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, NCE can reveal.
The Agency unveiled how the new-style framework will work at a suppliers day in Birmingham.
The Agency will use the new agreement for up to £5bn of schemes over the next four to six years and will start prequalifying firms next month.
The framework will be broken up into four lots covering engineering design services and then small, medium and large-value construction jobs.
Critically, the upper threshold on the two lower-value construction lots will increase over the life of the project. This will allow suppliers to bid for bigger jobs as their skills and capabilities develop and provide greater competition for the Agency’s established major contractors.
Initially the small construction lot worth a total of £450M, will be for jobs worth up to £25M. Over the life of the framework this will increase to £50M. The Agency is intending to name three to five mainly UK-based SMEs on this lot.
The medium lot will initially cover schemes worth £25M to £100M, but this 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. In total the lot is worth £1.35bn.
The large value lot for more complex and integrated schemes is the only lot that will not change in scale and will handle schemes worth £100M to £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,” Highways Agency major projects director Peter Adams told NCE. “We had one hell of an announcement in June 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 considerably 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,” Agency procurement director David Poole told NCE.
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 over capacity in the market, so the intention is that the smaller lot is targeted towards SMEs in the domestic supply chain and getting it to grow with us,” he said.
Adams said that European contractors would be invited to bid for the bigger lots and stressed that the Agency was keen to encourage innovative solutions from outside the UK.
Collaboration is key to the framework and the Agency has plans to ensure knowledge is shared through the supply chain.
“We are looking to take collaboration to a new level,” said Poole.