Sector - Finance & Legislation

Changes to Procurement Present Opportunities

12 Apr 21

In December 2020 the UK Government published a green paper outlining changes to its procurement procedures that it claims will transform the process by achieving better value for money and benefitting small businesses. Whilst the changes have made inroads into cutting red tape for SMEs competing against larger companies to win Government contracts, it could go further. James Maclean, CEO at Land & Water Group takes a closer look at how this strategy could be further enhanced in order to ensure that SMEs, in particular those that are in the civil engineering and construction industries, can offer competitive tenders for Government contracts.

As the CEO of a civil engineering business that has an ongoing commitment towards sustainable construction and simplified business processes, I wholeheartedly welcome this green paper from the Government. As a provider of highly skilled and often niche services within the civil engineering sector there is no doubt in my mind that we deliver infrastructure works that enhance both built and natural environments in pursuance of Government objectives. However the bureaucracy of bidding for Government tenders can make this a challenge. With this in mind any action and legislation that can ease this process is good news.

According to the Government website the aim of the green paper is three fold: to deliver value for money for the Government, to increase the social value of works and to enable SMEs to win Government contracts.

There is no doubt that this is a brilliant foundation. It covers key concerns that affect us all, both directly and indirectly. It is estimated that the Government spends £292billion with the private sector each year, funded by the tax payer so it is only right that they are looking for the most cost effective solutions.[1]

However, I feel that there is an opportunity for the Government to go further. To become real champions of civil engineering and construction firms, and the specialist services that we provide, and that this opportunity hinges on a simple concept – that of clarity.

As leaders within the construction and civil engineering industries, we are being asked to balance value for money with social value whilst having one eye on the future and the Government’s ambition of achieving net carbon neutrality by 2030. However, these three factors can, on occasion, conflict with one another. Therefore in order for us to be truly competitive with large tier 1 contractors we need clarity on which of these factors is of most importance when it comes to awarding contracts.

One of greatest advantages of engaging with agile SME’s is that we are specialist enough to innovate and we can think outside the box. Land & Water prides itself on being forward-thinking, incorporating a range of solutions which maintain and enhance the UK’s waterways. We’ve been trialling HVO fuel in our plant, which is 90+% carbon neutral, and we look to deliver low cost and low energy consumption operations whilst building in biodiversity to benefit the local environment. However, there is an ongoing conversation that needs to be addressed on whether we can overcome the potential juxtaposition of cost saving, whilst delivering social value and reducing our carbon footprint.

Delivering social value, whether it be working with local businesses to create jobs, increasing biodiversity through natural habitat creation or creating green spaces for local communities comes with a price tag. If we want to deliver the very best version of these concepts it should be invested in, however this might not be the ‘cheapest’ solution. Similarly, if we are to achieve the Government’s aim of being net carbon neutral by 2030 SMEs the length and breadth of the country will need to change our behaviours, upgrade our kit, switch from fossil fuels to renewables and find low carbon alternatives to the way we deliver environmental projects. This thinking requires investment which in turn needs to be funded through “orders”, so the new green paper needs to strike a balance measuring “cost and value”, “Cost” is the monetary value of what we do, “Value” is the success of the social and environmental gains we deliver. Procurement needs to assess both parameters in a balanced measure.

What we need the Government to hear is that we are on board with its objectives and share its goals. At Land & Water we are dedicated to enhancing environments for future generations, however we need clarity on how it will strike the balance between its differing objectives when awarding contracts. This will allow businesses within our sector to balance competitive pricing, with social values whilst protecting the environment through reinvesting in their businesses and having one eye on the future.

I do not expect that this can be achieved overnight, but working in collaboration with the Government we do have a golden opportunity to instigate meaningful change. By introducing a law to outline the principles of public procurement the Government can give clarity of what it deems to represent public good, value, transparency, integrity, fair treatment of suppliers, non-discrimination and finally cost. This can be further bolstered through the establishment of a new body to oversee public procurement. This body should be furnished with the authority to review, intervene and improve the commercial capability of contracting authorities. By combining these approaches the UK will have a progressive approach to procurement which not only clearly lays out the decision making criteria but one which has the ability to continually grow and further improve itself.

As leaders within the construction and civil engineering industries, we need to come together to ensure that the Government hears us and sees the value that the private sector can deliver if supported effectively.

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