Intelligent procurement – it can be achieved

By Catriona Lingwood, Chief Executive of Constructing Excellence in the North East

Everyone knows how hard the industry, particularly the North East, was hit during the recession, when changes to public sector procurement and the creation of single-sourced frameworks resulted in many companies being excluded from tendering, often on turnover alone.

Although frameworks were sold to government as a chance to save money, this approach has since been shown to be flawed in many areas.  Even now, we don’t need to look far to see evidence of misguided procurement practice resulting in companies simply running out of cash. When decision-making is based on lowest cost/minimum regulatory requirements it can be a recipe for disaster, taking no account of future costs.

It was great to see a huge turnout once again at our annual Constructing Excellence Awards. It just shows how much support the industry has, especially here in the North East. Construction Alliance NorthEast has always been a huge supporter of CENE and I am pleased to hear it is making an impact on regional procurement outcomes.

CAN launched in 2016 to primarily address the issues surrounding fairer procurement, it aims to create a more level playing field for regional SME contractors when tendering for public sector work.  Their reasoning is that the more contracts awarded to regional contractors, the better it is for the long-term future of the sector and a more sustainable industry generally. For me, it makes complete sense.

So, when North East Procurement Organisation (NEPO) began working on its documentation for its next Building Construction Works framework a couple of years ago, CAN worked closely with NEPO to ensure that local companies were not filtered out at an early stage in the process. Instead of turnover, they encouraged NEPO to focus on other key areas such as added social value; the creation of different value bands, up to £2m, between £2m-£5m and over £5m – companies only being allowed to bid for either the high or low bands, not both.

One year after the successful bidders were announced, I am delighted to see that out of almost £30m worth of contracts already tendered, local companies have picked up a significant share of the work, including wins by CAN members, Brims and Esh.  Most importantly, regional companies now account for 70% of those on the framework and they are also able to bid for a further £34m of imminent pipeline contracts, plus further work in the future.

 

This all goes to show that when effective collaboration takes place, intelligent procurement results. Thanks to the willingness of NEPO to collaborate and be open to advice, a shift in procurement policy was possible. We need more of this to ensure a healthy construction industry in the North East – it CAN be achieved!

For more information on Constructing Excellence in the North East, please contact chief executive, Catriona Lingwood, on 0191 500 7880 or email catriona@cene.org.uk.