Product category:
Building Trade Associations and Institutes
News Release from: Chartered Institute of Building [CIOB] | Subject: Holyrood construction manager appointment
Edited by the Buildingtalk Editorial
Team on 28 September 2004
Tendering Process For Holyrood Job
Questioned
Lord Fraser questions fairness of tendering process for Holyrood construction manager appointment.
Lord Fraser regarded the decision to adopt construction management for the Holyrood Parliament building as among the most flawed decisions in the history of the project In his view, the procedure by which Bovis was appointed as the construction manager early in 1999 was also flawed, this quite apart from the fact that the wrong procurement route was being followed
This article was originally published on Buildingtalk on 12 Mar 2004 at 8.00am (UK)
Related stories
CIOB Commission Welcomes Graduate Recruit Upturn
Applications to join building courses up to mid-January had risen by 16 per cent. Civil engineering courses are up by 25 per cent and architecture by 15 per cent.
'Urban Renaissance' Held Back By Funding Obstacles
London Assembly has called upon the UK Government to show more determination in assisting public and private sector organisations to find new ways of funding large-scale regeneration projects.
When Davis Langdon presented their tender evaluations to the review panel, it turned out that the lowest adjusted tender had been submitted by Sir Robert McAlpine at £4,846,000; Tenderer 2 (not named), £5,027,000; Tenderer 3 (not named), £6,137,000; Bovis £5,772,000 (totals rounded).
After lengthy debate, the review panel meeting in early December 1998 concluded that both Tenderer 3 and Bovis should be dropped on cost grounds, lifted in Bovis's case by the addition of £700,000 to cover inflation, plus a fee of 1 per cent for provision of a parent company guarantee.
The Bovis tender was already £926,000 above Sir Robert McAlpine's, but the provisions for inflation plus the proposed PCG fee put them top of the list at £6,272,000.
Further reading
London's Olympic Demand For Construction Funding
The London Development Agency is responsible for preparing and implementing the Mayor's business plan and invests more than £300 million a year in supporting the growth of new and existing businesses.
Construction Industry Better Deal On Software
The Chartered Institute of Building (CIOB) has announced that it will be offering its members access to a range of IT resources as part of a special CAD and IT service.
Solar Tower Will Be World's Tallest Structure
In New South Wales, Australia, a feasibility study has taken place to build the tallest structure in the world, a solar electricity plant measuring 1000m tall and 7000m wide.
Two weeks after that meeting, one of the client representatives who had been present at the initial discussions insisted that notwithstanding the decision to drop them, Bovis should be included in the final stage interview.
The grounds that were that "the cost position does not in itself rule them out and we are now more fully appraised of their commitment to The Scottish Office as client." Lord Fraser took the view that although the Treasury guidance on such appointments did not specifically envisage a post tender final interview, he did not see this as precluding such a step in the process.
More difficult however was the situation where one of the contenders dismissed on grounds of cost was to be readmitted to the process, but the other was not.
The inquiry report questions the Scottish Office decision to readmit Bovis to the process without also reconsidering the position of Tenderer 3.
As Lord Fraser said, Davis Langdon had reported that Bovis had submitted the highest of the four tenders after appropriate adjustments.
Both the tenders of Bovis and Tenderer 3 exceeded the client's guideline of £5,500,000.
Decision to exclude tenderer was flawed While Lord Fraser took the view that the client was within its rights to revisit the decision, and to invite a third tenderer to take part in the final round, "it is my view that such a decision is one which should only have been taken on the basis of a proper evaluation of the comparative positions of both of the two excluded tenderers and on a basis which provided a clear audit trail." In both respects, he declared, that decision was flawed.
At the final round of interviews, the Bovis managing director said that his company would provide the guarantee without any additional charge, so reducing its bid by £500,000.
It was on this basis that the contract was eventually awarded to Bovis.
The reduction, as Lord Fraser commented, very significantly improved its competitiveness in relation to that of the other tenderers.
"I have not been addressed" he said, "on the legality of allowing such a post tender variation and I refrain from making any comment in relation to the legal implications of the position.
