Midas Group chief executive Alan Hope has accused the Education Funding Agency’s regional frameworks of “squeezing out the little guys” and restricting work for SMEs.
Mr Hope, who is celebrating 10 years at the helm of the South-west based contractor, told Construction News that regional frameworks needed to be more inclusive of local contractors if they were to deliver results.
The £500m EFA framework for the South-west was awarded in July 2014, with winners including Bouygues, Galliford Try, ISG and Skanska.
But Mr Hope said the process was “a classic example of how to get the wrong result” when procuring public projects.
“The main issue I don’t understand with public sector procurement is how they say the frameworks are regional, but they end appointing billion-pound national contractors on all the regional frameworks and squeeze out the local guys,” he said.
Mr Hope argued that none of the winners on the framework were “proper regional contractors”.
“What that’s doing is restricting work for local SMEs,” he added.
“National firms will use their national supply chain, and they won’t be giving the work to the local subcontractors in the region.”
Midas Group, which posted a turnover of £248.6m in the year to 30 April 2015, was originally shortlisted for work on the South-west EFA framework, but was one of five firms to miss out.
“The EFA regional frameworks are restricting work for local SMEs”
Alan Hope, Midas
Mr Hope said the EFA should overhaul the scoring system for framework awards to reward firms that place more of a focus on the local supply chain.
“The local economy and SMEs [should benefit] from work going on in the area, rather than [have] national contractors shipping in their national supply chain that just drives back out when the work finishes. It seems pretty simple.”
He added that companies bidding for the works were “not asked” how they would use the local supply chain and SMEs if they won a place on the framework.
Mr Hope’s comments echo the Department for Education’s own ‘mystery shopper’ report, which found that the frameworks had not complied with government procurement policy.
This led former cabinet office minister Francis Maude to suggest that the framework might be put back out to tender, but the DfE has since insisted that it has no plans to reprocure or cancel the project.
Mr Hope said other public procurement frameworks were showing “positive signs”.
This was particularly true for High Speed 2, he added, on which at least 60 per cent of contract opportunities in the supply chain for phase one are expected to be filled by SMEs.
Midas lays out expansion plans
Midas is planning to expand into the South-east having traditionally been strongest in the South-west, with the firm aiming for areas outside the M25 rather than London, according to Mr Hope.
“There’s still space for a high-quality regional contractor who wants to be part of the local business community,” he said.
Midas will not target any additional sectors but will work across its current portfolio, which includes education, commercial, retail and housing work.
Mr Hope said the student accommodation and higher education sectors had been particularly lucrative for the firm this year.
He also added that early contractor involvement was vital to much of his firm’s repeat business, rather than frameworks and tenders.
“Any smart client now is booking their contractor early, rather than running it through a tender process and finding out that people aren’t really that interested in bidding for it.”