The one and only: using the NEC for public projects

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The Office of Government Commerce has decreed that only one form of contract be used for all public work. But how did it come that conclusion? Well, that’s a good question

Keep fibbing, folks! Win work by telling the customer that the NEC contract it’s asked for in the bid-bumf is something you love and treasure. That was a fib you had to tell to win work on the Olympics. There was no choice.

And now let me explain how easy it is for members of parliament to be bamboozled into making pronouncements from on high. The 16 MPs on the Public Accounts Committee (the one that keeps an occasional eye on the construction industry) have been persuaded to say that public works contracts will fly under one contractual banner: the NEC3. They think they are getting a good deal. But the truth is that 99 contractors out of 100 were born into JCT (we used to call it the RIBA form); they have lived by it, loathed it, loved it. It is part of them. And when you are working in your comfort zone, well, there is a better chance of things going well. NEC3 is outside the comfort zone for 99% of firms.

The government gives a lot of public money, your money, to the construction industry. Some years ago it dropped a clanger. It decided to force its own standard form down the throats of builders. It was probably the idea of a civil servant in consultation with construction folk who had taken their eyes off the ball. The form was called GC/Works. A better name might have been CON/1. Contractors doffed their cap in great respect. And fibbed. They pretended it was all jolly good stuff. They preferred JCT63, or JCT80 or the sequels, but ssshh, don’t tell the customer. Mind you, we lawyers liked GC/Works. It gave rise to lots of rows.

Then in the mid-nineties the “collaborative working” idea was voiced. Be nice to each other! GC/Works was happily dropped and the New Engineering Contract was invented; it waxed lyrical about partnering. We had to be nice to each other! None of it works, of course. It really doesn’t matter whether or not the document shouts “collaborative” or anything else – the number of rows is no different now from whenever. We like to fight; it’s our culture.

The snag for NEC publishers was that some of its competitors climbed on the bandwagon. They too started shouting “be nice” to each other. The label on the JCT tin and the PPC2000 tin now shouts about collaborative working. Well now, that’s inconvenient, said the Office of Government Commerce (OGC). And to avoid the bleat of favouritism, the OGC went to a group called the Public Sector Construction Clients Forum (PSCCF) and asked those folk to announce which of the three forms shouted the favoured political propaganda best.

The New Engineering Contract was invented; and waxed lyrical about partnering. We had to be nice to each other! None of it works, of course

Neatly sidestepping that burden, the PSCCF told the OGC to put its hand in its pocket and pay for an evaluation of all three contract documents. The cheque went to Arup. Arup reported. It’s a good report. It says in short: all three are okay. “Each contract reviewed satisfies the OGC’s evaluation criteria. Each would enable parties using them correctly to achieve OGC’s Achieving Excellence in Construction Standards, from which the evaluation criteria are derived.”

Now then, the people at the PSCCF are not daft. They wanted to know which of the three documents pass muster. And since all three do, that’s that. Ah, but now comes a bit of fancy footwork. In the minutes of the meeting of this committee, it also says: “In discussion, PSCCF confirmed the value of a common form of contract” … so we will keep to NEC3 only. None of that is in the Arup report. It’s the bright idea of a handful of people in a sort of by-the-way remark. And by the way, some key people were missing that day. The Construction Confederation chief was absent, and it so happens that the confederation wholly condemns the idea of using one form. It calls it the creation, a monopoly, uncompetitive, and wholly inappropriate. Wow!

Now then, friends at the OGC, you reported to parliament that it was “strongly voiced” at the Construction Committee that there be one suite of forms, and parliament thinks you have consulted the industry. You have not. Sunand Prasad, the RIBA president, noticed the manoeuvre, and said your decision had imposed “an inappropriate restriction on the market”. Suzannah Nichol, the National Specialists chief, gave no support; nor did the Scottish Building Contracts Committee, nor the Association of Consultant Architects.

Sir Michael Latham said: “I believe that all three contracts are very suitable.”

So, parliament, so OGC, take stock please. Shall we call it a breakdown of communication? It sounds better than fancy footwork.