Consultation With The Industry

Introduction

To support the delivery of best value solutions and services, the Highways Agency is seeking the views of the Research & Development and Technical Consultancy Industry about its proposals for the procurement of this important area of work and its vision to create, maintain and develop a Community that embraces R&D and the Technical Consultancy supply chain.

Replies are required by the 30th January 2004.

The consultation has been developed in association with representatives of the industry.

Framework contracts can be used as a contractual means of facilitating the delivery of best value, particularly by working within a non-contractual Community environment which supports the operation of the framework contracts.

Background

The Highways Agency is an Executive Agency of the Department for Transport (DfT) responsible for operating, maintaining and improving the strategic road network in England on behalf of the Secretary of State for Transport. We have a major role in delivering the Government's Ten Year Plan for Transport.

Research & Development and Technical Consultancy in the Agency

R&D is the key source of new ideas, knowledge, tools and technologies that drive forward innovative solutions to customer needs. The R&D programme is guided by a strategy in consultation with other government departments, industry and road users.

The Agency's 03-04 budget for R&D is £13M, an 18% increase in the allocation for the previous year. There is a similar budget for Technical Consultancy. We presently have 45 live framework agreements with 53 suppliers.

Consultation With The Industry

Highways Agency Procurement Strategy

This was published in November 2001 and it emphasised that procurement is at the heart of the Agency's business - good procurement practice and good relationships with our supply chains are essential to the effective delivery of best value solutions and services.

We have been successful in procuring projects and services that are consistent with the principles of the Procurement Strategy :

and are examples which provide :

As a consequence, Communities have been formed which are all inter linked and all functioning in broadly similar ways to allow the Agency to better communicate with and understand the ultimate capability of its supply chain.

The Community

A Community has to be underpinned by firm foundations to provide an environment that will allow objectives to be achieved. Based on our experience of existing HA communities the foundations of the R&D / Technical Consultancy Supply Chain Community are likely to include:

There are benefits to the supply chain in working within a Community environment. These include :

Highways Agency Procurement Strategy

What we want to do and how we will do this

We want to apply the Procurement Strategy principles and the Community concept to our R&D and Technical Consultancy work. In particular, it is considered that R&D has the potential for significantly better value by the early involvement of research suppliers in the development of projects, allowing greater scope for innovation.

We intend to implement a rolling programme under which our existing frameworks and discrete contracts will be replaced by a smaller number of wider ranging, longer term and higher value framework contracts with fewer suppliers.

The expectation is that a number of prime suppliers will provide the majority of the work through their supply chain arrangements. However, it is recognised that small and medium sized suppliers also provide a valuable resource and can offer better value on appropriate projects. We would expect smaller firms to be employed through the supply chain but it would be possible to include a number of smaller firms on a framework, or give consideration to a separate specialist framework.

The Agency will work with suppliers to achieve continuous work flows within budgetary constraints. This will create an environment which will enable supplier's performance to be measured against the Agency's Headline Key Performance Indicators which are :

Suppliers performance against these indicators will be used to help inform work allocations and to facilitate activities such as best practice and knowledge share. Best value will be achieved when the right team is working to clear objectives and supported by quality, measurement and benchmarking control mechanisms. Each framework will have a Framework Board which will primarily have an allocation and monitoring role.

The framework contracts will include an informal Partnering Clause. The expectation is that payment for work will be on an actual cost and / or target cost arrangement. The revision of rates under the contract will be applied annually with reference to the Average Earnings Index.

There will be two evaluation stages for the procurement of the frameworks. The first stage will concentrate on the capacity and capabilities of potential suppliers by seeking answers to questions that will provide information that is consistent with that required by the Capability Assessment Toolkit. The second stage will concentrate on those aspects of quality which enable a supplier to demonstrate that it can add real value to the product or service.

As each new supplier is appointed we hope that they would be willing to join the Community.

What we want to do and how we will do this

What we want from you and what will happen next

We welcome your views about the way we plan to procure this work and the vision to create, maintain and develop the Community as well as your comments upon the following questions :

  1. Frameworks
    1. Would remuneration by actual cost and/or target cost in accordance with a stated share formula, where work and target cost is reviewed against specific milestones incentivise the supply chain to provide best value ?
    2. If so is this approach appropriate to a) R&D and b) Technical Consultancy work ? If not please suggest alternative arrangements.
    3. Paragraph 15 concerned KPI's. How should these be measured in the R&D / Technical Consultancy context ?
    4. Paragraph 15 omitted the "Safety" indicator which is included in the suite of KPI's used to measure the performance of our Major Projects contractors. Do you think that this indicator is relevant to R&D / Technical Consultancy work. If you think it is how could it be measured ?
    5. How can concerns about confidentiality and Intellectual Property Rights be reconciled with the objective of sharing best practice ?
  2. The Community
    1. Do you see benefits in the Community concept ?
    2. Do you consider that the foundations mentioned in paragraph 10 are appropriate for the Community and, if so, what values would members need to demonstrate to maintain the foundations and develop the Community ?
    3. Should there be an infrastructure by which the Community is managed, and, if so, how would this function be managed and funded?
    4. By what criteria should prospective members be allowed to join the Community ?
    5. What barriers, if any, do you see to the creation of the Community?
    6. Would you like to join the Community and what do you think you can bring to it ?
  3. Frameworks / The Community
    Would you be prepared to join the Agency in applying The Government Procurement Code of Good Practice ? This is a non contractual code of conduct for all members of the supply chain that encourages all participants to work together openly and co-operatively by committing themselves to the core values of fairness, honesty and openness, efficiency and effectiveness and professionalism.

    More information about the Code can be found at http://www.ogc.gov.uk/

Please reply by : 30th January 2004

What will happen next

We will analyse the results of the consultation and announce the findings. Concurrently we will prepare the rolling programme, details of which will be placed on the Agency's web-site and take forward pilot procurements of the replacement frameworks mentioned in paragraph 11.

What we want from you and what will happen next