Procurement for 21st Century Schools
Procurement at work
The initial approach to delivery of the 21st Century Schools Programme in Wales has been based on valuable lessons learned from a number of Welsh projects as well as from large-scale school investment programmes in England and Scotland.
The nature of the programme in Wales suggests that a range of options for delivery based on best practice should be made available rather than a pre-defined one. An important aspect of procurement for the programme is to secure community benefits such as training and apprenticeship opportunities, through the adoption of a strategy for contracting and for the supply chain which will open up opportunities for small and medium enterprises (SMEs) in Wales.
The use of local materials and the adoption of low-carbon solutions are amongst other aspects that will support the local economy.
An example might be the promotion of innovation in sustainable off-site construction, for which a long-term pipeline of work would help create a market underpinning viable businesses, leading to job creation and a significant contribution to developing the Welsh economy.
The long-term nature of the programme brings with it opportunities for cost-effective procurement routes. However, some of these might only be achieved by scaling-up from local solutions to regional and national ones. Local authorities may need to find a balance between these possibly conflicting aims of local benefit and wider efficiencies. The WLGA has set up the Collaborative Works Group to look at working together across local authorities. Here you can find a link to the route map for procurement best practice.
As background to the route map, the following summary of benefits and disadvantages of different contract types may be useful:
Until about ten years ago this was the most commonly used procurement route, involving separate stages for the appointment of designers and contractors. This approach has continued to be widely used by local authorities in Wales for relatively small-scale projects, and almost always for one school at a time.
Such contracts, however, can be relatively expensive as a result of the inefficiency of one-off procurement, which has to be repeated for each school.
In this long-term and larger scale programme there is an expectation that alternative approaches will be used which will be more efficient and may also have the benefit of building capacity and expertise in the local authorities.
A range of ways of procuring schools projects is open to this programme, each with its own implications, benefits and disadvantages. Authorities will be expected to indicate in Business Case submissions which procurement routes they propose to use based on a robust appraisal of options.
In addition to procurement options for delivery of the construction projects themselves, the Welsh Government is developing approaches to efficient ICT procurement. Guidance on this will be provided as part of the 21st Century Schools Standard when it is available.
Design and build
The design and build route is an approach adopted in recent years by many local authorities across the UK, and is in line with recommendations from the UK Government regarding improved efficiency and value for money. It can be used for single schools, or for several projects grouped together in a single contract.
One contractor (sometimes employing more than one design team) takes most of the responsibility for the delivery of the projects, and carries risk on the assembly of the whole team, and its effective integration, to meet the client's targets.
Some local authorities have put in place framework contracts, whereby a panel of contractors has been prequalified, through competition, for use over a fixed period. These contracts are usually for design and build, and allow a relationship to be established between the local authority and the contractors that permits continuous improvement and efficiencies for both parties.
Frameworks are also an excellent opportunity for several authorities to collaborate, and there are examples of such initiatives currently already in place or being procured in Wales. Contractors normally bid for framework contracts in value bands and for those at the lower end there are opportunities for smaller local firms and suppliers to be involved. Frameworks are likely to be the procurement vehicle of choice, where appropriate, for use in 21st Century Schools Programme.
Some local authorities have developed a variant on the frameworks described above in which a single design and build contractor is appointed for a fixed number of years following competition.
These partnering agreements normally bring with them a commitment to develop and improve standards and to reduce costs over a series of projects, in return for a commitment from the Council to use the contractor for a minimum total value of work in the period. This allows a good working partnership to be developed between authority and contractor/design team, in which key individuals on both sides can learn together over time.
Using this approach it has been possible in such cases to introduce elements of innovation, and to take account of the lifecycle of the projects in terms of detailed design and cost control.
Maintaining the asset
The procurement routes illustrated above do not address the responsibility for keeping schools in good condition after investment is complete. This normally falls to the client, the local authority or the school. So, unless standards are very carefully specified in the building contract, a building that is expensive to run and maintain can result with no recourse to contractual remedy.
Local authorities and schools have historically found it difficult to budget at the level required to keep their premises in optimum condition over long periods of time. The inevitable result has been that schools may need expensive repair or require complete replacement.
Facilities management contracts can be used to address this problem; another option which may be available to local authorities is the use of life-cycle contracts, including those using private finance. Procurement of schools using revenue-based funding, whether it is based on public-sector or private-sector borrowing, is an option that the Welsh Government is exploring further.