Schools out for tender

Contractors and education service providers are slowly coming to terms with the full implications of the coalition government’s planned shake-up of the education sector in England and Wales.

In contrast to the termination of the Building Schools for the Future (BSF) programme (which aimed to rebuild or renew nearly every secondary school in England), the government has made clear its commitment to academies, with a massive expansion of the previous programme. An Academies Bill is expected to become law by August, which will make it easier for schools to set up as academies, and will allow those rated as “outstanding” to be fast-tracked.

Michael Gove, the education secretary, has written to every school in the country to invite them to break away from local authority control and take up academy status. In a recent speech Mr Gove confirmed that more than 1,772 schools had enquired about becoming an academy, including 870 outstanding schools. This is dramatic and rapid change. Only 200 academies were approved by the previous government through a programme that had been running for 10 years.

Alongside existing schools’ conversion to academies is the government’s commitment to free schools - set up and run by parent groups, teachers, charities, trusts or voluntary groups without local authority control. By mid June, there had been more than 700 expressions of interest in setting up free schools. The government’s aim is to open the first wave in autumn 2011.

All of these new academies and free schools will be legal entities separate from local authorities and expected to stand on their own two feet. They will have greater control over their own finances and have direct responsibility for land, buildings and people and thus will be able to appoint contractors directly to carry out construction and maintenance.

This dramatically changes the procurement landscape for contractors and will demand a more flexible and diverse range of approaches to securing business. Contractors will need to engage effectively with procurers, ranging from novice parent/teacher groups to local authorities to commercially driven private companies. This will affect everything in the relationship between procurer and contractor - from the way the details are agreed to the terms of the contract and the risks and liabilities that each party takes on. Local authorities are known quantities but the same cannot be said for some emerging new school providers.

Mr Gove confirmed that more than 1,772 schools had enquired about becoming an academy

Local authorities will be subject to procurement regulations and procedures as well as their own internal rules and guidelines. Commercial operators will be experienced in appointing contractors and will bring this experience, and their preferences, to the negotiating table. School governing bodies and parent/teacher groups are likely to be much less experienced, and will need to be treated differently. Contractors will need to take these considerations into account when bidding for work and should understand the environment they will be working in.

There are likely to be opportunities for contractors to offer economies of scale. For example, there may be a significant number of academies and free schools in a geographical area, and although each of these will be independent from each other they may come together to purchase works or services. Alternatively, a contractor appointed by a number of schools in the same area may be able to offer better rates to other local schools.

Another area that will need to be kept under review is the effect the academies programme will have on existing PFI/BSF schools. When these multi-school projects were set up, most of the schools involved were local authority-maintained and one contractor was appointed to provide all construction and maintenance. If any of these schools now becomes an academy, they may want the freedom to employ alternative contractors to work with the incumbent provider or even to break away entirely.

These changes should be viewed as a chance for many more players to get involved in a market that has previously, owing to the structure of government programmes such as the PFI and BSF, been dominated by the major building contractors who could afford the enormous costs of bidding for large-scale projects.

Matthew Wolton is director of TPP Law