Network Rail's reclassification as public sector body was 'opportunity to improve procurement'

Will Green is news editor of Supply Management
16 March 2015

Network Rail’s reclassification as a public sector body was a “great opportunity” to improve procurement processes, a conference was told.

Jim Carter, commercial director at Network Rail, said the organisation had speeded up payment times and standardised its pre-qualification questionnaire (PQQ) as a result of the change.

Previously Network Rail had to meet the requirements of the Utilities Contracts Regulations for any procurement related to the running of the railways, but for other purchasing it was classified as a company and did not have to follow EU procedures.

But on 1 September 2014 it was reclassified and as a result now has to meet the Public Contracts Regulations for all purchasing outside that connected to the operation of the railways.

Speaking at Procurex South in London last week, Carter said two years ago average payment times were 55 days but this was now 24 days, and 98 per cent of invoices were paid within 30 days. As well as altering PQQs, they have also had to incorporate anti-bribery clauses into contracts.

“I see reclassification as a great opportunity for Network Rail,” said Carter.

Referring to a government “aspiration” that 25 per cent of spend is channelled through SMEs, Carter said: “I think we would be well over that. The SME agenda is fascinating.”

Carter said Network Rail had spent £7.5 billion with 4,248 suppliers in the past 12 months.

He said a shrinking government subsidy meant it had been necessary to establish a “procurement practice management process”, which included planning demand, strategic sourcing, measuring savings and gaining customer and bidder feedback.

Carter said the sourcing cycle had reduced from an average of 95 to 58 days. “It’s crucially important for us to improve our contract management,” he said.

The reclassification came about after the Office for National Statistics announced in 2013 that Network Rail’s debt would be recategorised as public sector debt because of changes in European accounting guidelines.

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