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Northern Ireland in procurement overhaul

Public procurement across Northern Ireland is to be significantly overhauled, including initiatives to reduce bidding costs, increase opportunities for small business and standardise PQQs, following two successful legal challenges to major government frameworks.

A major report into the Executive’s procurement practices is due to be published within weeks and has been described by finance minister Nigel Dodds as “a landmark in government construction procurement in Northern Ireland”.

The report, intended to make the procurement process less cumbersome, is expected to also recommend the government improve visibility of future work prospects, increase opportunities for contractors to bid for work, introduce smaller types of frameworks and reduce the likelihood of future legal challenges.

Mr Dodds said: “I am confident the report, when published, will herald a new era in public sector construction procurement in Northern Ireland.”

The Executive said the report is being produced in response to the economic downturn, however industry and legal experts have suggested it was primarily driven by concerns over procurement processes following the two challenges to already-awarded government frameworks.

Construction partner at law firm Weightmans, Paul Donnelly, said: “There is clearly some political embarrassment here.”

While Mr Donnelly said the “EU rules on procurement are very clear” he admitted the Executive was likely to be producing the report as it was “running a bit scared of getting it wrong again”.

The Executive has a planned capital investment of £3 billion over the next two financial years. Major future public infrastructure works currently include the Titanic Signature scheme, the Rapid Transit System for Belfast and the Royal Victoria Hospital Critical Care Unit.

A task group – including contractors, consultants and government officials – was established to agree the principles to be applied to future construction procurement.

While the report detailing the principles to be applied to future public sector procurement will be released next month, the group will have until Christmas to draw up a delivery plan for the recommendations.

There has been concerns that some may not be picked up in full by government clients, but a spokeswoman for the Department for Finance said: “As chair of the procurement board, the minister has instructed the Central Procurement Directorate [which handles public procurement across Executive departments] to work with all government construction clients to implement the report’s key principles.”

Initiatives are intended to be “rolled out” as they are developed throughout the course of the year.

Mr Dodds said working groups had been established which would “review the minimum levels of financial standing required by those tendering to ensure that they are proportionate to the contract size, examine tender arrangements to allow SMEs to join together to bid for larger projects and accept relevant experience in lieu of specific experience of a particular market sector”.

He added: “Other measures within the report, including the development of a standard pre-qualification questionnaire, will reduce the cost of bidding and of evaluating tenders.”

Construction Employers’ Federation managing director John Armstrong, who has been actively involved in the development of the report, said: “Industry desperately needs these measures to be introduced as quickly as possible.”

Construction Industry Group for Northern Ireland chair Colin McCarthy said report was expected to recommend the introduction of a new mediation service, which  would be “a first port of call” for contractors in future.

“Ending up in court doesn’t really do anyone any favours at the end of the day,” he said.

The region’s £650 million schools modernisation project has been struck by long delays after the Executive decided to appeal a High Court decision to scrap the major framework.

Last November the Executive also was forced to abandon an £800 million framework agreement after the High Court ruled its procurement process was flawed and said compensation to an unsuccessful contractor would be “a waste of money”.

The government has now had to look at alternative methods of procuring work in these areas, including tendering each contract individually.

ANALYSIS

By Martin Baker

Northern Ireland is at present being watched very closely indeed.

We have recently seen some very important legal challenges there, from both a commercial and legal sense.

The Henry Brothers and McLaughlin and Harvey cases last year were the first occasions in the UK where an already-awarded framework had been set aside.

What we have seen, partially as a function of the economic climate, is that contractors are much more inclined to challenge. As a result, the public authority has been forced to review its procedures.

But the report’s recommendations seem to risk establishing a rather cosy relationship – just the type of relationship that EU procurement rules aim to break down.

There are also attempts being made to reduce the legal challenge, which is like putting the clock back and telling contractors: ‘Don’t bite the hand that feeds you’.

It seems to me some of these recommendations could in fact negatively impact those not party to their drawing up.

And with the recent increase in willingness we have seen for contractors to challenge the government, it will need to make sure its final procedures don’t add any fuel to the fire.

Taylor Wessing head of competition, EU and trade, Martin Baker 

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