Ethical Procurement in the Construction Industry

Ethical procurement in the construction industry.

Contractors and consultants spend considerable resources in tendering for work. We believe that clients are entitled to take precautions to ensure that the competence and resources of tendering contractors and consultants are adequate and that the personalities involved are likely to be able to form part of a cohesive team leading to the successful completion of the project.

Pre-qualification would appear to be the best way forward. Many projects advertised in the Official Journal of the European Union (OJEU) indicate that the selection criteria is based 70% on technical competence and 30% on price. In these circumstances it would appear reasonable for the client to use a pre-qualification procedure to produce a short list of 6 to 8 suitable qualified contractors or consultants that pass the technical competence stage leaving only the price and any qualifications to the submitted tender to be considered before selecting the successful tenderer. To ensure the total integrity of the tendering process all tenders should be opened at the same time with two or more people in attendance. Where public, shareholders or taxpayers money is funding the project we believe that clients should award the contract to the most economically advantageous tenderer. In short, ethical procurement entails pre-qualification of all matters except price; followed by acceptance of the lowest tender taking into consideration any exclusions and/or conditions.

Pre-qualification questionnaires are often lengthy and require the submission of numerous copy documents and specific answers resulting in submissions of well over 150 pages and taking 30-40 hours of executive time. It can be argued that this is time well spent if it results in the inclusion in a short list of contractors or consultants invited to tender where only price will determine success. However where a pre-qualification process results in a short list of tenderers all of whom quote for the work only to find further conditions being applied resulting in price not being the determining factor this is, in our opinion, not ethical. Surely it is onerous upon the client to ensure that the pre-qualification process is sufficiently comprehensive to admit to the final pricing stage only those contractors and consultants that are totally acceptable and would be awarded the contract if their price was economically advantageous - the lowest in plain English.

A recent example of unethical procurement involved 22 consultants responding to an OJEU advertisement to work on a £15 million build cost project. The pre-qualification questionnaire required 30 hours of executive time and resulted in a document containing over 100 pages from each applicant. Six consultants were shortlisted and the tender prices were: £8,500, £18,750, £18,850, £21,000, £30,750 and £33,000. The work was awarded to the consultant who bid £18,850 on the basis of further information being requested as well as an interview. The lowest tender was not invited to an interview. The reason given for the decision against the lowest tenderer was that it appeared that they would not give sufficient time to the project. In this instance the client was a substantial public body spending tax payers' money. We believe that this is one of the worst cases of unethical procurement and a failure to spend tax payer's money with integrity. It could be that the tendering process was engineered in favour of the firm that was awarded the contract. Higher Government authorities refused to investigate the matter as did a Member of Parliament.

We would be interested to receive comments and other instances of unethical procurement procedures particularly where taxpayer's money is being spent.


1 comment(s) for “Ethical Procurement in the Construction Industry”

  1. Tina Says:

    Contractors are not uncentivised to roll over their coanttcrs, in fact their entire credibity is based upon their ability to get the job done within the achievable expectations of their CLIENT. It may surprise the author but good contractors have customer satisfaction at the top of their priorities.If solution improvement is a requirement, call it out. More often than not the mandate of the contractor is to execute a scope defined by a consultant.A lazy manager is nothing else but a lazy manager, and there are many of these embedded in the permanent workforce.Why not get rid of contractors? Businesses need to have a holistic view of their resource needs to deliver on the goals and objectives. A mix if full time, part time pernament and contract resource pools is common, it is the management of the mix that is key. As tragic as it is how would corporates make the last quarter head count tweaks without having contractors to terminate temporarily?Outsourcing is a legitimate part of the mix, but the coanttcrs associated with outsourcing carry rigidity and unefficiency too. Contractors are the more efficient way of outsourcing one off work packages.The fact is that poor and lazy managers are the wasteful layer of organisatons. Keep them focussed, efficient and effective, and you they will drive the right resource mix for the business.

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