This weeks biggest stories are frameworks, SMEs and Mipim
David Cameron’s “enemies of enterprise” speech at the Conservatives’ spring conference this week – in which he attacked public sector procurers who issue only large contracts and deal with only large firms – will have sent a debate that’s long been on the construction agenda to the top of civil servants’ overflowing in-trays.
The question of how to support small businesses and harness the benefits they can bring - when efficiencies are associated with bundling large groups of work together in framework deals – is a long-standing headache. It affects every sector, but none more so than construction.
Cameron’s speech, and recent government rhetoric about breaking up public sector frameworks to give smaller firms a chance, has confused many after years of government policy that pushed integrated supply chains and framework deals. But, as chief construction adviser Paul Morrell says, many of the policy statements so far are not directed at construction. The government, in fact, acknowledges that procuring a national hospital building programme is not as simple as ordering paperclips.
But while the government is not moving away from frameworks in construction, it is clear that officials procuring projects need to make savings to the tune of 30-40% - and find ways to engage more with SMEs.
Frameworks do not need to be at odds with this. After consulting with firms on the academies framework, for example, the government says it can slash by £1bn the cost of academies going through procurement, and halve the time each scheme takes to procure. But frameworks are likely to be scrutinised like never before, and many will face changes to the way they are operated. The academies deal has already gone through this, being split into two regional deals when it was reprocured in 2009. That enabled regional players, like Leadbitter, to take a slice of the work. The National Federation of Builders is taking this thinking one step further, by looking to put together a group of SMEs to bid on bigger framework deals.
Pioneering councils like those attending this week’s Mipim event in Cannes, also show how projects can open up to SMEs. The forward thinking of these authorities is already marking them out as key players in the new era of local-led procurement. Manchester council, for example, has set up different frameworks for projects in different value groups, ensuring that smaller schemes are not simply swallowed up by bigger players.
It is up to the industry to highlight these examples to the government if we are to avoid a widespread return to lowest-price, cut-throat bidding – which in the end will benefit nobody, least of all the smallest firms on the tightest margins.
Sarah Richardson is deputy editor