Highways Agency officials are to take the unprecedented step of calling in firms shortlisted for its latest highway maintenance contracts to discuss their pricing strategies, NCE understands.
The move to what is known as the “negotiated” procurement route under European Union (EU) regulations is considered unusual and highlights the problem the Agency has been having assessing bids for Asset Support Contracts (ASCs) - the new maintenance contracts.
The first two ASCs, covering Area 2 in the South West and Area 10 around Manchester, have heavily delayed and the Agency has already warned bidders in the running for the ASC covering Area 6 that there will be more delays.
Area 6 covers Cambridgeshire, Essex, Norfolk and Suffolk. In the running are Amey, Atkins/ Skanska, Balfour Beatty/Mott MacDonald and Carillion/WSP.
The Agency has now written to bidders informing them of its intention to use the negotiated route. The Agency told NCE that using this procurement route is “normal procedure” under EU public procurement regulations”in specific circumstances”.
But the regulations say that the negotiated route should only be used in “exceptional conditions”.
NCE understands that the Agency has never taken this approach before on a highways maintenance contract.
The Agency normally procures using a restricted procedure. This does not allow for negotiations with bidders and contracts are awarded solely on the basis of submitted tenders.
Bidders contacted by NCE this week said they were unsure how the latest change to the bidding process would be applied.
“None of us has gone through the negotiated route for Highways Agency contracts before,” said one bidder.
“The basic premise is that there are unsuitable or irregular items in bidders’ bid documents so the Agency wants to use the negotiated route to allow it to discuss individual items with bidders on a level playing field.”
The Agency’s ASCs have been designed to encourage cost cutting innovations by introducing outcome-based standards and using schedules of rates. But this has led to different interpretations of how best to structure bids that give a low price while meeting required outcomes.
NCE understands that zero rates have been placed against individual items in some cases.
The Agency said the move to the negotiated route would help it move the procurement process forward as quickly as possible but so that any concerns could be resolved with bidders in an “equitable and transparent manner and without adding unnecessary cost to either the taxpayer or to any potential contractors”.
More contract delays
The £600M Mersey Gateway crossing may not open until 2017, the client warned this week.
Halton Borough Council has admitted the 1km cable-stayed crossing between Runcorn and Widnes may not open in 2016 as previously planned.
The possible delay has been introduced by the council allowing an extra three weeks at the end of the competitive dialogue process to allow the three bidders to develop “more competitive solutions”.