Procurement Bill [HL]

Written evidence submitted by King’s College London

to the PROCUREMENT BILL Committee (PB33).

This submission proposes an amendment that is essential to achieve effective competition and improved value compliant with the Government’s mandate for ‘early supply chain involvement’ in construction procurement. ‘Early supply chain involvement’ has achieved significant improved value for public sector clients, as evidenced in the ‘Trial Project’ case studies published by Cabinet Office on gov.uk. However, it has been resisted by other public sector clients by reason of lack of clarity in the Public Contracts Regulations 2015.

‘Early supply chain involvement’ is now mandated on a ‘comply or explain’ basis in the ‘Construction Playbook’ published by Cabinet Office in December 2020 and updated in September 2022. The proposed amendment is designed to support adoption of this important Government policy. The King’s College London Centre of Construction Law & Dispute Resolution has worked closely with Cabinet Office in developing and implementing the Construction Playbook procurement policies, including through the appointment of Professor David Mosey CBE to lead a 2021 independent review of public sector construction frameworks (‘Constructing the Gold Standard’) that includes recommendations endorsed by Cabinet Office in relation to procurement by ‘early supply chain involvement’.

‘Early supply chain involvement’ requires the appointment of a supplier chosen according to criteria that establish value for money but not a full price or cost. This is in accordance with subsection 23(5) (d) of the Bill. It is then fundamental to the success of ‘early supply chain involvement’ that the chosen supplier implements an objective mechanism for determining price and cost after contract award and before the relevant goods, services or works are supplied. This mechanism is described in the Construction Playbook and comprises agreed activities governing the build up by the supplier of additional cost details for client scrutiny and client approval in order to establish a full price or cost before the chosen supplier is authorised to supply the relevant goods, services or works.

The proposed amendment is as follows:

Subsection 23(5)

Page 18 line 21

Add new subsection 23(5) (e):

‘where and to the extent that value for money but not price or cost is a criterion under subsection 23(5) (d), an objective mechanism for determining price and cost after contract award and before the goods, services or works are supplied’.   

This amendment ensures that the advantages of flexibility in setting award criteria (including through ‘early supply chain involvement’) are not undermined by post-award negotiations or other price and cost uncertainties which could affect, or even invalidate, value for money considerations used in awarding contracts. To avoid this, the amendment requires the contract to include ‘an objective mechanism for determining price and cost after contract award and before the goods, services or works are supplied.’

Only through such a mechanism for confirming value for money being put in place at the time of contract award is it possible to secure maximum supplier contributions to improving value and reducing risks. These supplier contributions are an important aspect of ‘early supply chain involvement’ and they underline the need for an objective post-award process to achieve the proven benefits. For example, these benefits have been illustrated by the innovations, cost savings, reduced carbon emissions and local business opportunities that were agreed through ‘early supply chain involvement’ by the Ministry of Justice with the supplier and specialists engaged on its Five Wells prison construction project after their appointment and before commencement of work on site; this project featured as a case study in the Construction Playbook.

We hope that the Committee will consider this amendment carefully as a way of ensuring that value for money commitments are met in the procurement of any goods, services or works.

Submission by Professor David Mosey CBE on behalf of King’s College London Centre of Construction Law & Dispute Resolution

February 2023.

 

Prepared 21st February 2023