It does however appear to me, on elementary considerations of fairness as between competing tenderers, that if one tenderer was effectively permitted to change a very material aspect of the financial basis upon which its tender was submitted that is an opportunity which should have been afforded to the others." The revised Bovis bid was £5,371,919, with a construction management fee of 1.25 per cent.
Though the conversion of that fee into a lump sum on agreement of the cost plan had been agreed, the schedule drawn up between the Scottish Office and Bovis failed to make any provision for such a conversion.
Lord Fraser regarded this as a significant deficiency in the contract documentation.
On this omission, Lord Fraser comments: "Had the contract reflected the evident willingness of Bovis to convert their fee to a lump sum, the issue of fee capping which arose in 2003 would not have been a problem in relation to Bovis.
Further, the conversion of their fee to a lump sum would have served as a powerful incentive to Bovis to apply maximum rigour in relation to cost control." The construction manager appointment having been settled, there was a further omission in the awards procedure, taken up by one of the contenders after the decision had been made, ironically the one who had submitted the lowest initial tender.
Lord Fraser explained: "Both in terms of European Union procurement law and in terms of guidance, unsuccessful tenderers should be afforded the opportunity of a debriefing.
I heard evidence from Mr David Boyle, director of Sir Robert McAlpine, that his company requested a debrief after the selection process but that no satisfactory response was received to three letters - "In her closing submission to me Ms.
Laura Dunlop QC, appearing for the Scottish Executive, frankly acknowledged that there had been a failure in this respect for which she expressed her regret.
I have been informed as to the specific circumstances that led to this administrative oversight and it is very understandable why one individual was not available to conduct a debrief.
The system should have allowed for someone else to have taken on the task.
It did not and a legal requirement was neglected.
"It is my understanding that, despite the eventual offer of a PCG by Bovis at no additional cost, in the event that offer was not taken up and had still not been taken up as recently as February 2004 when the point was raised in the Finance Committee of the Parliament and when the Scottish Parliamentary Corporate Body recommended that such a PCG should be obtained from Bovis.
I understand that this may now have been done.
While I recognise that Bovis is a major and reputable company, this is something that should have been done at a much later stage." An unhappy incident in the projects history The soundness of the project's business administration came under Lord Fraser's scrutiny in the matter of the 1998 appointment of the late Enric Miralles and RMJM as architects for the Holyrood building.
Lord Fraser found that the initial minute of agreement with the Secretary of State signed by Se¤or Miralles purportedly on behalf RMJM was contractually invalid because at that date no company of the name cited in the document had been registered.
This led to invoices for some of the early work being charged to the Scottish Office without there being in existence any valid contract.
This was of course corrected later on, but Lord Fraser's comment was sharp in its disapproval.
"It is a matter of surprise to me", he said, "that so little inquiry was made of the joint venture and how it was to operate.
The architectural commission for the new Scottish Parliament was let to a company with a nominal share capital of ?100 and only ?2 issued and fully paid up.
"I would have expected a rigorous process of due diligence to have been undertaken and collateral warranties to have been obtained from both RMJM Ltd.
and EMBT.
None was sought; none was obtained and this major and expensive project moved forward with a breathtaking degree of informality and an almost non-existent legal framework.
I have since learned that in early 2004 RMJM Ltd.
has offered to subscribe to an undertaking by which it will formally bind itself as accountable for the past, present and future performance of the architect.
In other words, it has offered a form of collateral warranty.
I consider this to be commendable, but to reinforce the point which I have made above." He added: "I am very critical of this episode.
It appears to me to have been sloppy, unprofessional and fraught with danger.
However, in the event the architect has not sought to take advantage of the lack of definition in the legal relationships and I am slow to suggest that this incomplete legal framework caused delay or expense, although it set an unhappy precedent in the history of the project.".
• Chartered Institute of Building [CIOB]: contact details and other news
• Email this article to a colleague
• Register for the free Buildingtalk email newsletter
• Buildingtalk Home Page
Search the Pro-Talk network of sites
