The industry has waited a long time for the government’s £2.9bn construction consultancy framework. But doubts remain that all the problems have been ironed out. So will the wait have been worth it for the 32 firms on the scheme?
Late in May Kevin Murray, head of property and construction at the government’s buying arm, the Crown Commercial Service, convened a snappily-titled “supplier induction event” at the organisation’s Holborn offices for members of the government’s £2.9bn construction consultancy framework. It might not sound like much to write home about. But for the 32 firms in the room, this meeting, finally formally marking the birth of a framework designed to be the principal route through which public sector bodies buy construction consultancy, had been a very long time coming indeed.
Sources said representatives from the Crown Commercial Service (CCS) suggested to the assembled industry the even more snappily-titled Project Management and Full Design Team Services framework (PMFDTS) would hit the ground running, with public sector clients lined up to commission work after the election, and with great confidence that it would be well-used after that. Its scope is massive: tender documents said it had been designed in consultation with central government, nuclear industry, education, local government, devolved administration, defence and health sector clients.
Given the time, bidding cost and potential value of the framework, those of the 32 spoken to by Building were understandably jubilant to have made it into the room. One partner at a successful firm said: “We’re absolutely delighted with the outcome – it’s really a huge deal for us.”
But behind the smiles of the winners, there are still lots of questions to be asked about the procurement and operation of the vital CCS framework. Almost four years overdue, the framework appeared subject to every problem imaginable, including a legal challenge that forced the abandonment of the first attempt in 2014. The body that set it up, the CCS, was in January described by MPs as “dismal” after having failed to deliver quality services or gain the confidence of Whitehall departments, leading some to question whether spending departments would actually use it. Questions also remain about whether the procurement really fulfilled the government’s pledge to prioritise small businesses, and whether it failed to weed out “abnormally low” bids, even though this issue contributed to the government ditching the original framework in 2014.
Tale of woe
The new framework was originally born out of the “buying solutions” framework run by one of the CCS’ predecessor bodies, the Office of Government Commerce (OGC), but which expired in June 2013. Eventually the OGC brought in consultant UK SBS to procure its replacement, commencing work in October that year, 10 months later than planned. After further delays and the issuing of more than 400 “clarifications”, the winning bidders were finally announced in June 2014, before being subjected to a legal challenge from one of the losing bidders, T&T. The consultant alleged manipulation of prices and the government’s scoring system, and rather than fight the case the government decided to re-run the procurement, eventually bringing it in-house to be overseen by the then newly-formed CCS. But the delays did not end there, with the new deadline for getting the framework up and running by December 2015 proving woefully optimistic – ultimately by 18 months.
The jury’s out on the usage. Certainly our sense is that the higher education sector, for one, isn’t interested in using it at all
Richard Young, Buro Four
We now know from the National Audit Office report in December 2016 into the CCS that it was, at the time, under review by the Cabinet Office, which had concluded it had “consistently promised more to customers than it could provide”. Malcolm Harrison, appointed chief executive of the CCS in November last year to put its roll out back on track, told the Public Accounts Committee in January this year that the CCS had muddled up activities that should be centralised with others, such as placing purchase orders, which should have been left to individual departments. The Committee also concluded its management of frameworks was “unsatisfactory”, with the body failing to benchmark and unable to prove that frameworks were the best in the market. The CCS responded by saying it now had “an experienced senior leadership team in place”, and that it was “confident in our ability to deliver value for the taxpayer moving forwards through the centralised procurement of common goods and services”.
Despite all these problems, consultants that have now won a place on the framework are optimistic about its likely impact. One director at a firm on the framework says: “We think confidence in it will grow. There are good suppliers and the ease of access it will provide for public bodies means it will pick up.” Peter Hogg, partner at Arcadis, says: “We’re pleased. Of course we would have preferred a shorter, crisper process, and we think some clients would have preferred that too – but we’re already seeing strong take-up.”
And while Richard Young, director at project management firm Buro Four, which missed out on a place, says the bidding process was costly and bureaucratic, requiring “volumes of stuff, asking the same questions repeatedly of slightly different phases of the project”, the feedback from winners is that CCS handled the procurement better than UK SBS before them. A partner at a successful bidder says: “They handled it reasonably well compared to the previous attempt. There were still a lot of clarifications, but less than last time round and the communication was a lot better.”
Nevertheless, Buro Four’s Young says this bureaucracy, combined with the requirement for detailed knowledge of specialisms such as BIM, even on the supposed single-discipline lots, made the process distinctly unfriendly for SME or specialist bidders. RLB chairman Ann Bentley has previously suggested the aborted first round of bidding alone cost the industry at least £5m, and Young says: “It went far deeper in to other specialist areas than we’d ever want to go – it’s only the big firms that have all this in-house.”
