PROCUREMENT STANDARD

Procurement Standards

Procurement Standards

One of the main factors influencing clients in adopting design and build as a procurement route, has been the assumption that a single source of responsibility will reduce the incidence of claims. It is perhaps true that under traditionally procured construction, claims often arise as a consequence of confusion and conflict between the various participants to the construction process. It does not seem however that design and build procurement necessarily reduces the incidence of claims. (William 2002 pP. 44.)

A common problem in design and build contracts is doubt over the scope of works intended by the employer's requirements embodied within the contract. Disagreement will concern whether design and construction work carried out by the contractor is entirely the product of design development, for which the contractor carries a clear responsibility under the contract, or whether such work arises from changes in the employer's requirements. It is often very difficult to distinguish whether an item of work carried out by the contractor is merely design development or constitutes a change in the scope or character of the works. Things get a little more complex as there are a number of different currencies and bodies within the EU and worldwide that have a stake in these thresholds. Essentially, the OJEU thresholds are updated every two years in line with World Trade Organisation legislation to which the European Union is a signatory (the Government Procurement Agreement - GPA) Confusingly, whilst European legislation sets out the thresholds in Euro currency, the GPA defines them in the form of something known as Special Drawing Rights (SDRs).

SDRs are an asset established by the International Monetary Fund (IMF) - sorry yet another acronym.  SDR value fluctuates on a daily basis and is based on the relative values of the Euro, Sterling, Japanese yen, and the US dollar. The bi-annual updates to the EU thresholds factor in relative movement between the SDR and the Euro. For countries outwith the Eurozone (i.e. the UK) there has to be a further alteration to the figures in order to bring them into line with the new threshold levels - luckily some legal minds at the EU publish these.

Such conflict often starts with the design review procedures required under the contract. It is understandable for a client to seek to be involved in the design process by checking the contractor's proposed design before construction commences on any part of the works. This checking however, can often lead to a distinct narrowing of the freedom of design which the contractor intended by its commercial bid. (Seeley J. 1981 Pp. 23-27)

Often the employer or his advisors will be awakened to design issues only upon receipt of the contractor's submittals and will call for alterations to the proposed design without firmly referencing these in the employer's requirements. Contractor's will call this "preference engineering", which, they will say, amounts simply to the instruction of change for which they should be recompensed under the contract.

The most successful design and build contracts are often those ...