Your browser is no longer supported

For the best possible experience using our website we recommend you upgrade to a newer version or another browser.

Your browser appears to have cookies disabled. For the best experience of this website, please enable cookies in your browser

We'll assume we have your consent to use cookies, for example so you won't need to log in each time you visit our site.
Learn more

Picking through procurement perils

That guardian of taxpayer value for money, the Commons public accounts committee, added its voice last week to the growing hubbub questioning whether government departments are truly qualified to procure our infrastructure services.

390017_Rugby_station

West coast: Procurement of the new train operating franchise is in limbo as incumbent Virgin trains works under an extended contract

In the latest report into the West Coast Main Line (WCML) franchise fiasco, the committee of MPs was moved to warn that the Department for Transport (DfT) might be capable of mismanaging future procurement for major projects, including High Speed 2 (HS2) and Thameslink.

The committee blamed the need to cancel the franchise award for the WCML on the DfT’s failure to get basic processes right, as it underestimated taxpayers’ exposure to risks (News last week).

Sadly, and despite potential claims that this may have been a consequence of cost-cutting across government departments, this is not the fi rst time MPs have accused the DfT of such misdemeanours. Back in 2010, the predecessor committee’s investigation into the failure of Tube upgrade contractor Metronet led to the conclusion that the department’s hands-off approach was at odds with requirements for it to appropriately manage risks.

At a time when the industry is being called upon to demonstrate efficiency, the spotlight keeps falling on the behaviour of clients, suggesting that, despite good practice advice and critiques from the Cabinet Office and Infrastructure UK (IUK), there is still some way to go.

“What was the absolutely worst client of 10 years ago - as Railtrack - has probably become the purveyor of best practice now as Network Rail”

Alasdair Reisner, Ceca

Not that it’s all bad. Civil Engineering Contractors Association external aff airs director Alasdair Reisner points to the transformation of the owner and operator of our railway infrastructure.

“What was the absolutely worst client of 10 years ago - as Railtrack - has probably become thepurveyor of best practice now as Network Rail,” he says.

However, Reisner is swift to point out that the economic downturn has given clients more power as they seek to de-risk as far as they can, which means tough conditions for suppliers.

The supply chain may have been a little bit sniffy about what they would bid for in the good times, says Reisner, but that had a less detrimental effect all round than the current scenario of economics dictating tough action from clients.

The result is large numbers of firms on tender lists, onerous contractual conditions and longer time frames for procuring services as rebids occur and the grip is tightened on margins

So, what are the consequences of clients behaving badly? It seems there is a correlation between the value to civil engineers of a client’s work and how badly suppliers will allow themselves to be treated.

For instance, there is more “stand-up-and-walk-away” outrage among suppliers abandoned by the Environment Agency when it suspended procurement of its £2.5bn design and construction framework (NCE 17 January) at the 11th hour. There is also general wariness of government defence procurement. But when it comes to a traditionally more reliable giver of civil engineering work - the roads sector - bad behaviour is apparently more readily tolerated.

Despite the regular headlines about delays in the Highways Agency’s Asset Support Contract awards, and the news that Suffolk County Council is reprocuring its £400M highways maintenance deal, it doesn’t automatically follow that contractors will be put off from tendering in the future.

“As a civil engineering contractor you simply cannot aff ord not to be in roads,” says one senior contractor, although he added. “You’ve got to be selective about what you bid for.

“There’s not much in the middle but you can operate with a number of relatively small projects while taking a much more strategic approach to tendering for the right large jobs - rather than taking a scatter gun approach.

“But the fear is always there that if you’re not winning work you’re going to go bust.”

Going bust as a consequence of poor client tendering is a huge concern, adds Reisner, because some firms have already decided that it is worth sacrificing margins to keep the business going. “Losing just a few bids can be very detrimental,” he says.

Perhaps worse is a real fear of a more adversarial culture making a comeback. Reisner says that, while IUK and the government’s construction strategy are making the right noises, the strategy of providing clients with the tools to recognise their own capabilities and knowledge gaps was needed four years ago.

“That, if implemented back then, would’ve meant that some of the nasty procurement debacles of late would not have happened,” he says.

However, Reisner is perhaps more optimistic than the Public Accounts Committee and says HS2 can be a procurement success. Certainly, infrastructure deliverers and their clients must do something to leave behind bad news of the failures of Metronet and the WCML franchise competition.

Have your say

You must sign in to make a comment

Please remember that the submission of any material is governed by our Terms and Conditions and by submitting material you confirm your agreement to these Terms and Conditions. Please note comments made online may also be published in the print edition of New Civil Engineer. Links may be included in your comments but HTML is not permitted.