Public housing set for contentious e-auctions

A £1bn commodities framework which aims to use the controversial method of reverse e-auctions to slash the cost of materials for public sector housing schemes by a third is about to be launched.

The framework, which is scheduled to be advertised this week, is the brainchild of the Office of Government Commerce’s (OGC) construction and FM efficiency unit.

The framework will be let
by the Northern Housing Consortium (NHC) on behalf of the OGC. The consortium has 76 local authorities and 59 ALMOS and RSL as members.

However, the framework will not be limited to the consortium’s members. The framework’s OJEU notice will invite other housing associations and local authorities across England to become clients of the framework in order to

provide even greater economies of scale.

NHC will choose a number of manufacturers for the framework. These will take part in a series of reverse auctions for the provision of heating appliances, bathrooms, kitchens, windows and doors.

The framework is based on a scheme recently piloted by North Tyneside council which achieved savings of 24% on the price of materials.

Peter Wooliscroft, former head of the Department of Health’s ProCure 21 framework initiative, and currently part of the OGC construction and FM division, said the framework would revolutionise the way materials are procured.

He said: "Rather than having a number of clients operating in isolation of each other, buying a range of different boilers, for example, this framework will cut out the waste in wasteful buying by providing a range of high quality commodities collaboratively procured against a known quantity at a known price for a known delivery date."

Wooliscroft added that "savings of 24% to 30%" could be achieved using this form of framework.

But the Construction Products Association voiced serious concerns about the framework. Its chief executive Michael Ankers told CJ: " The adoption of a reverse e-auction approach flies in the face of all that the Latham and Egan Reports sought to achieve in improving industry performance.

"It conflicts with the concept of integrated supply chains which the National Audit Office has made clear will deliver the real efficiencies in government procurement. Instead we are going back to a system based entirely on lowest initial cost."

The reverse e-auction commodities framework is one of a number of initiatives the OGC construction and FM efficiency unit are looking at. The unit was created to drive through the recommendations of the Gershon Review into public sector procurement.

These call for savings of £600m annually in public sector construction and FM procurement to 2010.