Public sector procurement professionals involved in major capital build and infrastructure projects in Northern Ireland are implementing a major new initiative designed to increase transparency both in the tendering process and the lower tiers of the supply chain below the lead contractors.
The ‘New Decade, New Approach’ agreement details a series of major upcoming investments in capital build projects, which promises to give smaller local manufacturing and construction firms new access to substantial contracts.
The initiative follows a series of high-profile projects that have stalled or been bungled, as well as the catastrophic effects on employees and suppliers following the collapse of major contractors seen as ‘too big to fail’.
A key requirement of the new agreement is for tendering processes surrounding planned capital build and infrastructure projects to be rigorous and comprehensive.
The Irish Times reports that due to the amount of investment of taxpayers’ money at risk, procurement processes for building projects and major public infrastructure must be very rigorous and procurement departments must be certain of a reliable and strong supply chain.
A major change for procurement practitioners involved in strategic sourcing and tendering will almost certainly be the abandonment of the ‘MEAT’ (Most Economically Advantageous Tender) assessment method.
While that appears to offer tempting cost reductions to procurement, it fails to give vital scrutiny to suppliers of goods and services in the lower links of the supply chain, where a financially shaky sub-contractor struggling with bad debt and with a record of missing payments could all too easily get involved in major public building projects.
Procurement practitioners will now need to show that the contractors they are offering projects to satisfy their confidence criteria by demonstrating strong credit ratings.
Advocating trade credit insurance as a sign of trustworthiness, industry expert Nigel Birney said that “a small chink in the chain can threaten the entire project and leave a trail of destruction which derails the scheme, burns business owners and, ultimately, leaves public bodies high and dry”.