Press Releases

Treasury launches contract guidance for Public Construction

Procurement contract guidance for PFI, Design and Build and Prime Contracting was announced today by Andrew Smith, Chief Secretary to the Treasury.

As well as providing a clear direction for Government Departments on the priority strategies to be used, the documents underpin the need for procurement decisions on public buildings and works to achieve a balance between aesthetic and environmental impact, functionality and affordability.

Andrew Smith said:

"Central Government spends some £7.5 billion annually on construction and therefore is one of the industry's most influential clients. We have a responsibility to help the industry to improve its performance by creating the market forces that make this possible.

"The Achieving Excellence initiative, launched last year to improve significant Government clients' performance, made it clear that we will focus on interacting with suppliers in the future through integrated supply chains working co-operatively. The documents launched today indicate a further move in that direction."

Nick Raynsford, DETR Construction Minister, speaking today at the M41 Annual conference in Birmingham paid tribute to the work of central government and the Achieving Excellence Initiative. He said:

"The Achieving Excellence campaign has set Government Departments and Agencies challenging targets for improving their performance as clients, and has introduced action plans and monitoring arrangements to ensure delivery. I am pleased to announce today another step forward in the modernisation of government procurement."

Peter Gershon, Chief Executive of the newly formed Office of Government Commerce said:

"Achieving Excellence requires government clients to work with the industry to reduce waste in all aspects of construction procurement and management. This should achieve greater value for money for the taxpayer and allow greater and more secure profit margins for those suppliers who accept the challenge to work in this way with Government."

Mr Smith endorsed a joint directive from the Treasury and the Office of Government Commerce (OGC) making clear that from 1 June 2000 all central government clients should limit their procurement strategies for the delivery of new works to PFI, Design and Build and Prime Contracting and, from 1 June 2002 that these procurement strategies should be applied to all refurbishment and maintenance contracts. This means that traditional, non-integrated strategies will only be used where it can be clearly shown that they offer the best value for money. This means in practice that they will seldom be used.

NOTES FOR EDITORS

• The OGC will bring coherence to the purchasing activity of some 200 Government Departments, non-governmental bodies and agencies employing some 5000 staff on procurement tasks and spending some £13 billion of taxpayers' money every year. The OGC will perform an important role in the government's modernisation and competitiveness agenda and will ensure best value for this major element of public expenditure.
• The Government Construction Client Panel (GCCP), which developed the Achieving Excellence initiative, was set up in March 1997 to co-ordinate the work of individual departments as clients in construction procurement, and to provide a single voice on cross-departmental strategic client issues. Its formation was a direct response to an Efficiency Scrutiny in 1995 which examined Government's role in construction procurement.
• GCCP membership is drawn from around 50 departments with an involvement in construction. These range from big players like Defence Estates, Highways Agency and NHS Estates to more focussed interests like Property advisers to the Civil Estate (PACE). DETR is also a member given its role as sponsor for the construction industry. It is chaired by Procurement Practice and Development Division at the Office of Government commerce, formerly HM Treasury.
• Achieving Excellence is a three year strategy document that was launched by Alan Milburn on 4 March 1999. It sets out target for Government performance for each of the years 2000, 2001 and 2002 under four headings "Culture Change", "measurement", "Standardisation" and "Change". It is supported by a more detailed Government Improvement Action Plan which sets targets at central and departmental level.
• One of the action points in Achieving Excellence was the introduction of integrated procurement strategies - in particular PFI, Design and Build, and Prime Contracting - where members of the supply chain work as a team to provide the best solution for the client. The introduction of these needed to be supported by guidance on terms and conditions .
• "Standardisation of PFI Contracts", ISBN 0 406 92881 9 was published in July 1999 with a foreword from Andrew Smith.
• GC/Works/1 Amendment 1 (2000) ISBN O 11 702494 5 is applicable to GC/Works/1 Single Stage Design and Build (1998) and GC/Works/1 Two Stage Design and Build (1999) produced by the Property Advisers to the Civil Estate (PACE).
• Defence Estates has produced a set of core terms that can be applied to Prime Contracting contracts. For further information see www.defence-estates.mod.uk
• This press release and other Treasury Information is available the GCCP website at http:/www.hm-treasury.gov.uk/gccp