Public sector procurement is a barrier to SMEs in the built environment and the sector needs more informed clients

Houses of Parliament, Westminster
The Houses of Parliament, Westminster

Procurement of construction services in the public sector too often defaults to a ‘tick box’ exercise rather than a considered approach, to the exclusion of smaller practices that may be able to offer better value for money.

LI chief executive Alastair McCapra said: “Feedback from our members is that local authorities often don’t know what they’re trying to procure or how the procurement system works. If you don’t know anything about design, you’re unable to ask the right questions, so everything comes down to cost.”

McCapra was speaking on Monday 16 January at the first evidence giving session at the All-Parliamentary group for Excellence in the Built Environment for its Commission of Inquiry into Excellence in Construction Procurement.

Together with representatives from RICS and RIBA, McCapra gave evidence to the Commission chaired by MP Tony Baldry, and including MPs Nick Raynsford and Oliver Colville, the Earl of Lytton, and senior figures from the construction sector, such as Sir John Armitt, Jack Pringle, Gordon Masterton and Alan Crane.

Both the LI and RIBA argued for the need for a more proportionate system of procurement. As it stands, SME practices are required to submit the same level of information as larger practices when they tender for public sector contracts. Could this be made proportionate to the scale of the work and risk that they are undertaking?

“Traditional procurement methods make it relatively easy for SME to participate as subcontractors, but do not promote collaborative working and often run up costs because of their inflexibility,” said McCapra.

“Frameworks do promote collaborative working, but also make it very hard for SME to bid in, since they have to provide the same level of information and commitment as much larger firms and can’t meet the requirements. Are there forms of contract or procurement which find a happier balance – allowing SME to work collaboratively with larger players, while bearing a share of the risks and costs proportionate to their contribution to the overall value of the services procured?”

This was echoed by RIBA’s Peter Caplehorn who said that clients needed to provide “less rules and more logic”. He said procurement was hindered by a lack of technical understanding on the part of the client and that RIBA members hardly ever get feedback on how they’ve performed during the process. “

Caplehorn said that: “Urgent reform is needed. We’re seeing poor quality design, bad value for money and shorter life times for buildings.”

Both the LI and RIBA spoke of the need to support local authorities on good design through enabling mechanisms, such as client advisers, to help local authorities get a clear idea of what they want, and also called for more design professionals on the inside.

Jack Pringle asked the presenters if they felt it was a question of the market being misaligned or whether the professions themselves were misaligned to the market?

To which, McCapra replied: “The markets don’t understand how to get the best out of SMEs. What has happened is that the barriers to participation have gone up and up, making it difficult for smaller practices to play a meaningful part in an overall project.”

He dismissed the notion that SME practices are inherently less experienced than their larger counterparts, saying that they are often made of up highly-experienced landscape architects who have moved away from larger firms. He added that SMEs often have good local knowledge that might benefit projects procured by their own local authorities.

All three presenters agreed that this wasn’t a case of the public sector being bad and the private sector good, but that it was more about the difficulties of dealing with a pluralistic client compared to a single client.

Caplehorn said: “What you tend to get on commercial projects is a figurehead who will drive a project hard through their bureaucracy, and with that comes clarity of thought.”

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