Brexit – the implications for public sector procurement? #CEprocurement

The government has announced a working group to review the impact of Brexit on our sector. Issues such as free movement of labour and the effect of currency devaluation on the cost of materials have been widely debated. But another important way in which the EU affects our sector is through the OJEU procurement rules which govern how the public sector must procure construction services, consultants and contractors.

The Constructing Excellence theme group on Procurement discussed this topic in December and invites a wider discussion on the topic. Post your comments below, or tweet using #CEprocurement, and we will update this blog during 2017 to reflect your views.

The OJEU regulations generate a degree of transparency to the procurement process and have served to broaden the supplier pool from which the client can draw. The regulations have also driven the client community towards the greater use of frameworks which, when well conceived and managed have delivered major savings for the public purse.  We therefore believe that it is helpful to have such a high level process in place . Similarly other regulations, such as the Social Value Act, which require consideration of social value and environmental impact, are also desirable. Nor need the regulations be a barrier to innovation. For example, leading edge projects such as the Dudley College Advance II project which is trialling the Integrated Project Insurance new model of procurement have been able to work comfortably within the rules whilst still appointing an integrated team on the basis of quality alone without a design to price.

Therefore we believe that Brexit should not trigger an abandonment of these value adding processes.

This is not to say that there is not room for improvement in the regulations. For example, the time period allowed for the prequalification questionnaire phase (PQQ) is 35 days, but only 25 days is allowed for Invitation to Tender (ITT), yet it is the latter where all the project-specific, value-adding detail needs to be developed.  As a minimum it makes clear sense to swap these two periods. There is also a view that some of the financial limits above which the regulations apply are too low – but we envisage these would be easily amendable by ‘secondary instrument’ in future. But it is surely preferable to improve the existing model rather that embarking upon wholesale time consuming and expensive process reinvention? In a sector that already suffers from a surfeit of uncertainty, such procedural reform would be unwelcome.

We did debate the extent to which the regulations have actually enriched the supply chain for clients. Have they for instance facilitated access for SMEs and new talent, or in practice does the client frustrate the diversifying intent of the regulations by creating frameworks from which they can choose their old favourite suppliers despite the presence on the list of newcomers?  Many public sector bodies do not understand how good procurement (NOT “buying”) adds value for the client, and the supply chain. Perhaps the problem is that the current Regulations apply to all sectors – but construction is quite different, and certainly its procurement is far more complicated, so if more radical change is to be contemplated then a high-level generic set of Regulations for all sectors with subsidiary detail for different sectors might be a more productive approach.

What would definitely not be helpful would be different regulations for the devolved nations (Scotland, Wales etc) – non-standard procurement approaches in different jurisdictions add cost for the supply chain particularly for those firms in all nations who wish to work cross borders. PAS91 should be adopted as standard by the whole of the public sector – and suppliers should be more vociferous when encountering procurers who are not using it.

These are just some opening thoughts. We would like to have a wider engagement with all parts of the industry on this subject. Input from public sector clients, contractors, suppliers and lawyers would be particularly welcome. Please circulate to any useful contacts – and then use the comment function below or on Twitter using #CEprocurement to contribute your point of view. We will update this blog regularly during 2017 to reflect your comments. We look forward to hearing from you.

Charles Mills
Chair, Constructing Excellence Procurement theme group, and Programme Manager at TFL

1 thought on “Brexit – the implications for public sector procurement? #CEprocurement”

  1. The above blog focuses on procurement as it is a core focus of ours. But we have the opportunity next week to feed into Lord Stunell’s construction sector group that is mentioned at the start, what other issues would you want to raise? Stunell is inviting views and practical information on 3 broad areas as follows:
    1. What are the industry’s priorities for the final shape of a Brexit deal?
    2. What is the best/worst sequence of events in any transition stages? An example might be that visa restriction should only come after skills gaps are being fixed (but might be seen as an ‘easy win’ for government at the outset).
    3. Aside from Brexit, what other policies are needed to mitigate damage/maximise opportunity in a post-Brexit industry? Points already made include a large increase in skills investment, and a sustained counter-cyclical infrastructure pipeline. He is also ready to hear of any ‘red tape’ that it is judged should be cut.

    I suggest topics could include the following, but what are your thoughts please?

    • Avoid recession – invest counter-cyclically as appropriate (already covered in Stunnell’s comments)
    • Skills/labour – support offsite development
    • CE/CEN standards as basis for a common market
    • Research funding (Horizon 2020 etc)
    • University students from the EU
    • Replacing funding for regional investment projects (eg roads in Wales) previously funded by the EU (ERDF etc)
    • Taxation – reduce VAT on refurbishment (no EU to block or for HMT to use as an excuse).

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