The government has a commitment to spend £1 in every £3 of public money with SME firms, however just 10% of the framework places went to SMEs, according to the Cabinet Office. Young says of the government’s promise to buy more from SMEs: “It’s just rhetoric. We’re on many private sector frameworks where we’re valued, but the government is just not interested.”
A number of bidders, both winners and losers, have also spoken to Building of disquiet over the pricing of rival bids, with concern heightened by the fact the previous framework was abandoned in 2014 amid complaints about price and “scoring manipulation” of UK SBS’ system. This system for judging pricing was based solely on prices for consulting services for the South-east region. At the time T&T complained that “many winning bidders” provided “very low prices for the South-east” and “very high upwards adjustments to those prices for regional work”. T&T said this was despite the fact “regional work ought in general give rise to lower costs than work in the South-east”, saying it would be possible for bidders once on the framework to then turn down lower priced work in the South-east region. T&T’s legal challenge never publicly named the firm or firms it accused of price manipulation. T&T also complained that UK SBS failed to investigate “abnormally low pricing”.
We think confidence in it will grow. There are good suppliers and the ease of access it will provide for public bodies mean it will pick up
Anonymous industry source
Mace, which was successful on the multi-disciplinary, project management, and cost management lots of the new framework, had by some distance the lowest cost bid on all three of the lots it gained a place on, according to information passed to Building. With bidders’ tender prices scored out of 25, Mace scored 21.5 on the multi-disciplinary lot and the full 25 on both project and cost management. On the multidisciplinary lot the second placed bidder, Ridge, scored only 12.4, and on both cost and project management Mace’s score was even further ahead – more than double its nearest rival. One rival bidder said: “Mace were head and shoulders above everyone else on fees.”
With the previous abandoned procurement, Mace won each lot it bid for on pricing too, according to scores seen by Building at the time. Building understands that this time round a number of bidders were sent letters described as “abnormally low tender” letters by the CCS asking them to justify aspects of the prices they had submitted, though both the Cabinet Office and Mace declined to say if Mace had received one of these.
Despite concerns, there is no evidence suggesting Mace’s prices, or anyone else’s, were below the cost of actually delivering the work. Certainly, given the abandoning of the previous procurement, the sensitive issue of “sub-economic tendering” was clearly one the CCS was very much aware of this time round. A CCS spokesperson said: “The procurement was undertaken in line with the published Invitation To Tender and with Public Contracts Regulations 2015 and CCS are satisfied with the outcome.” Mace did not wish to comment.
In one sense this debate is academic – given that no-one has challenged the award, something that would have to have been lodged by 2 June. The more important question is whether public sector clients will now use the framework to the extent expected – the CCS’s tender documents said it expected a workload of between £1.6bn-£2.9bn to go through the framework during its four-year lifetime. However, the four-year procurement delay means other public sector frameworks, such as those run by the Homes and Communities Agency, Scape and consortiums of local authorities and health trusts have been heavily used by commissioning bodies instead, who may need to be convinced to return to the fold. Rules around general election purdah mean the government can’t officially comment on the expected future usage of the framework.
However, Buro Four’s Young says: “The jury’s out on the usage. Certainly our sense is that the higher education sector, for one, isn’t interested in using it at all.” And while initially the framework had been designed to cover government work overseas, in July last year the Foreign Office, MoD, Defence Infrastructure Organisation and Department for International Development jointly decided to pull out of the framework for overseas work and set up their own.
The public clients have got to be able to find a way to reduce the number of people they go out to on each tender otherwise this could just waste so much industry time
Anonymous industry source
Concerns have been heightened by the breakdown of trust, highlighted by the Public Accounts Committee, between central government departments and the CCS, which meant that by last year, rather than servicing all 16 central government departments, as per its original business plan, the CCS was only managing spend for seven – which didn’t include some big spending departments such as education or health. While a CCS spokesperson said the framework was “open to all government departments and the wider public sector,” one source at a firm which has made it on to the framework said: “There is a degree of nervousness that it will have lost some of the momentum from the old OGC framework.”
This nervousness is compounded by the extended membership of the framework. Where the old OGC framework comprised a single lot containing 12 firms, the new framework contains 32 firms on six lots, with between 10 and 16 suppliers on each lot. This means that not only will the overall volume of work be split up between 32 players, but that for each individual piece of work firms will be competing against anything up to 15 other businesses. The source quoted above says he also fears this “will mean workload is more diluted”.
A source at a different successful firm said he was more concerned about the potential for a huge administrative burden of bidding. “The public clients have got to be able to find a way to reduce the number of people they go out to on each tender otherwise this could just waste so much industry time. This is pretty important.”
According to the customer guidance issued by the CCS alongside the tender documents, there is an ability to exclude firms from the mini-competitions held within the framework, but only if their competencies don’t cover the specific work being offered.
So while the sector is undoubtedly relieved the procurement is over, it seems it will still be some time until the industry knows whether all the pain was worth it.