Specialists: Tender abuse still common

Exclusive by Graham Ridout



Main contractors have been accused of cynically exploiting the tendering process in order to compensate for money no longer available to them via payment malpractice such as pay-when-paid.

Rudi Klein, legal adviser to the Constructors Liaison Group (CLG), warned: "The Construction Act put the lid on the scope for the manipulation of some of the worst payment terms such as pay-when-paid, but that has just put the pressure on the front-end of the process. There has been substantial evidence that tendering has got out of hand."

Klein, who said Dutch auctions and bid peddling were rife, added that main contractors were simply ignoring proper procedures for the selection of subcontractors, in particular the code of practice published by the Construction Industry Board (CIB) in April 1997.

The CLG recently surveyed specialist contractors to gauge whether main contractors were following recommended best practice on tendering. CJ has obtained a copy of the survey, which was sent to construction minister Nick Raynsford in June.

In its submission to Raynsford, the CLG urged that the CIB be charged with implementing a six-point action plan to eradicate tendering abuses. The plan of action included initiating a campaign to emphasise the need for compliance with the CIB code; inviting the Department of the Environment, Transport and the Regions to monitor compliance in the public sector; setting up a complaints procedure; and setting key performance indicators to make firms comply with CIB codes of best practice.

Tendering malpractice has also turned up in the latest state-of-trade survey by the National Specialist Contractors Council. NSCC director Grenville Weltch said the latest evidence shows that "contract malpractice and abuse continues." He added: "Dutch auctioning is consistently cited as the most common malpractice and as having the most significant effect on a specialist's business."

Richard Woolerton, director of the Contract Flooring Association, which has over 460 member firms, concurred: "Dutch auctioning is still there despite all the talk of Egan and partnering. Price is king and the cheapest will always win. I don't know of any member of the CFA who has won a job unless it has been the lowest."

Woolerton added: "The old culture is still prevalent. All the talk about integrated supply chains is just a lot of hot air. Floor finishes are a small part of the overall project value and are not thought about until near the end of the project when the pressure is on to save money." Woolerton said CFA members report that this leads to pressure being exerted on them from major contractors or project managers to cut their bids.

Ian Murdoch, a lecturer at the Department of the Built Environment at the University of Northumbria and compiler of the NSCC surveys, said that survey results suggest "people just accept it [Dutch auctioning]."