The most over-used word of 2020 was, ‘unprecedented’. I can well imagine that, ‘uncertainty’ would dominate a word cloud of commentary surrounding the economic outlook for construction in 2021. Against this backdrop it is entirely foolhardy to try and predict the future for procurement. However, the pandemic and a Brexit deal has accelerated some of the aspects that were emerging in 2020 and so I’m going to stick my neck out and identify what I think are the top three positive trends in procurement for our industry.
1. Demonstrating social value
We are going to see lots of transformation in public procurement in the UK. In September last year, the government announced it was introducing a new public procurement model that takes greater account of the additional social value created by contractors who are bidding for work.
This is a significant policy change that means social value will become a mainstream priority in all public sector procurement this year
The Public Services (Social Value) Act (2012) already required public buyers to consider how they could secure social, economic and environmental benefits as part of their procurements. The recent policy note highlights changes that mean, from 1 January 2021, public sector buyers are required to think differently about how they can secure social value from the goods and services they buy.
The policy note also introduces a new social value model which sets out that social value should be explicitly evaluated rather than just being ‘considered’. Under this model, a minimum overall weighting for social value of 10% of the tenderer’s score is mandated with half of this score being attributed to health and wellbeing, and a quarter each for environmental benefits and supporting stronger communities.
This is a significant policy change that means social value will become a mainstream priority in all public sector procurement this year. I really welcome this as it will provide a wide range of social value related considerations, such as opportunities for disadvantaged groups, delivering sustainable and healthy communities, and driving climate change response.
To underline the commitment to this policy change, in the UK’s trade and cooperation agreement with the EU there is also a commitment that, “Each Party shall ensure that its procuring entities may take into account environmental, labour and social considerations throughout the procurement procedure…”.
Social value is unquestionably going to impact procurement this year and not just in relation to training and employment opportunities. As architects we are already implementing tools and strategies that help us define and demonstrate the social value that design can bring.
2. A preference for modern methods of construction
As far as public procurement is concerned the government’s strategy to increase the use of offsite manufacture or modern methods of construction (MMC) is starting to dominate social infrastructure.
The Department for Education has really blazed the trail in this area. Its recently established MMC1 framework is now the prime vehicle for school’s procurement. It seems that the forthcoming renewal of the department’s (traditional) contractor framework will also put an emphasis on ‘construction technologies’ and ‘spatial clusters’ to deliver quality and efficiency, perhaps leading to MMC solutions becoming the norm for school buildings. Certainly, almost all major contractors are earnestly preparing to embrace MMC this year, if they weren’t already.
In healthcare, the government’s target is to achieve a 70% threshold of the use of MMC for new business cases that support capital investment. This is driving discussions around how major hospitals can be delivered in this way between the Department for Health and main contractors. In the recent Procure 22 process there was a focus on repeatable rooms and components programme and there are now MMC healthcare specific frameworks being tendered such as the LHC Modular Framework MB2.
In the justice sector there is a clear preference for MMC solutions as seen in the latest new prison, HMP Five Wells, Wellingborough. Current procurement for the extension of six existing prisons demands MMC solutions. The Ministry of Justice perceives the benefits of MMC to be certainty of programme and cost, improved quality of product, and reduced disruption time to live prison environments.
Across other sectors such as residential, hospitality, workplace, and defence we are also seeing a new willingness to embrace MMC and we welcome this as a very positive development.
3. A move to zero carbon
There is no doubt in my mind that environmental sustainability targets are going to emerge in a more meaningful way in 2021. We’re seeing increasing requirement from private sector clients such as universities to achieve zero carbon targets for new build projects that support their climate change declarations. Increasingly, government procurement is also showing signs that it will soon demand similarly ambitious targets. The DfE’s £7bn construction framework currently being tendered asks bidders to demonstrate how they will deliver the necessary, “Step Change to ‘Net Zero carbon emissions in Operation’”.
Similarly, the zero carbon ambition is moving up the justice sector agenda and while targets might not be set quite yet, there’s certainly an indication of the direction of travel as the MoJ has recently asked potential bidders to their new prison procurement what a route to zero carbon would look like as part of their submissions. At last it seems that this direction of travel will pervade all public procurement before long as the government formalizes its own response to climate change.
In addition to these shifts in legislation and targets we shouldn’t underestimate the philosophical shift that is emerging either. Perhaps over spilling from the DfE, there’s a new generation of decision makers who are not afraid of MMC and who believe in the benefits of social and environmental sustainability. It is they who seem determined and able to drive this change in procurement. For the design and construction sector these changes are positive and progressive and we should all embrace and support them.
Philip Watson, director HLM Architects