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Public sector Procurement Update

The National Federation of Builders (NFB) has published a new report on its findings following research into the effect of public sector procurement processes on the construction industry, and in particular, Small to Medium-sized Enterprises (SMEs). 

The NFB’s report highlights that the main constraints on SMEs bidding for public work is time, cost and resourcing for completing, in particular, pre-qualification questionnaires (PQQs). The PQQ is the first stage a company must pass before it will even be invited to submit a tender. Although the report highlights that there is greater awareness of contract opportunities – the time taken to complete the pre-qualification process has increased.

Whilst a high profile report by an organization such as the NFB is useful, its content says nothing that those of us working in the industry do not know already. Public procurement processes can be laborious and unfruitful but as public sector contracts account for more than 40% of the construction industry’s work, access to those contracts is key for many contractors – especially at a time when private sector development work is at a relative standstill for all but the largest of projects. Therefore, it is crucial that construction firms can effectively tender and win local authority work.

Combined with the inherent issues of working as a subcontractor in a supply chain (non-payment, employer insolvency), the ideal for a construction SME is to bid for and win work in its own right and whilst criticism for badly run frameworks and public procurements is rife, an equally real barrier to winning public sector contracts is the low skill level in the private sector when completing bid paperwork.

The current financial threshold requiring a construction contract to be procured through the Official Journal of the European Union (OJEU) is £4,348,350 or over, with many public bodies tendering under OJEU for construction projects of a much lesser value. Learning to understand the public procurement procedures and familiarity with the paperwork and contracts being advertised can significantly improve a company’s success rate at winning public contracts and with the publication of reports by bodies such as the NFB, it could be hoped that the public sector will also look to simplify the first hurdle of pre-qualification questionnaires.

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Published: Monday 5th November 2012
Categorised: Corporate Law, Construction, Planning, Public Procurement, Public Sector

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