Memorandum submitted by the Flat Roofing
Alliance
The Flat Roofing Alliance is a Trade Association
representing both contractors and manufacturers involved in the
flat roofing industry. Some issues arising out of current procurement
practices are causing concern to our members, and I have been
asked to bring them to your attention.
The specific issues are summarised below. Should
you require any further information please do not hesitate to
contact us.
PURCHASE OF
MATERIAL
There is evidence that some Local Authorities
are proposing to let tendering on a labour only basis with the
Local Authorities purchasing all the materials directly. The purpose
for this would be to drive down the costs by removing the profit
element, which is added by merchants and contractors. There are
a number of reasons why this is, in our view, counter productive
to both the client and the whole supply chain.
It is likely that the contractor would increase
the mark up on his labour charges to ensure that he maintains
his profit margin and so defeat the whole object of the exercise.
The question of ownership or title of materials
becomes more complicated, as does delivery to site at the right
time. The contractors right to charge extra whilst waiting for
or moving materials, storage, unloading and general management
of the site are all matters that would suggest that this should
be avoided.
Whilst we understand that this practice may
work in the heavy materials sector, we do not believe that it
is appropriate in the Specialist Contractor Sector.
ONLINE BIDDING
The use of the Internet to carry out Dutch Auctions
is a development that should be watched very closely.
The practice involves putting tender lists online
and extending the deadline to allow tenderers to amend their price
downwards. This can be seen to work when components are being
purchased from their manufacturers and the unit cost is known.
If however, it is extended to contractors the scenario is very
different. If a main contractor reduces his price under these
circumstances it will be with the intention of enforcing reductions
further down the supply chain. The effect of this will be to cut
the amount allowed for Health & Safety and then to try and
reduce specialist contractors' prices. This can only be done by
reducing quality and standards. This in turn may lead to an increase
in defects, contract periods, poor co-ordination with other trades
and clients' dissatisfaction.
This process when applied to contracting may
lead to a lower initial price, but a poorer quality project—is
this Efficiency in Procurement?
CHANGING SUPPLIERS
As part of the procurement process the client,
quite often a Local Authority, will call in a manufacturer and
use them to work up a specification. The tender documents go out
based on that specification and quoting the manufacturer with
the mandatory clause "other equal or approved". Tenders
are submitted and one is successful. Surely at this point the
specification put out by the client is accepted, it seems however,
that the clients are allowing the successful tenderer to change
the specification after they have been awarded the contract. Thus
there is no protection for the manufacturer, which has spent time
advising the client and preparing a detailed specification.
7 June 2007
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