however, is only part of the story as the guidance specifically recognises the strength of “early contractor procurement” as a means to improve on employment and skills commitments offered at tender stage. Where a contractor is appointed early on a single project or framework or term contract, the guidance notes the scope to review second tier subcontractor and supply chain packages for best value and to test whether cheaper local alternatives also offer the prospect of improved employment and skills commitments.

This approach can have benefits for contractors if they are incentivised through recognition of their improved employment and skills outputs, for example by way of sharing in savings or added value or by way of a performance indicator that leads to contract extensions or additional projects. A system that creates thinking time while local employment and skills issues are addressed should enable contractors to respond to the political imperative of meeting local employment and skills needs.

The creation of opportunities beyond the constraints of EU procurement to enhance local employment and skills commitments after award of contract responds directly to the coalition’s drive for localism and enables local authorities, without incurring additional cost, to address the needs of their local economy.

David Mosey is a partner at law firm Trowers & Hamlins, which collaborated with CITB Construction-Skills on the new guidance

 

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