Procurement and Maintenance Strategy
The Highways Agency recognises that awarding contracts solely on the basis of lowest price does not provide value for money, either in terms of the final cost of construction or the through life and operational costs. In 2001 the HA set out a forward thinking procurement strategy which covers all categories of the work within the HA (http://www.highways.gov.uk/business/1178.aspx).
A number of basic principles have been set to all categories of work to achieve best value. They are aimed at building an incentivised team as early as possible before unnecessary constraints are introduced and which may restrict innovation. Taken together, the principles provide a framework which allows trust to be developed and encourages a culture which rewards added value and continual improvement. The incentives to suppliers are that the client will pay a fair and reasonable profit for a good service, in addition suppliers will be rewarded with a share of savings arising from innovative ideas and within the context of long–term relationships the main incentive will be continuity of work.
The principles of the procurement strategy are set out below:
- Early creation of delivery team - early contractor involvement for more scope in innovation, better risk management, and forward planning of work programmes and resources
- Integrated and incentivised supply chain - integrating the supply chain with its specialist knowledge, incentives for innovative ideas to give best value solutions
- Maintaining a competitive and sustainable supply chain - maintaining a good quality supplier base motivated and incentivised to work with the Agency
- Clear points of responsibility, no unnecessary layers of supervision - clarifying roles and responsibilities to reduce contractual interface problems, eliminating resource wastage from unnecessary layers of supervision
- E-procurement - to make tender processes, communications and performance measurement more efficient
- Selection of suppliers on the basis of best value - identifying the aspects of quality which add real, affordable value, using reality checks to confirm quality submissions and promises
- Fair allocation of risks - risks will be allocated to the party best able to manage them and the Agency will accept risks where suppliers are prepared to work in partnership to manage them and control the consequences
- High quality design - design solutions will be based on whole life value, assessed by reviews integrated with Office of Government Commerce gateway review processes. We are committed to achieving the principles of good design set out by the Government Strategy for Better Public Buildings
- Partnership approach based on long-term relationships - moving from short-term project partnering arrangements to long-term relationships for retention of skills and better resource and work programming
- Performance measurement with continual improvement targets - establishing a five-year programme of improvement under the Clients' Charter scheme to confirm benefits in the form of cost and time-savings, reduced defects and accidents, and improved whole life value and satisfaction with the product.
The HA procurement strategy emphasis on the longer term and whole life value is as applicable to the application of pilots as to the mainstream activities of the HA. The requirements for a sustainable development and the ongoing maintenance of an innovation must be high in the consideration of any innovation to be applied to the HA network.
Sustainable development means supporting a better quality of life through the efficient use of available resources to realise social progress and to maintain stable economic growth, while caring for the environment. A poorly specified brief or specification at any point in the supply chain can introduce or perpetuate waste and increase cost. Suppliers and the HA must take responsibility for the sustainability of its products as well as its processes. These, together with design quality are only achievable if integrated from the very beginning of the planning, design, construction and maintenance process.
Innovation is central to the Agency's work and it is committed to invest in Research and Development projects that will improve products and service delivery, while enhancing competitiveness and productivity among the supply chain. It will look for collaborative research opportunities with its suppliers, universities and local authorities as part of a knowledge improvement and sharing programme. Ideas for Research and Development will continue to be fed through the Safety, Standards, and Research Directorate who manage the overall programme.
Within a pilot it is likely that intellectual property rights (IPR) will be an important feature. Early consideration about how these will be addressed could assist in reducing future problems.
The emphasis within the HA selection process is on quality aspects, seeking to select suppliers best able to identify optimal solutions and to deliver them efficiently and safely. Price is taken into account in terms of affordability and how much the HA will pay for added value. This, together with the quality/price ratio, will be determined on an individual pilot basis and will take account of the specific circumstances and requirements.
The selection process must also include consideration of the longer term resource commitment required by the HA and the provision of appropriate ‘handover’ and training by the supplier.