Enhancing the procurement of services contracts

Philip McClay, Deputy Director of Construction and Procurement Delivery (CPD) Health Projects, talks to AgendaNI about the remit and outputs of a Design Consultancy Services Subgroup, raising design quality in government projects, improving selections processes, tender scoring mechanisms and the action being taken to improve supplier performance.

The CPD/Construction Industry subgroup was established to explore what actions both industry and government can take to develop a more sustainable procurement policy within the construction industry. It produced a report in June 2017, which outlined 10 key themes aimed at further improving the procurement of construction related services contracts, named the Ten Principles for Procuring Better Outcomes. These outcomes were:

• raising design quality in Government construction contracts;
• establishing certainty in briefing and scope of services;
• selection process, past experience and financial standing;
• tender price scoring mechanism;
• appropriate procurement routes;
• performance management;
• opportunities for new and emerging talent;
• streamlining of procurement procedures;
• payment and cash flow; and
• tender feedback.

On the theme of raising design quality in government construction contracts, McClay says: “Well-designed buildings have benefits for the citizen. For example, well-designed schools have been found to enhance the educational experience and encourage children to learn. St Bronagh’s Primary School, Rostrevor is a very good example, having recently won the Royal Society of Ulster Architects Liam McCormick Prize for Project of the Year in 2018.”

“Altnagelvin Radiotherapy Unit is another great example. It’s a recognised fact that well-designed healthcare buildings are one factor which contribute to a healing environment which helps patients to recover more quickly. Design quality needs to be improved and the trends of these two projects need to continue, but what’s important is that we do have good examples out there.”

To build on those examples, the subgroup set about drafting up guidelines to ensure that professional services firms play their part in delivery quality Government buildings that represent best value for money. “The output from the group has been used to inform the production of a Procurement Guidance Note that is broadly based on the Royal Institute of British Architects 10 Principles for Procuring Better Outcomes.” McClay explains.

“This guidance note was particularly focused on procurement and how procurement can be used to better leverage design quality. Having published this, we are looking forward to seeing design quality coming to the fore in all projects, which will benefit everyone who uses these facilities.”

Another issue tacked by the subgroup was the reduction in completed projects. “The downturn has had an impact on the construction industry, both for design services and contractors, and one of the issues that has arisen is that design teams had less examples of completed projects,” McClay says.

“The subgroup proposed a graduated scoring matrix whereby a scheme that hasn’t been completed can still be put forward for consideration as part of a selection process. If a project is not completed, but a planning submission has been made, then the project will score 50 per cent of the maximum marks available; if a contractor has been appointed, 75 per cent of the maximum mark is available. The hope is that this will open up the field to more practices who do not have projects fully completed at the time of procurement and encourage them to submit an application.”

An important aspect of the selection process is the tender price scoring mechanism used to determine the successful tender. As McClay explains: “In the past, contracts, even when awarded on the basis of quality and price, tended to be awarded to the team that have put the lowest fee which sometimes can affect the quality of  the project. What we want to do is award contracts at a more sustainable fee level enabling professional practices to provide sufficient resource to ensure the design and contract administration service provided is high quality. The ‘Narrow Average’ mechanism agreed by the subgroup calculates the average of the prices submitted excluding the highest and the lowest price.

“The highest price score will then be awarded to the submission closest to that narrow average when quality and price are being assessed. Where the professional services team is being appointed on a price only basis, the contract will be awarded to the tenderer whose price is closest to the narrow average except where there is a lower price within an agreed proximity margin.”

Once the procurement process has been completed, McClay says: “historically, Government clients have sometimes been accused of not managing contracts to a high enough standard. That perception also came through in our working groups. For us as a Government client, we were pleased to see that the industry representatives were encouraging the use of more robust contract management.”

A Procurement Guidance Note 01/12 entitled Contract Management Principles and Procedures that contains a poor performance protocol has been revised. The perception with the previous version, McClay says, was that it was a “single stage process that was difficult to see through to the end”.

In the past, contracts, even when awarded on the basis of quality and price, tended to be awarded to the team that have put the lowest fee which sometimes can affect the quality of  the project. What we want to do is award contracts at a more sustainable fee level enabling professional practices to provide sufficient resource to ensure the design and contract administration service provided is high quality.

“A notice of written warning, a ‘yellow card’ can be issued when there is a poor performance issue and the consultant (or contractor) has been given an opportunity to improve their performance. This notice of written warning is published on the DoF/CPD website and remains in place for a 12 months. If a supplier has two or more of these notices of written warning on the record at any one time, government clients may exclude them from any future competitions for a period of 12 months. Where performance is so poor that traditionally the issues would have resulted in termination of the contract, the client can now issue a Notice of Unsatisfactory Performance, a ‘red’ card instead. This notice is recorded on DoF/CPD’s website and a government client may exclude the supplier from future procurement competitions being undertaken for a period of three years.

“These new protocols have been put in place to ensure that contract management standards are maintained. We are on a journey here, and there are going to be twists and turns along the way, but we in CPD hope that some of these mechanisms that have been drawn up in conjunction with the industry will make that journey a little bit smoother.” McClay concludes.