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SMEs ‘discriminated against’ by EFA’s school building frameworks, says NFB report

The Education Funding Agency’s £5bn Regional Framework for school building should be scrapped and re-procured, a new report has urged.

It argues that SMEs are “still often being discriminated against when attempting to participate in the EFA’s capital school-building programme”, including its £5bn Regional Framework.

According to the report’s authors, this exclusion is “contrary to government advice” and anti-competitive.

The report was co-authored by the National Federation of Builders, consultancy DeNové and architectural group Project Compass.

They claim the Regional Framework failed to adhere to procurement policy notices (PPN) by setting “unnecessarily high” turnover thresholds for contractors bidding for a place on the framework, and said it should be cancelled.

The framework was set up to deliver smaller school-building projects and to give SME and regional contractors access to the EFA’s school-building programmes.

However, only two out of 43 spots on the framework were awarded to contractors with a turnover of less than £100m when contractors were appointed last July.

Meanwhile, more than half of the places (23 out of 43) were awarded to six contractors, all of which are also on the £4bn national Contractors’ Framework.

The report makes several recommendations to improve SME access to the EFA’s programmes, including cancelling the framework and re-procuring it, with costs for the original bidders being paid by the procuring agency.

It also recommends that some contractors are “called off the framework” and to limit competition to contractors that are not appointed to the main Contractors’ Framework.

The Regional Framework covers six English regions and involves projects worth £200,000 to £12m.

Contractors bidding for the framework had to have a minimum financial turnover threshold of £25m in each region of the framework that they bid for.

The report claims the threshold prevented SMEs from bidding for a place on the framework and that it contradicted PPN 02/03, which states that bidders should not be deselected on the basis of turnover size alone.

Project Compass director Walter Menteth said: “With an average contract size of £2m, you would expect the requirement on tendering to be quite small.

“You’d expect them to be calling off people with quite a low threshold.

“But they were looking for an annual turnover of £25m, which effectively excluded most SMEs. This goes contrary to government advice.”

The report says it is “unclear” whether the EFA’s requirement that members of consortia each had an annual turnover of more than £10m is allowed under the Public Procurement Directive.

Three regional contractors in the North-east – Surgo, Esh Group and Tolent – formed the SET consortium, which it considered “the only chance of proceeding to tender” for the framework.

SET was shortlisted to tender for the North-east and North-west regions, but it failed to win a place on the framework.

In a procurement case study, shared with Construction News, the contractors said the financial assessment aspect of the EFA tender was “very unusual” and that they had not encountered the EFA’s scoring system before, which provided higher marks for bidders being closer to the “mean average” of all tenderers, rather than favouring the lowest percentages.

SET said there appeared to be “an inherent advantage for contractors that are already delivering on central government educational frameworks, as there is awareness of what is expected and they are therefore better able to play the tendering ‘game’”.

The NFB report adds that the EFA failed to adhere to the Construction 2025 recommendation to “ensure SME engagement in national, regional and local frameworks”.

Mr Menteth said the report had been sent to the government and called for the EFA to meet with the NFB to consider its recommendations.

He said: “If you don’t have sufficient competition, you have an oligarchy, and it seems that this is what happened.

“They have netted the same people as they have on the national framework. There’s no competition at all.”

The EFA has been contacted for comment.

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