Public Sector Procurement for Construction
We are delighted to publish our latest database, '1,300+ Public Sector Procurement Contacts', which may be downloaded here. Non-subscribers may purchase the database separately for £75 + VAT by clicking here or by contacting us.
The following article provides an overview of the sector, including communication and marketing channels for those targeting national and local government-led construction projects. In addition for those wishing to focus on opportunities in the social housing sector, we offer our database of 500 procurement contacts at Housing Associations (click here – you will need to log in first).
The UK Government’s programme of public sector investment offers potential construction contracts totalling many £billions annually. The Government Construction Pipeline provides information on current and planned Government-led construction market activity for suppliers, contractors, etc. Presented by Barbour ABI, it comprises central Government construction data along with other public sector construction data on a national and regional basis. According to the summary for March 2016 (spreadsheet download), the pipeline included 14,705 programmes and projects covering 15 sectors with a total value of approximately £181 billion.
In order to get a general view of the breakdown of activity according to sector, it is worth looking back to an earlier analysis of the Pipeline published by KPMG. In their report published in May 2016, they identified that 84% of the pipeline's value comprised projects in transport (£92.2 billion), energy (£32.3 billion), and education (£27.9. billion). A further 15% came from the Ministry of Defence (£6.9 billion), Science and Research (£6.9 billion), Flood (£4.9 billion), Health (£4.3 billion), Justice (£1.8 billion), Housing and Regeneration (£1.4 billion) and Police Forces (£1.3 billion).
As this article explains below, there has been a deliberate attempt on the part of the UK Government to open up public sector procurement to many more businesses (not just in the construction industry) by rationalising the procedures. The Government’s 2011-2015 Construction Strategy identified that, post Latham and Egan, a consensus emerged agreeing that “… clients and their suppliers need(ed) to work together on a shared improvement plan, and that this means working with fewer suppliers......” The Strategy recognised the validity of the principles behind this, but posited that there was “a tension” between this and “....the desire to maintain a market that is accessible to new entrants (particularly SMEs).....” For the construction industry the resulting activities and programmes are intended to increase significantly the opportunities for small- and medium-sized businesses to secure work in the public sector.
In its subsequent Construction Strategy 2016-2020, the UK government commited to "....act as an exemplary client across the industry. GCS 2016-20 build(s) on the success of GCS 2011-15 and will help departments meet the challenges of inflationary pressure in a rising market by driving increased construction productivity". In this later document the principal objectives were stated as follows:
- improve central government’s capability as a construction client
- embed and increase the use of digital technology, including Building Information
Modelling (BIM) Level 2
- deploy collaborative procurement techniques
– enable early contractor and supply chain involvement
– develop skills capacity and capability, including by delivering 20,000 apprenticeships through central government procurement over this Parliament
– promote fair payment
- enable and drive whole-life approaches to cost and carbon reduction across the construction, operation and maintenance of public sector buildings and infrastructure.
Whilst compiling the database, we have carefully researched named individuals who have been selected as having purchasing authority or influence for estates or other construction related services as part of their job responsibilities. Each entry also includes the organisation name, address, contact number and email address (approx 90% of which are name-specific). As part of their annual subscription, subscribers may now download the database from the 'Downloads' page here.
Public Procurement Supplier Requirements
The perception is that large and established organisations will have a substantial advantage over smaller and/or younger companies when tendering to public sector organisations (PSOs) because they are a known quantity and have a proven track record. However, whilst the perception is not entirely without foundation, these advantages can be exaggerated. Given that the Government estimates that 99.9% of the UK’s 4.5 million businesses are SMEs, it is perhaps unsurprising that in 2010 it committed “to ensure(ing) that 25% of government’s spend, either directly or in supply chains, goes to SMEs by 2015”. In order to facilitate this, it introduced a number of programmes and initiatives, such as the Contracts Finder website and the Crown Commercial Service (CCS), which provide procurement services to the public sector. By using CCS agreements (which cover construction), buyers can order goods and services quickly and cost effectively whilst complying with EU and UK procurement regulations. The CCS has produced a useful guide, entitled 'Becoming a Supplier Through the Crown Commercial Service – what you need to know'.
