The Carillion
collapse shows the need to rethink how public sector contracts are procured and
managed, according to the UK's architects.
The RIBA has voiced
concerns about current procurement processes, including pre-qualification
questionnaires (PQQs) and framework agreements.
RIBA Executive
Director Adrian Dobson says that although these are intended to support fair
bidding, they actually restrict competition and create barriers for small
businesses entering the market.
"Standard PQQ’s
tend to bias selection in favour of larger multi-disciplinary suppliers. In
architecture this might be requirements to have three built projects of a
similar type, high turnover or PI requirements and multiple
accreditations," he continued.
"This leads to
a reliance on a small pool of large companies such as Carillion; narrowing the
talent pool and concentrating risk in too few hands. Smaller business,
including architects, are often restricted to being tier 2 and 3
sub-contractors who are then particularly vulnerable to overhead financial
collapses of this kind, where the cashflow crisis gets passed down the supply
chain.
"Carillion has
around 20,000 workers in the UK, but there will also be a vast impact on the
many sub-contractor firms that work with Carillion, including architects.
"The last
significant bankruptcy in construction was ROK in 2010, which we understand had
annual revenue of £715 million compared with Carillion’s £5,200 million; a huge
difference in magnitude.
"The government
has announced it will be covering Carillion’s costs on public sector service
contracts to ensure that public services are not interrupted. That still leaves
public and private sector construction work left in uncertainty and this needs
to be clarified by the Government and the liquidator as soon as possible.
"We
will continue to lobby government for a new approach to procurement."
