Suppliers must pass client鈥檚 yearly tests to keep their place on new 10-year contracts.
Airports client BAA is to introduce an annual 鈥淢OT鈥� test for suppliers that win places on its second-generation framework agreements, which will go out to tender over the next two years.

BAA is also expected to cut the number of suppliers it uses.

The new frameworks will last 10 years, twice the length of the previous arrangements. However, contractors and consultants will face an MOT test every year.

The new system is the brainchild of BAA group supply-chain director Tony Douglas, 37, who oversees BAA鈥檚 拢1.2m annual spend.

The tests, similar to MOT tests for cars, will check service delivery, value for money, quality, environmental performance and health and safety.

Under Douglas鈥� scheme, suppliers that fail the test will be given 鈥測ellow cards鈥�. This will oblige them to carry out a 鈥渃orrective action plan鈥� agreed with BAA.

They will then have to retake the test, although the time allowed for them to improve their performance will vary. Douglas said: 鈥淚n a simple case where overheads are 1% higher than the market, it could take just 24 hours to reduce it. Rather like fixing a broken exhaust.

鈥淗owever, if the marketplace has moved on and your technology is behind, it will take longer. It鈥檚 as if your oil is leaking all over the drive and your gearbox is shafted.鈥�

If you鈥檝e lost your motivation in a long-term agreement, you will be exited

Tony Douglas, Group Supply-Chain Director, BAA

Douglas said BAA鈥檚 supply-chain development team would be there to help suppliers trying to pass the annual tests.

If a supplier fails a retest, it will be given a 鈥渞ed card鈥�. 鈥淚f you鈥檝e lost your motivation in a long-term agreement, you will be exited,鈥� said Douglas.

The news is likely to be greeted warily by BAA鈥檚 construction suppliers. Some consultants are concerned by the news that their fees will be frozen while corrective action plans are carried out after a firm receives a yellow card.

One source said Douglas, who joined BAA 18 months ago from Kenwood, where he was a director, was stamping his authority on suppliers. 鈥淗e is a hard, commercial procurement director and is emerging as a new force,鈥� said the source.

BAA, which has 拢440m of construction projects under way and is expecting to issue orders for 拢240m more this year, is one of the strongest proponents of the Egan agenda. Sir John Egan, author of Rethinking Construction, is a former chairman of BAA.

The client dropped key suppliers, including Bovis and architect Percy Thomas Partnership, from its preferred list last February.

How the MOT and card system works

The contractor is awarded a second-generation framework contract for about 10 years. One year on, the contractor has an 鈥淢OT鈥� 鈥� a series of tests ranging from value for money to environmental performance. If it passes, it continues and is tested again the following year. If it fails, it is given a 鈥測ellow card鈥� and a 鈥渞epair plan鈥� to carry out. At the end of the repair plan, the contractor must take another MOT test. If it passes, it continues on the framework. If it fails, it is given a 鈥渞ed card鈥� and loses its framework agreement.