In 2010 only 6.5% of government business was going directly to SMEs and the 25% target was seen as ambitious. Accourding to the National Audit Office report published in March 2016, the actual percentage going to SMEs had rise to 27% by the year 2014-15 and the government then announced a raising of the target to 33% by 2020. It is clear therefore, that the public sector tendering process is evolving and applications from smaller companies are welcomed. This deliberate encouragement on behalf of the public sector is not just about ensuring a fairer distribution of contracts, but also because often SMEs can offer greater flexibility, easier and faster reactions, and/or greater choice (there are more of them) leading to competitive pricing.
Competitive pricing will, of course, remain a significant consideration; however, public sector organisations have a wide range of additional requirements when procuring products and services. These will often lead the PSO to consider other issues when awarding contracts and may favour the supplier who can demonstrate positive policies or practices in the following areas:
• Customer care/after sales
• Experience and abilities
• Staffing skills and skills development programmes
• Quality assurance
• Equal opportunities employment
• Environmental issues
• Health & safety
• Financial standing
• Geographical location and network of representatives
• Reaction speed
The suppliers’ attitude and established procedures in the above areas can make a significant difference to their chances of winning contracts, as the PSO will often make awards to those suppliers who help them meet their aims beyond the principal project, e.g. the PSO’s sustainability objectives or environmental policies and ambitions. So, in any tender application, it is well worth voluntarily including details of any recycling policy, environmentally friendly packaging, sustainable manufacturing processes, potential benefits to the local community/environment, etc. There are other areas which may enable the PSO to consider the suppliers' tender application favourably and which it may be useful to include in applications. For example, they may welcome the reassurance that may come from knowing that the supplier:
• Is a member of a trade association or scheme such as the ‘Considerate Constructors Scheme’
• Has won awards for excellence in its field
• Has adequate resources in terms of staff and finance
• Has up-to date knowledge and skills
• Gives guarantees
• Has its own environmental standards/packages
With regard to the contract value, as a rough guide, this should not generally exceed 25% of the supplier’s turnover, as this may be considered too high a risk to the PSO. If the contract value does exceed this ratio, the supplier will need to demonstrate how they will manage the risk. Where larger contracts are involved (£150,000+), the supplier is likely to need to provide 3 years audited accounts with P & L, balance sheets and bank references. Initially, smaller and newer suppliers may need to restrict their applications to lower value contracts or to undertake sub-contracting work (see below) to approved suppliers. Both routes will enable the supplier to become known and provide a reference point for future applications.
PSOs can have differing approaches to the procurement of services. Whilst they all conform to a regulated standard, the differences will often be in the individual working practices. Therefore, having identified the contract opportunity, it will be necessary to become familiar with the application process particular to the PSO. Guidance documents are generally available from the various local authorities’ websites or by application to the relevant contacts at other PSOs. It is worth bearing in mind that, if the contract is of low value, some organisations will not advertise it, so introducing your company and its services to the relevant procurement department can prove beneficial.
Naturally, many high-value contracts are awarded to large companies and/or companies with an established track record of supplying the public sector. Consequently, in order to take advantage of these, smaller or newer companies may wish to look at subcontracting to these larger companies. This will also assist them in creating a successful work history of supplying the public sector, which in turn will improve their position for later when they tender directly. Subcontractors can often identify the winners of large contracts via the OJEU (see below) or by contacting the public sector client organisation(s) directly.
'A Guide to Tendering for Public Sector Contracts in Ireland and the UK' published by Enterprise Ireland
The Local Government Association’s National Construction Category Strategy dealing with procurement.
There is a number of pre-qualification services of which suppliers may wish to avail themselves. Generally, these services are contracted by PSOs to maintain a ‘vetted’ list of qualified suppliers in various fields to save them time and provide assurance when inviting tenders.
• The Contractors Health and Safety Assessment Scheme (CHAS)
This is established as the market leader for health and safety pre-qualification in the UK. It is a non-commercial scheme, available to suppliers (those who provide goods and services) and to organisations (buyers) looking for suitably competent suppliers.
This is the UK Government's national register for suppliers. In the same way as CHAS offers a tool for use in the health and safety element of pre-qualification, ConstructionLine provides the pre-qualification tool for use in financial standing, technical references and other areas. Its aim is to improve efficiencies for buyers and suppliers in the construction industry, specifically by reducing the duplication of work and administration relating to the process of pre-qualifying suppliers for construction contracts.
