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Councils drive best value out

Survey shows local authorities award 80 per cent of contracts to the lowest bidder

MORE than 80 per cent of contracts awarded by local authorities are still going to the lowest bidder.

That is the damning finding of a Construction News survey that has prompted the Specialist Engineering Contractors Group to call for an inquiry into local government procurement practices.

The survey of 50 councils used the Freedom of Information Act to gather tender data on 226 contracts worth more than £671 million.And it showed that on 82 per cent of contracts authorities spurned best value to choose the winning bidder on price alone.

The SEC Group has made past calls for politicians on the Commons select committee of the Office of the Deputy Prime Minister to examine procurement practices among local authorities without success.

But SEC chief executive Rudi Klein said: 'Under the Local Government Act, there is a statutory commitment to best value. If more than 80 per cent of all contracts are being let on lowest price, that can't be right - they're breaking their statutory duties.

'There are a lot of local authorities out there that are unaware of best practice or which ignore it completely.Not only do we need an inquiry, but we need to take advantage of the current general election to ask candidates what their attitude to the issue is and whether they would also support an inquiry.'

In February Construction News asked 50 councils for details of their last three construction and civil engineering contracts awarded, above and below a value of £3 million - six contracts in total. In all, 35 responded at the time of going to press.

Despite limited use of partnering and quality/price assessment - and countless procurement strategies claiming a commitment to best value - 64 per cent of contracts worth more than £3 million were let on lowest price.

In cash terms, this represents £299.6 million of £626 million spent in total, although the figure is slewed by Bovis Lend Lease winning the £109.5 million King's Dock scheme from Liverpool City Council, despite being £80,000 more expensive than rival Laing O'Rourke.

And councils tendering jobs worth less than £3 million went for the lowest bid on 93 per cent of contracts - £43.4 million of £45.2 million by value.

Industry improvement body Constructing Excellence is preparing a new protocol on best practice in local authority procurement, which it plans to publish in June.

Chief executive Dennis Lenard said: 'I am not surprised by the figures. Unfortunately we are struggling in many regions to get buy-in even though the evidence for savings is overwhelming.

'The problem as I see it is the mixed messages. On one hand we have a drive for efficiency and targets being set per cent of contracts - £43.4 million of £45.2 million by value.

Industry improvement body Constructing Excellence is preparing a new protocol on best practice in local authority procurement, which it plans to publish in June.

Chief executive Dennis Lenard said: 'I am not surprised by the figures. Unfortunately we are struggling in many regions to get buy-in despite the evidence for savings.

'The problem is the mixed messages.

On one hand we have a drive for efficiency and targets being set and yet each authority still has the autonomy to operate outside suggested guidelines.'