Procurement
Recent years have seen industry’s engagement
with government on matters of public procurement improve...
With a limited public sector capital budget in Northern
Ireland, that engagement has been geared
towards making procurement processes easier and more straightforward for
local companies.
On matters such as the centralisation of the procurement and delivery
of key infrastructure projects, social clauses and Project Bank
Accounts it is critical that industry continues to have its voice
heard.
Issues of note impacting public procurement
Issue: Challenges in maintaining a clear project pipeline and difficulties in awarding contracts.
Challenges:
- Constrained Capital Budget: The limited capital budget hampers the initiation of new projects and impacts the ability to meet infrastructure demands.
- Inflationary Pressures: Rising inflation affects project affordability, requiring adjustments in procurement strategies.
- Fixed-Price Contracts: Fixed-price contracts often fail to account adequately for inflation, leading to budget shortfalls.
- Procurement Act Challenges: The Procurement Act introduces changes to public procurement, requiring adaptation for successful implementation.
Solutions:
- Procurement Board: Seek to enhance the existing structure, remit, and powers of the Procurement Board.
- Contract Flexibility: Adapt contract forms to introduce greater flexibility, particularly in response to inflation. Explore contract mechanisms that account for changing costs.
- Two-Stage Approach: Embrace a two-stage approach for major building projects, incorporating target costs and pain/gain mechanisms. This approach can provide a more realistic budget envelope and enhance risk-sharing between clients and contractors.
- Implementation: Ensure that reforms to the standard government contract clauses associated with cost inflation and risk transfer are implemented by all publicly funded bodies and that any further necessary changes are speedily identified and made.
- Pipeline: Monitor the success of the revised procurement pipeline in providing the necessary certainty to industry on future investment.
- Procurement Review Service: Establish a new Procurement Review Service which seeks to avoid costly and time-consuming legal challenges.
- Assessment of Procurement Act: Conduct an assessment of readiness for the implementation of the Procurement Act. This assessment should address potential challenges and training needs for government and industry stakeholders.