December 2021 saw the publication of the independent review of public sector construction frameworks, commissioned by the Cabinet Office, and led by Professor David Mosey PhD. Mosey was given the brief of creating a new “Gold Standard” for public sector frameworks and framework controls. His report, Constructing the Gold Standard, follows his consultation with over 100 clients, suppliers and advisers highlighting practices which drive successful outcomes and others that impede progress.
Mosey’s appointment came off the back of the government’s far reaching reforms outlined in its December 2020 Construction Playbook, discussed also in the context of the NEC form of contract by my colleague, Shy Jackson, that contained a commitment to carrying out the review. In commissioning the review, the Cabinet Office recognised the potential of frameworks to act as “a powerful engine-room” for implementing the Construction Playbook policies including strategic planning, integrated teams, continuous improvement and the delivery of better, safer, faster and greener project outcomes.
The Gold Standard will need to be met by all future public sector construction frameworks. The review also recommends actions to improve value under existing frameworks.
Why are frameworks considered to be key?
Frameworks contracts are used widely in the public sector. Mosey notes that over 2,000 public sector construction frameworks are currently active and the consultation process alone considered £180bn of public sector frameworks.
In their simplest form, frameworks enable public bodies to alleviate the burden of public procurement requirements and procure goods and services from pre-approved suppliers. Where their broader opportunities are exploited, they are used by authorities to establish long term, collaborative and innovative relationships with their supply chain.
The review highlights the opportunities frameworks offer to avoid the frustrating sense of “Groundhog Day” (the continuous building of relationships from scratch with each new team on each new project) breaking the cycle of lost learning. It notes that parties can work together under a developed commercial strategy, governed by fair procedures including the mechanism by which work is awarded and the means by which performance should improve over time. In this sense, they offer a significant opportunity to implement the Construction Playbook policies.
What are the issues?
The review sets out a number of reasons that its participants considered have contributed to framework failure. When considering framework procurement, unsurprisingly, there was criticism of the use of frameworks to bypass procurement procedures.
The report notes that there are time and cost consequences for all parties in procuring multiple, speculative frameworks, which are not connected to specific pipelines of work. It highlights that the average bid cost for each major framework is now over £247,000 for contractors and £130,000 for consultants with a maximum of £1 million in each case. Significant sums to expend, complying with processes criticised for being overly bureaucratic, if there is a lack of clarity as to the pipeline of work to be procured. This is not just a supplier issue. Ultimately, these costs will be recovered from public sector clients.
Issues were also raised with the nature of the framework agreements themselves. Even where clients seek to use frameworks to deliver strategic aims, the report notes that “the potential of frameworks is not always well expressed or well understood”. While objectives may lead to the inclusion of complex performance measurement systems at the procurement stage, if they are not used effectively to reward excellence, award work or share improved practices during the framework term, ultimately they are ineffective.
The limited understanding and adoption of digital technologies, modern methods of construction, early supplier involvement and commitments to improved social and environmental value (including net zero carbon targets) were also highlighted.
What the Gold Standard proposes
Mosey sets out 24 recommendations for “Gold Standard” construction frameworks that reflect the requirements of the Construction Playbook. These attempt to address the perceived issues, inherent in framework contracting, from strategy and procurement and initial objective setting through the full contracting and lifecycle of projects procured under these models.
The recommendations themselves are each genuinely blog worthy but taken as whole there is a clear drive towards enhanced collaboration and transparency at every stage of procurement. This is a focus on multiparty relationship building from the get go; enabling a broader range of parties to align their long term objectives, rewarding and incentivising value add and innovation, advocating for a fairer risk profile and embedding the prioritisation of safety, social and net zero carbon commitments. But this is not just aspiration, the report contains proposals for the tools that parties can use to ensure that the recommendations can be implemented.
How is it likely to be received?
Of course, only time will tell how successful these recommendations are in changing what is clearly a model in need of a revamp. That said, there is a clear appetite and motivation, not just within the parties currently participating in the market but across the supply chain, to improve the model at all levels. The current post-Brexit and COVID environment and the pressure on public procurement to demonstrate the absence of “chumocracy” provide a great springboard from which these measures could flourish.