Government roads client aims to boost capability of smaller contractors.
Boosting the capability of small and medium sized contractors is to be a major thrust of the Highways Agency’s new £5bn collaborative delivery framework, it has been revealed.
The Agency unveiled how the new-style framework will work at a suppliers’ day in Birmingham last week.
It will use the new arrangement for up to £5bn of schemes over the next four to six years and will start prequalification next month.
We are going to be working with suppliers to grow their scale
Peter Adams, Highways Agency
The framework will be broken up into four sub-frameworks, one £500M framework for design, and three for construction. These will be a small works lot, a medium sized works package and a package for major works.
Critically, the upper threshold for the two smaller construction frameworks will increase over the life of a project. This will allow suppliers to bid for increasingly larger jobs as their skills and capabilities develop, with the aim or creating greater competition for the Agency’s established major contractors.
Initially the small construction framework, worth a total of £450M, will be for jobs worth up to £25M. Over the life of a framework this will increase to £50M. The Agency is intending to choose three to five mainly UK-based SMEs for this lot.
The medium sized framework will initially cover schemes worth £25M to £100M and is worth a total of £1.35bn. The upper limit will soar to £450M jobs by the end of the framework, giving the four to six suppliers named here the chance to compete for the Agency’s biggest projects.
The large value framework for more complex and integrated schemes is the only lot that will not change in scale and will handle schemes worth between £100M and £450M. Four to five firms will be named for this lot, worth up to £2.7bn in total.
“We are going to be working with suppliers to grow their scale, because increasing capability and capacity is absolutely key for us,” said Highways Agency major projects director Peter Adams. “We had one hell of an announcement in June [in the Spending Round] and are quadrupling our investment in the roads programme.”
The new framework replaces the current major projects framework which expires in March 2014 and has been worth up to £2bn for Balfour Beatty, Bam Nuttall, Morgan Est, Carillion, Costain and Serco.
But the next framework is set to be worth much more thanks to the increase in funding for the Highways Agency announced in June’s Spending Round.
“We are currently spending at £750M a year and we have to get ready for a level four times that - up to £3bn a year,” said Agency procurement director David Poole.
Annual spend required to deliver schemes confirmed in the Spending Round will peak at around £1.7bn in 2018/19 but the government’s longer term investment plans - if implemented - would see annual spend rise steadily to £3bn by 2020/21.
Poole said that upskilling the domestic market is key to delivering that workload.
“There is already a concern about over capacity in the market, so the intention is that the smaller lot is targeted toward SMEs in the domestic supply chain and getting it to grow with us,” he said.
Adams said European contractors would be invited to bid for the bigger lots and stressed that the Agency wanted innovative solutions from outside the UK.