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Sydney Lenssen Big buying is not always best

ANALYSIS

Essex will revamp its road maintenance next year with the Contract 2000 Project. Almost 200 approved contractors and suppliers will be sacked, 120 people in the county's DLO will be TUPE transferred or made redundant and depots will be sold.

Instead, work will be divided between two £12M-£15M partnership deals with national contractors. The north and south contracts will run for three years and will be renewable by agreement with no maximum period. Bye-bye local firms.

June 2000 is the start date because the maintenance works contracts used by the agency boroughs, district councils and the county finish next May, together with the term contract with WS Atkins.

Essex wants to save between £1M and £5M. On 4 February, Val Fordham of procurement and regulation wrote to approved firms telling them: 'Very little work will be purchased via the approved lists after 2000.'

On 4 April contractors were left dumb when told: 'The county suffers a continuing inability to match funding to the needs of the highway service.' Key words in the shake-up are 'best value', 'partnering' and 'trust'.

DLOs and approved contractors currently deal with winter maintenance, emergencies, surface dressing and patching, road studs, plant and lorry hire, grass cutting, drain cleaning, lighting, signs. They are responsible for all works of less than £500,000. Most contracts are much smaller. '£150,000 is a big one, and does me for a year,' says one firm.

Essex head of transportation John Sanders stresses that the changes are no reflection on the services provided to date.

'But we've seen just how a national contractor can contribute in planning and design on our recent A130 Private Finance Initiative contract. They've got better buying power,' he said.

'Current jobs are conventional client/consultant/contractor. By making the consultant redundant, we reduce tender and contract procurement costs. By establishing trust, we should get better quality and be more responsive to local needs.'

With no design or supervision, the new term consultancy will lose about a third of its workload. Did Atkins welcome the proposed changes? 'Turkeys don't vote for Christmas, do they?' says Sanders. 'But they are supportive.'

Essex wants to award the two big contracts to two firms by January. After advertising, it has longlisted 11 firms of the ilk of Tarmac, Alfred McAlpine, May Gurney and Ringway. They have just returned their unpriced proposals, detailing how they see partnership working.

Sanders wants to shortlist three or four, then negotiate. 'At some stage we'll need prices - a competitive check - but at this time we don't know how or what we want priced. It depends how we partner.'

The displaced local contractors and suppliers have a different story. 'We've been told we'll all get jobs with the big boys, because they don't have men and machines waiting and they'll need subcontractors,' says one.

Another says: 'I've spent 15 years of my life driving scrapers for motorway contractors, watching them screw everybody, ruthlessly sending subbies to the wall, always waiting for payment. If Essex thinks I'm going back to that, forget it.'

As an Essex council taxpayer, eager to applaud progressive initiatives in construction, I have a vested interest in the Contract 2000 Project. But I find it extraordinary that the whole upheaval hangs on faith in the virtues of big contractors and the current fad for 'big buying'.

In my experience, the following are truisms. If the county doesn't procure, the contractor will charge to do it. Contractors are no better than anyone else at costing activities. But they are good at maximum pricing. Big contractors are more expensive than small, yet make smaller profit margins. Take away supervision and all contractors cut corners.

Essex will need luck with its self-created monopolies.

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