Out-Law News 4 min. read
22 Dec 2021, 1:50 pm
An overhaul of construction frameworks, a contracting model which is popular in the UK public sector, has been endorsed after a review identified concerns about the cost, complexity and waste associated with their current use.
Framework agreements sit on top of, but do not tend to interfere with, underlying contracts that are agreed. Framework agreements are popular in the public sector because they provide an umbrella arrangement under which public bodies can engage pre-approved suppliers on projects without triggering a lengthy public procurement process.
However, an independent review of public sector construction frameworks (135-page / 4.33MB PDF) has highlighted that prospective contractors are spending almost £250,000 on average in bidding to become approved suppliers under each framework and how they often encounter “bureaucratic and inconsistent practices”.
The review further identified concerns over a lack of clarity over the work planned or committed to under existing frameworks, as well as complexity in performance measurement systems, limited understanding and adoption of digital technologies and modern methods of construction, and a failure to link delivery to net zero targets or improved social value
The best frameworks we see, that consistently deliver the best results, are based on collaborative enterprises between the procuring authority and its supply chain
“A framework can create a sound commercial strategy for its clients, managers and suppliers if it enables and governs an attractive amount of work, if it sets out fair procedures governing how that work is awarded and if it establishes the means by which performance should improve over time,” according to the report by professor David Mosey of King’s College London’s Centre of Construction Law, who led the review.
“A framework can also strengthen and integrate the systems of preconstruction phase planning for each project and programme of work, and it can improve the quality of information shared and used to underpin safe and efficient design, construction and operation. In these ways a framework provides a flexible and dynamic model for a long-term contract that delivers the efficient and collaborative procurement of projects, portfolios of work and pipelines of multiple projects. However, there are a huge number of public sector construction frameworks in the marketplace. Review participants have illustrated how the potential of these frameworks is not always well expressed or well understood and how they are not always successful in delivering their aims,” it said..
Professor Mosey has set out 24 recommendations to improve the way construction frameworks operate, which he said together constitute a new “gold standard” for such frameworks in the future. The Cabinet Office has endorsed the recommendations from the review for adoption in future public sector construction frameworks..
“Transformational change will only come if gold standard frameworks create aggregated and harmonised programmes of work, and if they attract new commitments to improved value for money, efficiency, safety, social value, net zero carbon and whole life value,” professor Mosey said..
Experts in construction contracts and major infrastructure projects at Pinsent Masons welcomed the review findings. Pinsent Masons was a contributor to the review..
Anne-Marie Friel of Pinsent Masons said: “The best frameworks we see, that consistently deliver the best results, are based on collaborative enterprises between the procuring authority and its supply chain and include more ‘carrot’ than ‘stick’. This requires intelligent leadership at all levels as collaboration is not something you can do solo. If you get the balance right, then overly onerous contractual terms become unnecessary, as a successful enterprise based on repeat delivery of best-for-project outcomes is sufficient reward to drive performance.”.
Jonathan Hart of Pinsent Masons said. “So-called ‘zombie frameworks’ – construction work for single projects procured as a framework, where the procurer has neither the resource nor the intention to ask tenderers to bid for further work but requires the bidding community to apply additional time and resources to more complex tendering processes – have long been a harmful feature of the UK industry. It is good to see that their baleful effect is now being acknowledged. Hopefully this review will remind procurers, and their advisory consultants, that the ambition in the Construction Playbook is here for good.”.
Nigel Blundell of Pinsent Masons said: “At the heart of the recommendations are themes of using the framework for long term portfolios of work and ensuring collaboration between the parties on the framework. At a time of change where there will be the need to innovate and understand evolving issues around increased use of modern methods of construction, net zero and the technologies to facilitate these, increased use of data and the implications of building safety, commitments to use and share best practice between members of the framework is to be welcomed.”.
“The need to use frameworks strategically is a key emphasis. This initiative will succeed if those procuring frameworks realise that the framework can be used over its lifetime to improve value and drive continuous improvements. This will need public sector clients to commit to a number of key principles set out in both the Construction Playbook and Project 13 so that the client is at the heart of the framework’s projects and there is a coordinated approach to design and construction. The recommendations that two stage procurements, whole of lifecycle costs and collaboration are important drivers of this approach.”.
“By setting out transparent pricing and mini-competition procedures and adhering to them, overall procurement costs can be reduced. Those administering frameworks on behalf of clients need to embrace these concepts, moving away from a lowest price, single stage tendering model to assessing long term value and rewarding successful outcomes. It will also be important to align terms of project contracts to appropriate risk sharing and incentive mechanisms rather than placing all onerous risk upon contractors. Adopting these principles creates a structure for success but fundamental to its implementation is that funding is committed to enable long term projects to be delivered utilising this approach. Without funding, the benefits of the approach will not be realised fully,” Blundell said.
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