JCT contracts already work for government’s ‘New Models’ of procurement

JCT Chair, Peter Hibberd, has responded to the Government’s draft guidelines on New Models of Construction Procurement, published by the Cabinet Office and Energy Reform Group in January.

The response, submitted to the Cabinet Office on Tuesday, acknowledges the importance of providing guidance for procurement within the public sector, but also criticises the report for a lack of clarity in the routes of procurement it attempts to describe.

The ‘New Models’ guidance identifies three specific approaches to procurement; ‘Cost-Led Procurement’, ‘Two Stage Open Book’, and ‘Integrated Project Insurance’.

The Government states that the new models ‘include principles of early supplier engagement, transparency of cost, integrated team working and collaborative working’ and that ‘This guidance will help both central and local government bodies to work with industry in a consistent and collaborative way, building long term stable partnerships between client and suppliers.’

Peter argues that further clarity is required in explaining the requirements of each route:

“The guidance raises many questions particularly regarding approach and terminology used. It also fails to relate the processes to previous work on procurement. If the work were related in this way it would help to avoid possible confusion as to what constitutes a procurement approach. It would also help in understanding what is proposed and how, for example, integrated project insurance relates to procurement.

“The important thing to appreciate about any procurement route is that close involvement of the client generally produces better end results and that early involvement of the supply (or project) team increases the chances of success.

“Therefore it is not surprising that the proposed procurement approaches embrace the underlying concepts of integrated teams and collaboration (however these should underlie most procurement). Clearly, there is no single solution as to how these are achieved.”

In addition, Peter also identifies which JCT contracts would already be suitable for use within the different approaches outlined in the guidance:

“JCT contracts are designed to meet an array of procurement approaches, including those identified in ‘New Models’.

“In practice one of a number of JCT contracts could be used for this stage but looking at current practice it seems that for many the preferred choice is the JCT Design and Build Contract.”

“The JCT contract designed specifically with both Two-Stage Open Book and full integration of the design team in mind is the JCT Constructing Excellence Contract 2011 (CE).”

JCT’s response to the guidance was submitted to the Government on Tuesday 27th May and the response in full can be downloaded via the JCT website.