All over bar the shooting: Frameworks

I can’t help asking if the recent McLaughlin & Harvey challenge to framework contracts will persuade public authorities to say “blow all this framework malarkey, let’s stop the lot”.

The idea that has caused all the kerfuffle concerns (in this case) £800m-worth of local authority work coming up in the next four years. The plan is to hold a competition to pick five contractors, lock out all the rest, then have secondary competitions between the privileged five to see who picks off which bits of the loot. Behind it is a smidgen of wrong-headed thinking. Oh, it sounds good alright, but time has shown that it doesn’t work. Let me explain.

Back in 1995, a series of reports blamed competitive lowest price tendering for being a root cause of construction’s “confrontational relationships”. So, went the thinking … let’s have a “partnering approach” based on contractors and their design teams working together. Perhaps the idea of bringing a lucky few into the fort is intended to fill them with team spirit and bonhomie. I’m not certain how a framework deal stops any contractor breaking his neck with a “lowest price”, but hey, if everyone is oozing goodwill, that’s all right, isn’t it?

In 15 years or so of watching the ‘partnering approach’, I can tell you that it takes very little for the entire so-called team to be at one another’s throats

But after 15 years or so of observing the “partnering approach”, I can tell you that it takes very little for the entire so-called team to be at one another’s throats. A contractor kept from what it says is “its” money is willing to throttle the client’s QS and architect. And the architect that is told that an extension of time applies because it has been half-hearted is a nasty beast in defence.

McLaughlin & Harvey came sixth in the framework race. That meant it lost its chance of getting any of the £800m-worth of work. Its bid was, wait for it, within 1% of the bids placed fourth and fifth. So, it called for an inquiry. How was its bid marked? Seemingly 30% of the marking is given under the criterion of price. On that score McLaughlin & Harvey was fourth. The other marking included a methodology that had not been disclosed in advance to the bidders. Can you see the snag? If you know what the marking system is about, you can tailor your bid with a smidgen of commercial nous. So McLaughlin & Harvey said they were disadvantaged in not knowing. If they had known, that 1% that took them out of the fort may have been improved. Anyway, the High Court agreed that the framework adventure was bad.

So now what? McLaughlin & Harvey asked the court to add it to the five, so becoming six. Or set aside the competition and have a re-run. Or dump the framework idea completely. Or award damages. Put shortly, it wanted a remedy to prevent it suffering loss and damage as a result of a breach of duty. Imagine, though, that your company was one of the “lucky” five. You would be furious. If the race came on again and then you came outside the magic five, blow me, you might consider suing. But wait. The first round was conducted unlawfully. You have lost nothing to which you were lawfully entitled. So, how about simply adding a sixth contractor? That won’t do either. It would have the notional effect of diluting the work for all five of the current parties. It may be that all five would now sue for loss of chance … oh dear.

In 15 years or so of watching the ‘partnering approach’, I can tell you that it takes very little for the entire so-called team to be at one another’s throats

But how would damages be calculated? Remember, getting into the fort is only half the battle; the other half is winning some of the contracts via the sub-competition.

The High Court, in the end, ordered the entire bid process and the selection of the five contractors to be set aside. The process would go back to the original 11 contractors who competed. And if the public authority is minded to drop the whole idea of a framework agreement, it was very welcome. Meanwhile, there are several projects ready to do. It may even be that someone comes up with the bright idea of going out to tender for specific contracts, just like we have done for generations. Nobody can persuade me that a framework ringfenced deal has less chance of disputes than any other system. Disputes are the way of things. A framework is just another way of beating the price down to within an inch of confrontation.