4 May 2011 | Lindsay Clark
Public sector procurement encourages “suicidal bidding” for infrastructure and building projects, an industry group has claimed.
The Civil Engineering Contractors Association (CECA) said government purchasing processes still award work to the lowest bidder – rather than the supplier who will provide the best value – which encourages firms to offer prices lower than they can afford.
Launching a campaign to improve public procurement, CECA, which represents 330 civil engineering contracting companies, said below-cost tendering was currently rife in the infrastructure sector as less scrupulous contractors bid at less-than-sustainable levels in order to secure business.
“This has obvious detrimental effects for all parts of the industry,” the organisation said. “Clients may find themselves with a contractor resorting to claims or corner-cutting in order to make a margin on the project, or even an insolvent contractor if the ‘suicidal’ bidding acts as its name suggests. The consequences of this could be particularly wide-ranging as employees and suppliers will also go unpaid. Additionally, reputable companies may find themselves forced out of the market.”
CECA has published an action plan - Ten Steps to Smarter Procurement - ahead of the government's proposed reform of construction procurement, expected in June.
Alasdair Reisner, CECA director of external affairs, said: “Clearly there will be options for better management of procurement, starting with more capable and better-trained procurement officers.
“That is not to say they are all bad, some are very good quality, but if you look across the board, there are people procuring in ways that could be done better.”
Together with ending suicide bidding, CECA recommended that procurement could be smarter by:
• Halting stop-start procurement
• Greater visibility of workload
• Standardising pre-qualification processes
• Standardising references
• Creating a ‘new deal’ for frameworks to help regional contractors
• Allowing early contractor involvement
• Limiting tender list sizes
• Improving the quality of tender documentation
• Managing inflation risks