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You may not have seen this coming, but apparently 2022 is set to be the 鈥測ear of the framework鈥�. That鈥檚 the view at least of David Mosey, professor of law at King鈥檚 College London, who last month published a report setting out proposals to shake up how public sector frameworks operate.

He admits that his tag for the next 12 months might not be 鈥渢he most exciting鈥� branding. But his 135-page report, entitled Constructing the Gold Standard, is the latest watershed moment for an industry that has been undergoing rapid change in recent years.

Its 24 recommendations intend to overhaul how the public sector 鈥� which accounts for around a quarter of all UK construction output 鈥� procures work. And the government has confirmed that the proposals, which do not need any new legislation to implement, will come into force 鈥渞ight away鈥�.

Mosey, who was appointed by the Cabinet Office to lead the independent review in February last year, says the reforms are a world first in terms of public sector procurement. Compared with how public sectors in other countries procure construction work, he says his approach is 鈥減rogressive, not in an idealistic way, but in a commercially rationalised way鈥�.

And compared with other UK sectors he has studied, including health and IT, he says construction is 鈥渨ay out ahead鈥�. The implication is that the review will result in public sector procurement of construction services in this country being among the most progressive of any sector in any part of the world.

Added to the government鈥檚 Construction Playbook, which laid the groundwork for much of the Gold Standard review, it is part of a wholesale modernisation of the entire industry. 鈥淲e are in a good place鈥�, Mosey says.

How to waste time and lose money

The report addresses a multitude of shortcomings in how UK frameworks are currently used, issues that are recognised across the construction industry. Participants in the review contributed 120 written submissions and case studies. There were also 50 interviews contributed by 20 framework providers and over 100 clients, suppliers and advisers.

The issues described in the report 鈥� from over-inflated speculative values designed to lure firms to bid for places on frameworks, to a lack of early contractor involvement on projects and short-termist practices by clients 鈥� are systemic. 

The result, according to Mosey, is that suppliers and public sector clients waste significant cost and time by using frameworks that are often confusing, inconsistent and not connected to specific pipelines of work. People he spoke to reported average bid costs for each major framework of more than 拢247,000 for contractors and over 拢130,000 for consultants, reaching a maximum of 拢1m for some cases.

But too often clients do not even use their own frameworks and instead shop around the marketplace looking for alternative frameworks with the lowest possible fee. Meanwhile suppliers find themselves out of pocket as the volume of work they had been led to expect is not brought forward. 

The inefficiency of tendering just creates all this additional cost you have to carry, whereas actually what we want to be doing is working directly with the customer

Scott Corey, Willmott Dixon

For contractors with tight margins, all of this wasted money puts a limit on what they can do for clients. It is particularly concerning given the pressure the public sector puts on firms to do more on projects than just putting up a building. Additional ambitions such as achieving net zero carbon emissions on schemes inevitably suffer.

鈥淎ll of that money that you waste on tendering would be spent on something else,鈥� says Willmott Dixon strategic accounts and services team director Scott Corey. 鈥淎nd what would that be? It would probably be providing additional value for the customer, whether that be social value or sustainability.

鈥淭he inefficiency of tendering just creates all this additional cost you have to carry, whereas actually what we want to be doing is working directly with the customer to develop a design and get onsite and build it for them.鈥�

Early engagement

Another issue which emerged as a theme in the report is a lack of early contractor engagement. Clients鈥� use of frameworks in an ad hoc fashion to get jobs done quickly, rather than consulting suppliers and their supply chains, is a 鈥渉idden disruptor鈥� of frameworks, according to Mosey.

He says a consultant will often advise a client to use a particular framework, but just for a single-stage design-and-build job without any interest in the longer-term objectives of the framework. Why?

鈥淏ecause [the consultant] is on a low fee, they have no time or opportunity to get involved in the framework objectives,鈥� says Mosey. 鈥淭heir brief is to deliver a project, do it quick, and they help the client identify a framework they can tune into. But they don鈥檛 feel invested in the overall strategic objectives, they just want their individual project delivered.鈥� 

Dean Fazackerley, head of technical procurement at framework provider LHC, said one of the biggest challenges the firm faces is 鈥渢ransactional鈥� work opportunities from clients with unrealistic timescales. One example he gave was a job brought forward at the end of November last year with a tender response deadline of the middle of December, with an expected start on site by 4 January.

 鈥淔rom a contractor鈥檚 perspective, that鈥檚 just far too short for anybody to respond to. Contractors are planning six to nine months in advance in terms of their order books. As an industry, we need to wake up to the fact that contractors need that lead in.鈥�

Suppliers told LHC that they could not do the job, and no one bid for the project. So the client approached other framework providers with the same requirement.