Over 8,000 buyers from 2,000 organisations throughout the UK already use the ConstructionLine database to source pre-qualified suppliers in the construction sector. They range from public sector bodies such as the NHS, local authorities, police and universities, to private sector businesses such as major contractors, small construction firms and consultants.
ConstructionLine is open to public and private sector organisations and endorsed by the Department of Business Innovation & Skills. The OGC Common Minimum Standards and the Local Government Task Force also recommend using ConstructionLine as part of the pre-qualification and tendering process.
• Exor Management Services Limited
Exor is a commercially operated company providing an outsourced supply chain service to Public and Private Sector Organisations. It pre-qualifies, or validates, suppliers to enable PSOs to easily select appropriate organisations.
Their publicity material states, “By meeting the widely recognised Exor standards suppliers are able to pre-qualify or fully qualify for business opportunities through either formal tendering process or commercial negotiations. Being assessed to the Exor standard means suppliers can reduce the repetition submitting qualification information and gain access to a wider range of business opportunities.”
Where to Find Details of Contracts
Our Sales Leads section includes details of eighteen organisations providing project lead data and research (for both private and public sector contracts). Most of these will provide comprehensive data on each individual project including participating architects, contractors, etc., as well as estimated contract values, start and completion dates. Although sometimes more limited in breadth, details of exclusively public sector projects are available from a variety of organisations including:
• Contracts Finder
This is the government-backed resource established to open up lower value contracts to the market place. All public sector organisations are encouraged to publicise contracts on the site to provide the widest access to these tender opportunities. As part of the new Public Contract Regulations 2015, all Central Government procurement opportunities over £10,000 must now be advertised on the new Contracts Finder site.
In addition to the pre-qualification services mentioned above, members of Constructionline receive free alerts on construction projects.
• Supplement to the Official Journal of the European Union (OJEU)
Most public sector contracts will be published in the Supplement. Details will include an overview of the project and requirements and interested organisations are invited to express interest or, in some cases, tender directly.
• Tenders Electronic Daily (TED)
TED is the online version of the Supplement to the OJEU.
• European Information Service Centre (EISC Ltd)
This service, supported by the EU, provides email alerts for public sector contract opportunities throughout all 27 EU states. Once registered, suppliers may tailor their requirements according to value, country, product and service. Currently, an annual registration fee of £150 applies, although a free trial is available for two weeks. EISC also runs a programme of free workshops on procuring public sector contracts - these are usually held in Hampshire.
• Tracker Intelligence
Tracker provides comprehensive public sector contract information via its subscription based online service.
Procurement Portals & Suppliers’ Resources
Many of the largest public sector organisations have dedicated procurement portals to help suppliers find out about the latest opportunities and link with relevant buyers, and there are other resources to help suppliers. Some of the major ones include:
Procurement portal for Police and Fire & Rescue Services
Build Surrey http://www.buildsurrey.net/
Network for construction-related supplier partnerships in Surrey
Delta e-sourcing https://www.delta-esourcing.com
Used by over 300 public sector organisations
Designed for Life: Building for Wales - Shared Services Partnership http://www.designedforlife.wales.nhs.uk/
Construction procurement and delivery frameworks for major capital projects (over £4 million) in Wales
East Mids Tenders https://www.eastmidstenders.org/
Procurement portal for the East Midlands
Frameworks 2 Scotland https://www.frameworks-scotland2.scot.nhs.uk
Procurement portal for health and social care construction in Scotland
Kent Business Portal https://www.kentbusinessportal.org.uk/procontract/supplier.nsf/frm_home?ReadForm
Procurement portal for Kent
London Tenders Portal https://www.londontenders.org
Procurement portal for 20 London local authorities
North East Procurement Service https://www.nepo.org/
Procurement portal for North East Public Sector Organisations
Partnership for Public Procurement http://www.globalpublicprocurement.org/
Procurement portal for worldwide public sector groups, set up by the Chartered Institute of Procurement & Supply (CIPS) in the UK and The Institute for Public Procurement (NIGP) in the USA
Procurement portal, drawing information from a variety of sources, including the Official Journal of the European Union and news wires
Source East Midlands http://www.sourceeastmidlands.co.uk/
Procurement portal for the East Midlands
Source Leicestershire http://www.sourceleicestershire.co.uk/
Procurement portal for Hertfordshire
Source Nottinghamshire http://www.sourcenottinghamshire.co.uk/
Procurement portal for Leicestershire
Supply Hertfordshire http://www.supplyhertfordshire.uk/
Procurement portal for local authorities in Surrey
Supply to Surrey http://www.supplytosurrey.co.uk/
Procurement portal for District and Borough Councils in Hertfordshire
Supplying the South West https://www.supplyingthesouthwest.org.uk
Procurement portal for local authorities in the South West
Tenders Direct http://www.tendersdirect.co.uk/
Portal for latest OJEU and lower value tenders
The Chest https://www.the-chest.org.uk
Procurement portal for North West local government
News alert channel for UK government and public sector senior management, with a supplier listing
Procurement portal for 24 local authorities in the Yorkshire & Humber Region
Media and Events
Our resources include over 300 construction industry journals and magazines. The following represents just a small selection (please log in and click on each title to access editorial contact information, circulation data, ad rates, etc.).
