If we work together we can fix this

Social landlords have put annual contracts out to tender and awarded them to the lowest bidder, or used a panel of local tradespeople on an ad hoc basis.

But changes in the law and evolving practice in other forms of construction procurement mean that these approaches may not now be good enough.

A standard “term partnering” contract, to be launched by the Association of consultant Architects on 31 March, could be a solution.

It enables landlords to procure in a partnered way and still enjoy contractual protection.

The contract can be agreed before the term starts, so that the parties can develop procedures together and then begin to use them as soon as works start on site.

More and more registered social landlords and local authorities are turning to partnering to procure construction services. This means setting up structures and procedures that allow service providers to contribute to the procurement process, and that foster trust and cooperation between the parties. It is encouraged by the Housing Corporation, by local authority inspectors and by much independent research.

Partnering is particularly suitable for procuring contracts for reactive repairs. Typically a lot of the money spent on repairs contracts goes on administration, but long-term partnering relationships should reduce duplication and administration. Partnering also offers the chance to include key specialists in the contract, removes the need for annual tendering and allows the whole partnering team to contribute to the programme.

However, before putting a partnered programme out to tender you need to think about several legal and technical issues.

The first is the Public Services Contracts Regulations 1993, which apply to local authorities and RSLs and regulate the selection of service providers for reactive maintenance. The regulations apply when sums over £153,376 are involved. So if you are looking for someone to provide a maintenance package whose value will be more than £153,376 over the term of the contract, you will need to go through the public procurement procedure.

Partnering means you can include key specialists in the contract, avoids annual tendering and allows the whole team to contribute to the programme

Section 20 of the Landlord and Tenant Act 1985 may also be relevant. If any of the work to be done might be covered by the service charge that leaseholders pay the landlord, the landlord will usually need to consult under the act as well as undertaking the public procurement procedure. This may not be an issue with simple reactive maintenance contracts but care is required if, say, minor planned works or scheduled maintenance works are also to be undertaken.

The Transfer of Undertakings (Protection of Employment) Regulations 1981 (TUPE) might also apply. If any employees of an existing contractor spend most of their time working on your properties, they may have the right to transfer to the new contractor with their current terms of employment. This could affect tender prices. In the new contract you might stipulate that the new contractor will tell you about employees who may have TUPE rights at the end of the contract term.

VAT may also be an issue. It is generally no longer possible to save VAT by setting up a joint venture with a contractor. But it may be possible to save the tax on employee costs by employing them directly and having them managed by the contractor, although this raises other practical issues.

Partnering timetable

The new term partnering contract also includes provision for a partnering timetable, so that all parties know who is to do what by when in implementing improved processes. For instance, the contract includes procedures for “open-book” pricing, and if the parties agree that they would like to use this system, they might agree in the timetable to move to it at the end of the first financial year.

Other procedures allow for adding extra parties. In this way, key specialists – contractors for asbestos removal, CCTV, lifts and so on – and suppliers can become contractual members of the partnering team.

And the contract also covers things to keep partnering running smoothly, such as a core group to monitor key performance indicators and address difficulties as they arise.