The result, Fazackerley says, is that contractors 鈥渓ose trust in the framework and they don鈥檛 see the value in the framework either鈥�. And neither does this work for clients, who often find themselves bouncing between framework providers asking the same questions, potentially approaching the same contractors on multiple frameworks.

鈥淚t just flies in the face of what good frameworks are all about, which is early engagement of the contractor and the supply chain, who are ultimately building the building,鈥� says Corey.

Rebecca Rees, partner and head of public of procurement at law firm Trowers & Hamlins, says frameworks should be used to support a pipeline of projects rather than just being seen as an approved list and as a simple route to market. 鈥淭hey can create a collaborative market where you can achieve so much more.鈥�

Collaboration

So what is the solution to these problems? The clear response, and a key theme in the Gold Standard review, is collaboration. But the word, which appears 133 times in the report, can risk seeming both woolly and a bit pie in the sky.

Clients, after all, do not have unlimited time and money, and naturally will look for the cheapest option to get a job done as long as it is done well. And why would contractors, who are competing against each other on a framework to win work, share information and lose their advantage?

鈥淭hat鈥檚 the crucial point,鈥� says Mosey. 鈥淏ecause, if we accept that premise, we鈥檙e not going to meet our net zero carbon targets, we鈥檙e not going to deliver social value, we鈥檙e not going to eliminate modern slavery, we鈥檙e not going to support modern methods of construction, we鈥檙e not going to do any of the things that we鈥檝e all promised to do鈥�.

He says information sharing between suppliers is 鈥渁bsolutely fundamental鈥� to solving another longstanding problem with frameworks, which is that lessons learnt from projects are often lost when the client moves onto the next job. This chronic inefficiency, described by the report as 鈥渓ike a groundhog day鈥�, results in time and money being needlessly drained from the industry.

鈥淧art of that waste is that you鈥檙e reinventing the wheel every time a project is called off,鈥� says Rees. 鈥淏ecause you鈥檙e renegotiating terms and conditions that should be set out under the framework agreement, you鈥檙e recreating relationships each time.

鈥淵ou鈥檙e not treating the framework as a feedback loop where if there is a success in one project, that that is replicated as a matter of course under each of the projects procured under the framework agreement.鈥�

So suppliers on future public sector frameworks will now be expected to share both commercial information and their supply chains, and it will be a contractual principle set out at the tender stage of a framework.

These frameworks will be exposed for what they are, and they will fall away through non-use

David Mosey, report author

One example currently in operation is the Crown Commercial Service鈥檚 alliance contract for the government鈥檚 拢1bn prison programme. ISG, Kier, Laing O鈥橰ourke and Wates were appointed in July to build four new prisons across the UK. Under the deal, they are collaborating on both the designs of the prisons, which use standardised components, and how to build them. 

ISG chief operating officer Zoe Price said when the deal was signed that it had 鈥渧ast potential鈥� to minimise carbon emissions and maximise the social benefits of the government鈥檚 investment. Mosey says the approach incentivises firms to share things that they would normally keep to themselves.

鈥淚f you manage it well, you are bringing suppliers together and clients together to share additional things that are in their mutual interests, and obviously to do that you have to convince them that it鈥檚 in their mutual interests. There are two stages 鈥� commercial obligation and then the consensual process that requires motivational management.鈥�

Confusion

Far from forcing firms to do things they do not want to do, most of the review has been led by the industry, according to Mosey. But it has not totally escaped criticism.

Corey says the adoption of the framework standard alongside not only the Construction Playbook, which overlaps heavily with the review鈥檚 recommendations, but also the government鈥檚 procurement bill and a public procurement green paper, risks complicating things.

鈥淲e are potentially in a little bit of danger of creating some confusion in the marketplace with all of these different recommendations on the way that the public sector should procure construction projects,鈥� he says. 鈥淚t would be very helpful for the government to bring all of them together into one procurement bill that we can all follow and really have a go at. It needs to be made simpler.鈥�

That may come in time. For now, the stage has been set for a new procurement culture designed to sweep away the inefficiencies and fragmentation which has plagued the industry for as long as most people can remember. And what if some clients and framework providers fail to adopt the changes?

鈥淭hese frameworks will be exposed for what they are, and they will fall away through non-use,鈥� Mosey says. 鈥淭here鈥檚 a lot of distrust in the industry. A lot of it created by dodgy frameworks.

鈥淎nd it takes more than two to tango. It takes all of the parties to tango, so the industry is very keen to do the right thing if the clients do the right thing.鈥