Government to examine claims by subcontractors that public-sector clients still look for cheapest quote.
The Treasury is to carry out a wide-ranging review of government procurement methods after complaints from specialists that cut-throat tendering is still prevalent.

The review, to be carried out by the Treasury's Office of Government Commerce, will examine contract terms and conditions in consultation with construction industry bodies.

It will also consider industry payment terms and the now defunct Construction Industry Board's code of practice on the selection of subcontractors.

OGC's chief executive Peter Gershon and construction director Deryk Eke recently met the Constructors Liaison Group to hear concerns that competitive tendering was still rife among the government's clients.

After the meeting, Gershon confirmed in a letter to CLG chairman John Harrower that the CLG would be involved in the review. The letter said:

"I confirm that the OGC review of contract terms and conditions will involve consultation with CLG and other representative industry bodies."

The review is expected to take up to six months.

A separate CLG report based on a survey into specialist contractors' views of government procurement is also to be considered in the review.

It concludes that best-practice initiatives are being ignored on government projects in favour of contractors with a lowest-cost culture. The report criticises the government for not applying the changes set out in the 1999 best practice initiative.

It adds that there is concern about the lack of fairness and transparency in tendering procedures and claims that invitations to subcontractors to act as partners on government projects are rare.

Rudi Klein, chief executive of the CLG, said that the report had been handed over to the OGC with information on retentions. He said the report would provide the OGC with information on companies further down the supply chain, so it could act as benchmark.

Klein said: "We want to work closely with the OGC to help put stakeholders in the supply chain and to help improve upon the problems we have diagnosed."

CLG executive secretary John Nelson said that the CLG hoped that the remit of the OGC review would include cash retentions – a long-standing aim of subcontractors' trade associations.