In a recession, a standard for procurement for construction contracts could be just what the industry needs. So what do the draft rules say, and what would they achieve?

In the midst of a recession, the introduction of international and British procurement standards for construction contracts may seem to be taking place at an inopportune time. However, such changes could allow greater flexibility in the way contract awards are made, while helping to bring about efficiencies and ensure fair treatment and transparency for all.

Earlier this year, BSI British Standards invited comment on Part 1 of the first draft International Standard on Construction Procurement. Based on the South African standards, this draft is an advanced model, having had the benefit of substantial input over several years from member bodies of the International Organisation for Standardisation (ISO). The BSI is also developing a British Standard for Construction Procurement. Based on the ISO standard, the British version is likely to reflect UK-specific factors, current best practice and regulation.

The adoption of principles similar to those in the draft standard should be of significant assistance to the construction industry during this recession.

The standard is ambitious, setting out “processes, methods and procedures for the establishment within an organisation of a procurement system that is fair, equitable, transparent, competitive and cost effective”. It establishes standards for core processes, with a wide range of discretionary elements.

The standard would apply to public or private sector client organisations in the development of their procurement systems, and its principles are intended to apply down the supply chain. Its main objective is the creation of a framework for the development of procurement systems that facilitate fair competition, reduce the possibilities of abuse, improve predictability of outcome and allow the demonstration of best value. Its component elements are:

The UK version of the procurement standard is likely to be influenced by the potential for efficiencies and economic gain

  • Describing generic procurement processes structured around a basic requirement to be fair, equitable, transparent, competitive and cost effective
  • Establishing basic requirements for the conduct of an organisation’s procurement, including integrity and the avoidance of conflicts of interest
  • Establishing a framework for the development of an organisation’s procurement policy
  • Generic methods and procedures for procurement, including a detailed consideration of the alternatives available, including negotiation, competitive selection, competitive negotiation and electronic auction.

Of particular interest is the emphasis on secondary procurement policy and objectives. Much of the experience that contributed to the draft international standard relates to the objective of black empowerment in South Africa. The standard applies these lessons to secondary objectives including environmental, the targeting of enterprises and the targeting labour. In effect, this means that both social and economic goals can be considered when awarding a construction contract.

Social goals may include business ownership patterns, composition of workforce, distribution of employment opportunities and the relief of poverty. Economic goals may include increased use of local resources and job creation. The standard emphasises the need for the secondary objectives to be clearly defined in order to make them enforceable, measurable and quantifiable. This also means that they can be readily monitored, evaluated, verified and audited.

The development of the UK version of the procurement standard is likely to be influenced by the potential for efficiencies and economic gain compared with a standard approach to procurement, and also the advantage of secondary procurement objectives in securing broader economic targets. In a climate of increased competition for contracts and a rise in subsequent legal challenges, it is also helpful to be moving towards more transparent procurement systems.

The standard and template for comments can be accessed at www.bsigroup.com/bsiso10845-1. If you would like to be considered for involvement in the creation of the British Standard, contact alan.hall@bsigroup.com.

Richard Ward is a construction partner at Eversheds international law firm

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