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Construction Procurement: Deputy First Minister Says Yes To Reform

Construction Procurement: Deputy First Minister Says Yes To Reform

A radical legislative overhaul is underway in public procurement law, with the Procurement Reform (Scotland) Bill having recently received royal assent, and new EU procurement directives set to be adopted into Scottish law by the end of 2015.

In addition to legislative changes, Deputy First Minister Nicola Sturgeon has now officially endorsed the recommendations outlined in an independent review of procurement in public sector construction contracts, signifying the Scottish Government’s support of the proposals.

The independent review was led by Robin Crawford of KPMG and Ken Lewandowski, formerly of Clydesdale Bank Financial Solutions, and their report was published last autumn. It sets the tone for a potential major change in public sector construction procurement; making a series of recommendations that address key challenges faced by both public contracting bodies and private sector construction firms. It is intended that responsibility for addressing these issues should fall jointly to industry and government, and the aim should be to improve efficiency, streamline processes, create greater transparency and achieve better value for taxpayers.

What are the recommendations?

The recommendations cover a wide range of problem areas, but some key points include the following:

  • To strengthen the Government’s construction procurement policy function, the report recommends the creation of a senior construction advisor to champion the reform programme and act as a channel of communication between the Government and industry.
  • To generate greater confidence within the industry, the reviewers propose that a pipeline of anticipated workload should be published annually through a central directory. They also recommend that all public contracts be advertised through the Public Contracts Scotland portal.
  • The report stresses the importance of creating greater opportunities for SMEs to bid for public contracts. A number of different proposals are made which include altering framework agreements to make it easier for SMEs to compete fairly, and rejecting the use of UK wide frameworks which often have the effect of locking SMEs out of the bidding process. 
  • The reviewers have suggested setting a minimum threshold for projects run through the hub model to allow smaller projects to be awarded using traditional methods of procurement. This has only been posed as a point to consider, but it’s noteworthy given the Government’s commitment to hub. 
  • Refining pre-qualification questionnaires (PQQs) to make them less burdensome to complete, and issuing guidance to public bodies to assist in the use of PQQs in a way that is proportionate to the size and risk of the project.
  • Introducing Building Information Modelling (BIM) level 2 into all central government construction contracts, and encouraging its application in the wider public sector.
  • The reviewers also took the opportunity to criticise the use of extended payment terms by some main contractors which, in the view of the reviewers, exert unsustainable pressure on sub-contractors. The reviewers were forthright about the need for change, and declared that those doing so “should consider themselves on notice”. Other recommendations include the introduction of project back accounts (which are already being trialled) and the adoption of a maximum 30 day payment term by all public bodies.

Ms Sturgeon has said that she is “committed to ensuring that the Scottish Government plays its full part in supporting this programme”, although for now, the senior construction advisor will not be appointed.

The extent to which the report’s recommendations will be adopted remains to be seen.

The full report can be accessed here.

Kate Hannah
Trainee Solicitor

LChalmers