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BAA reviews frameworks to squeeze more value

Competitive tendering for some smaller projects will require contractors to take on more risk

AIRPORT operator BAA is to embrace more competitive tendering in a shakeup of its framework deals for its £9.5 billion investment programme over the next 10 years.

Britain's largest private sector construction client is preparing to 'cut the apron strings' for a host of its framework contractors under the new deals.

Head of capital projects Mike Temple said the aim of the overhaul was to 'balance commercial tension and supplier collaboration to achieve the best value for BAA'.

Under a new commodities framework - covering around 350 projects such as car parks, refurbishment and asset renewals up to around £50 million - BAA will look to firms to take on more risks on some contracts with a greater degree of competitive tendering.

Mr Temple said: 'Things have been a bit too comfortable and we have had evidence that we have not fully driven through best value. We want our suppliers to be somewhere between the position of competitive tendering and being guaranteed some work under the framework.'

Construction director Roger Bayliss added: 'This is not about getting lowest price but about best value for BAA.

Depending on the type of project there will be different weightings for technical and commercial considerations.'

The company has been consulting the industry over the future of its frameworks for the past 18 months and finally presented its new capital engagement strategy in a meeting with its framework suppliers on Monday.

BAA will preserve the cur rent framework model for its new framework deal for major complex projects, advertised in the Official Journal this week.

The operator will continue to retain the risk for the projects and form 'integrated alliances' under 10-year framework agreements - but there will be fewer contractors taken on board. The incumbents are Mace, Laing O'Rourke, Tay lo r Wood row and Hee r y, owned by Balfour Beatty.

Commercial director Ken Owen said: 'We have more confidence in our suppliers, so there will be a more hands-off approach.'

Mr Temple said UK contractors could have to compete with BAA owner Ferrovial for civil engineering work across the company's airports, as Ferrovial subsidiary Cintra seeks to enter the market.

He said: 'For suppliers not in the civils business it is not a concern but, for those who are, we might see Cintra wanting to become a framework partner.

'Another route they could potentially follow is to buy a company in this country to bid for work. They would not have any advantage and we would have to follow the regulatory processes strictly.'