On 30 October 2015 the UK Government published procurement guidelines to be applied by government departments in projects which involve the purchase of steel.

The guidelines, led by the Steel Procurement Working Group, are intended to help steel suppliers compete with international contractors. Matthew Hancock, Paymaster General and chair of the working group, said that the reforms would give British steel suppliers, who have been hit by a series of plant closures, a level playing field with international suppliers.

What projects?

The guidelines apply to infrastructure, construction or other major procurement projects with a significant steel component, where the overall project requirement has a capital value of at least £10 million.

Actions

The guidelines set out various actions which UK government departments should take, including:

  • Signalling future pipelines of demand for steel – for example through the National Infrastructure Plan
  • Ensuring effective pre-procurement engagement – in order to stimulate competition and give suppliers a better nature of the understanding of the requirement
  • Taking steps to ensure supply chain transparency and advertisement of supply chain opportunities
  • Assessing potential suppliers in the supply chain at selection stage – for example by ensuring that contractors comply with health and safety law in the country in which they are based.
  • Ensuring value for money is calculated on a whole life cost basis – with an assessment of the overall cost-effectiveness of a project to include the costs of energy consumption and costs associated with environmental impacts, including the cost of emissions.
  • Evaluating environmental and social benefits of contracts – environmental criteria could include assessing the carbon footprint of a project, whilst social criteria could include the benefits of employment and supply chain activity.

Application

The guidelines apply to all departments of the UK government with immediate effect, including their executive agencies and non-departmental public bodies. Other contracting authorities in the wider public sector are strongly encouraged to adopt the approach.

Background

The UK Steel industry is reported to be in crisis, with thousands of jobs lost in October 2015, and more currently under threat. The root of the crisis is widely believed to be the award of contracts to steel businesses abroad, where costs are lower. The new guidelines form part of the Government's response to the problem, with talks also taking place at EU level.

© MacRoberts 2015

Disclaimer

The material contained in this article is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.