Long-term, single-point procurement to become favoured system for UK's biggest clients.
Prime contracting is set to become the government's leading procurement system and has been adopted by the UK's highest-spending private construction client.

Office for Government Commerce is in talks with Defence Estates to disseminate the system to other Whitehall clients, including the Department for Education and Employment.

And in a separate development, J Sainsbury, the UK's biggest commercial client, revealed to Building this week that it is to switch to prime contracting.

The wider adoption of prime contracting by the public sector is set to begin next year and will probably be used for long-term maintenance and renovation deals.

OGC construction director Deryk Eke said the talks with Defence Estates were about how to disseminate the MoD's experience of prime contracting to other government clients.

Eke said the principle could be ideal for education work. He said: "If you look at the refit of a school, that would be a good place to apply the principles of one-stop shops and prime contracts." Eke was keen to reassure smaller contractors that the one-stop shop procurement route would not shut them out from working for big clients.

He said: "Smaller firms and specialists are always going to be there. There's no reason why prime contracts cannot be led by specialists, depending on the work." However, Federation of Master Builders deputy director-general Brian Flint claimed that there was still a threat.

He said: "This does jeopardise smaller firms; on a local basis it harms employment prospects when a large firm that just moves in and out of the area is used rather than a small firm that is there all the time." The move by Sainsbury, which has commissioned nearly £500m worth of construction work in the past year, will mean the end of existing framework deals with construction managers, architects and QSs.

Sainsbury's property arm, which became a subsidiary of the supermarket giant late last year, said it was adopting the route to establish long-term relationships with contractors.

Head of capital projects Roger Borer said the contracts, set to be in place this summer, would take the form of strategic alliances with contractors. He said: "By striking the alliance, we are now saying we are in for the long term." Borer said there were set to be three alliances in place. These would cover new build; extensions, refurbishments and small works; and distribution. He declined to say how many contractors would work on the deals or for how long.

The move came as Defence Estates announced the implementation of its regional one-stop shop prime contracts (box, left).

It also appointed BRE director Barbara Young as deputy chief executive for innovation.

Defence Estates' chief executive Ian Andrews said the client had also made the appointment to respond to calls for an industry representative on the programme.

What Defence Estates is doing

The regional one-stop shops cover the repair, maintenance and refurbishment. They are divided into five deals lasting seven years, with an option to extend them to 10. Defence Estates said it had agreed to change contract terms, to give contractors greater freedom to make changes to project briefs. The deals are as follows:
  • Scotland: £460m. Advertised January 2001.
  • South-west: £550m. To be advertised October 2001.
  • South-east: £650m. To be advertised second quarter 2002.
  • North/West Midlands/Wales: £750m. To be advertised fourth quarter 2002.
  • East: £550m. To be advertised second quarter 2003
  • Defence secretary Geoff Hoon has announced a £2bn UK-wide barracks upgrade