What’s next for procurement in the post-Hackitt era?
The Hackitt Review recommended sweeping changes to procurement practice across the building industry to ensure that building safety is prioritised. The Government’s Building a Safer Future consultation proposes radical change to construction and a host of new dutyholder roles, but was silent on any reforms to procurement law or practice. Where does this leave procurement in the UK, and what will need to change to support the proposed law reforms?
The 2018 Hackitt Review emphasised the importance of procurement in determining whether both high quality work and safety was prioritised in the construction of high risk residential buildings (HRRBs). Chapter 9 of the Review noted that “the procurement process kick-starts the behaviours that we then see throughout design, construction, occupation and maintenance” of buildings, and recommended a number of changes to procurement and contracting practices to produce “safer building outcomes”. These included requiring that contracts for HRRBs prohibit safety being compromised for cost reduction, and requiring that tenders for those contracts set out safety proposed which must be tested during the tender review stage:
The review also criticised the practice of lowest price tendering and low contractor profit margins, which led to both building safety being compromised and risk being pushed downwards in the supply chain, but stopped short of making any express recommendations in these areas.
Given this impetus for change, it was surprising that the Building a Safer Future document, while accepting most of the Hackitt Review’s recommendations, said nothing about reforms to procurement practice.
In the Queen’s Speech this October, a new Building Safety Bill was promised, followed a few weeks later by the initial findings of the Hackitt Inquiry. Give the political pressure on government to respond meaningfully to the Grenfell Tower tragedy, it’s likely that a bill will be introduced at some point next year. However, it’s still unclear whether the Government intends to provide further guidance on procurement practice, or whether the building industry will be left to find its own solutions. Many industry leaders have seen this as a missed opportunity, particularly around discouraging the use of lowest-price tendering both in the construction and maintenance of HRRBs and the sector more generally.
In the absence of any express guidance, the Steering Group on Competence for Building a Safer Future has released its interim report Raising the Bar, setting out an ambitious programme to improve professional competence across the building industry. The Steering Group proposes a series of national standards and competence frameworks for a range of professional disciplines, and a national registry of accredited individuals within each profession, supported by an industry-led Building Safety Competence Committee and a Government Oversight Body.
In respect of procurement practice, the Steering Group report that “poor procurement practices can lead to decisions that compromise all aspects of building and life safety”, and that key procurement activities “are too often carried out by individuals who are not fully qualified or fully competent which leads to poor decision-making and focus on price rather than building safety”.
With this in mind, a new procurement competence framework has been suggested to cover every stage of the RIBA Plan of Work and identify the capabilities and knowledge needed to use procurement to prioritise building safety. The competency framework will be developed by the Chartered Institute of Procurement and Supply with oversight from a government body, probably the UK Accreditation Service. All HRRBs would require a Procurement Lead, who will be assessed against the competency framework, eventually leading to a register of accredited persons to undertake this role.
The Steering Group recognises that this will require a culture change in the construction sector, and that further work will be needed to raise awareness of the new competence requirements and ensure compliance.
There are a number of procurement-related issues raised by the Building a Safer Future proposals that are potentially problematic, and remain without clear answers.
It is unclear how procurement teams will be expected to navigate the procurement of the new Dutyholder, Accountable Person and Building Safety Manager roles proposed in the Government’s law reforms, or how liability for these roles will be formalised in building contracts and appointments. Accordingly, it is uncertain if industry professionals will be willing to accept criminal liability for undertaking Dutyholder and Accountable Person roles, and/or whether these liabilities can be adequately insured. Given the widespread concern about a skills shortage in the construction industry, the new competency frameworks will need significant resourcing to meet the demand for trained and qualified professionals to take up these roles.
There is, of course, an ongoing concern about the “lowest price culture” in the construction industry more generally. Alternative pricing models are in use to attempt to move procurement decisions away from lowest price contracting. However, in the absence of a clear steer from government, there is a concern that (as the Steering Group note) “despite the best intentions of everyone involved in the various working groups… the culture of low prices and undercutting of competitors will continue.”
With landlords facing huge costs to ensure that new HRRB projects comply with the new Gateways system, and that existing buildings comply with in-occupation safety requirements, appointing a Procurement Lead will be yet another expense for an already cost and skillls constrained industry. It’s clear that without sufficient resourcing and a generous implementation timetable, the good intentions of these various proposals will become unworkable or prohibitively expensive.
Pending the tabling of the draft Building Safety Bill, landlords can prepare themselves for the changes by informing their Boards and executive teams about the likely impact of the changes, reviewing their procurement policies, particularly focusing on alternative pricing models to lowest price. Landlords should also review their standard forms of construction contract, bearing in mind Dame Judith’s endorsement of partnered methods of procurement as a way of developing collaborative working relationships with contractors.
Finally, landlords should aim to get a head-start on the proposed reforms by undertaking stock condition surveys on their existing portfolios, to identify potential building safety issues and collate important building safety information.