Education, Design & Build
Housing Association Magazine
Health Estate Journal
Healthcare Design & Build
Housing Association Building & Maintenance
Local Government News
Public Sector Build
Public Sector Building
Public Sector Estates Management (incorporated into PSS Magazine)
School Building Magazine
Social Housebuilding and Maintenance
Exhibitions and Conferences
Our resources include over 200 forthcoming UK construction industry exhibitions. The following represents just a small selection (for some you will need to log in using the links provided to access further information such as attendance data, exhibiting rates, etc.)
The Civil Infrastructure & Technology Exhibition
The Civil Infrastructure and Technology Exhibition (CITE) is part of Infrarail the largest infrastructure exhibition held in the UK.
Procurex Live is a series of regional exhibitions across the UK. According to the organisers, “the programme of Procurex Live 2015/16 regional events is dedicated to supporting the delivery of public services by providing anyone buying for or supplying to the public sector with training, networking and collaboration opportunities in this multi-billion pound marketplace.”
Healthcare Estates Conference and Exhibition
According to the organisers, the Healthcare Estates Conference and Exhibition is “.... the only national conference and exhibition to bring together those who design, build manage and maintain healthcare facilities.”
Healthcare, Environment & Infrastructure (HEI)
According to the organisers, HEI is “designed for companies who provide products, services, offer building, design and maintenance of healthcare facilities and are looking to generate leads within the healthcare sector.”
Education Estates Conference and Exhibition
According to the organisers, “Education Estates Exhibition visitors are responsible for the whole spectrum of education facilities, from village primary schools to major metropolitan universities all at different stages in the project life-cycle, from initial funding decisions to refurbishment.”
Local Government Procurement Expo
According to the organisers, the Local Government Procurement Expo provides “a unique opportunity for private sector organisations to showcase their innovative products and services directly to over 1000 key decision makers from the local government sector, representing an annual spend of over £45 billion.”
For those considering just visiting, they say, “The Supplier Training Zone will equip you with all the skills required help you win more business with local government.”
Highways Management Conference and Exhibition
According to the organisers, the Highways Management Conference and Exhibition provides an “opportunity for suppliers, manufacturers and service providers to demonstrate and display their latest technologies and products.”
National Housing Federation Conference and Exhibition
According to the organisers, the National Housing Federation Conference and Exhibition is “....the busiest and best event in the housing association sector......” For potential exhibitors they say, “Exhibiting offers unprecedented face-to-face access to the largest gathering of housing association decision-makers and buyers in the UK....”
The Chartered Institute of Housing's annual exhibition and conference organised for the institute by Ocean Media.
Meet the Buyer Events
Meet the buyer forums often provide excellent opportunities for suppliers to meet buyers from both the public and private sectors. ConstructionLine operates events across the country with meetings available on an ad hoc basis (suppliers queue to have a brief discussion with each buyer), whereas there is a number of dedicated events for the construction sector, generally on a more formalised basis where the supplier is provided with a timed appointment (on average 10-15 minutes). Again, these events are held across the country by a number of organisers. Construct UK publicises these in the Events Calendar (choose the 'meet the buyer' filter).
It is also worth noting that public sector organisation also often hold their own meet the buyer events, along with training events to help suppliers access contract opportunities.