Public procurement guidance supports Welsh steel - Supply Management

Public procurement guidance supports Welsh steel

23 January 2018

Welsh public bodies should regularly provide updated details of major projects involving the use of steel so local steel firms can bid for those contracts, according to government advice.

The Welsh Government’s Procurement Advice Note (PAN) sets out new guidelines for the awarding of contracts, in schemes such as major building or infrastructure projects, to support the country’s steel industry.

The PAN follows on from the Steel Report published by the Tata Steel Task Force in January 2016, which identified public procurement as an area of support for the steel industry in Wales and the UK. 

Tata Steel announced in March 2016 it was considering selling its UK operations, including plants in Llanwern, Caerphilly and Port Talbot, following a significant slump in business.

However, after a government pledge to support the sector, it reversed its plans and is now in active negotiations over a 50:50 joint venture with German steelmaker Thyssenkrupp. 

In December 2016, as part of efforts to boost the UK steel industry, the UK government similarly updated its procurement guidance, recommending greater visibility on upcoming projects involving steel and extending the guidance to include projects below a previous threshold of £10m and those from local and health authorities.

Welsh finance secretary Mark Drakeford said the PAN would provide clarity to the Welsh public sector on approaches to be adopted to open up sub-contract opportunities for local steel suppliers.

“The publication of the PAN is part of our ongoing commitment to support the long-term viability of steel making in Wales and recognises the importance of steel to the Welsh and UK economy as a provider of highly-skilled, well-paid jobs – both directly and in the supply chain – and as a key investor in further education and research and development,” he said.

The guidelines state that as well as requiring devolved bodies to publish their pipeline of major projects, companies bidding for contracts will also have to demonstrate they are not dumping cheap steel on the UK market – an issue that has been blamed for the problems in the sector in recent years. It said this prerequisite is intended to ensure contracts are not awarded just on the base of the cheapest price. 

The PAN also states that bidding firms must also show they comply with social, employment, environmental and health and safety regulations within the country they are based.

Drakeford added that the requirements are a further example of the Welsh Government’s commitment to provide opportunities for local suppliers to engage in public contracts, either directly or through the supply chain in support of the country’s steel sector. 

“It highlights our ongoing policy to use public procurement to support ethical business practices,” he said. 

“We are already seeing the results of the first steel PAN, which was issued in 2016, to support the Eastern Bay Link Road project [in Cardiff], funded by the Welsh Government. This has helped source 89% of the steel reinforcing bars used in the construction of the road from within Wales.”

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