Improving continuity
Industry participants emphasise the potential for improved value where a single award procedure can be aggregated to cover a programme of work or a bundle of projects with common requirements. In a framework strategy, procurement process and framework contract, the framework provider, clients and manager should identify and use all opportunities for aggregating multiple projects in ways that gain the benefits of long-term contracting for portfolios of work.
60% of contractor participants report that mini-competitions can be wasteful. |
Frameworks will not drive efficiency and continuous improvement if they always use mini - competitions to call off one project at a time. Over 60% of contractor review participants express concerns that the resources required to compete for individual framework projects can be wasteful and can fragment the potential of frameworks as effective long-term contracts. They emphasise the greater scope for innovation and investment in new technologies, for improving value and for reducing risk where framework systems enable longer-term or successive framework projects to be awarded on the basis of proven performance.
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Scape reports that 'The direct award model, coupled with call off process requirements for free feasibility stage (Construction and Civil Engineering categories) and pre-engagement activities (Consultancy), together with inhouse commercial and benchmarking expertise, supports: ■ The earliest possible market engagement to discuss alternate delivery routes ■ Market intelligence to support "should cost" approaches ■ Framework stipulations that our suppliers must get "under the skin" of the user's capability and procurement strategies to choose the right contracting route. A prescriptive requirement to produce a value for money statement with the user articulates what is wanted and how it will be achieved' |
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The South East and Mid-Wales Collaborative Construction Framework reports that A Participating Authority may award a Call-off Contract without competition where a Framework Contractor is already engaged on a Call-Off Contract and the Employer is reasonably of the opinion that it needs to award one or more further Call-Off Contracts to that Contractor as the works under the existing and proposed contracts are linked or can't properly be treated as a whole project or single requirement either because: ■ the contracts cannot be performed separately for technical or economic reasons, without major inconvenience to the Employer; ■ a further award is necessary to achieve consistency of design, appearance, technical, functional or other performance requirements; ■ for health and safety or other practical reasons; or ■ the contract follows on from a preceding contract for early contractor involvement undertaken by the relevant Framework Supplier' |
Longer-term call-off commitments enable the parties to agree plans for delivering work linked to plans for improving value so that they can jointly monitor delivery, review performance, provide feedback, take corrective actions, measure effectiveness and implement a process of continuous improvement.
The provisions governing a portfolio approach in a framework contract, and in its call off and feedback procedures, should include 'clear contractual obligations to drive continuous improvement in safety, time, cost and quality' (p.15). These obligations help to sustain a competitive market when used as success measures and incentives that are linked to project outcomes. For example, where direct awards are made by sharing a programme of work among multiple suppliers, the agreed measures of continuous improvement can be taken into account when calculating possible increases or decreases in the shares of work awarded to each supplier. This approach was adopted in Annex 3 case studies 4 and 8.
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Recommendation 10: Reduce procurement costs and improve value through the award of longer-term call-off contracts and the incentive of additional work In response to industry concerns regarding inefficient and costly mini-competitions, this review recommends that framework providers and clients establish as part of their framework strategy the optimum duration, scope and continuity of framework call-offs, including the potential benefits of awarding long-term project contracts or additional project contracts without additional mini-competitions, and that framework providers and clients obtain supplier proposals as to how these awards will lead to innovations and investments that deliver improved productivity and efficiency savings. |
Specific actions include:
Framework strategy
■ Consider and establish the optimum duration, scope and continuity of call-off awards, including the scope for longer- term call-off awards and for additional project awards without additional mini-competitions in order for suppliers to provide innovations and investments in new technologies that will deliver improved productivity and efficiency savings.
Framework Procurement
■ State the clients' commitments to call-off duration, scope and continuity, and evaluate suppliers' proposals as to how these commitments will affect innovations and investments in new technologies and the suppliers' delivery of improved productivity and efficiency savings.
■ State the scope for longer-term call-off awards that aggregate programmes for work and for additional project awards without additional mini-competitions and evaluate suppliers' proposals as to how these prospects will affect innovations and investments in new technologies and the suppliers' delivery of improved productivity and efficiency savings.
Framework Contract
■ State the clients' commitments to call-off duration, scope and continuity and the suppliers' commitments in response to the prospect of longer-term call-off awards or additional project awards without additional mini-competitions.
■ State how these commitments will affect the suppliers' innovations and investments in new technologies and the suppliers' delivery of improved productivity and efficiency savings.
■ State clear obligations to drive continuous improvement in safety, time, cost and quality.
