Health Department
Directorate of Finance

* please note that this letter has been superseded by CEL 50 (2009)

Dear Colleague

CONSTRUCTION PROCUREMENT POLICY

Summary

1. This letter provides colleagues with an updated statement of the Department's Construction Procurement Policy (Annex A). In doing so it provides a more precise and concise definition of policy than hitherto along with details of the mandatory requirements which must be complied with by NHS Trusts and other NHSScotland bodies. Also associated with the policy is an Annex of policy guidance (Annex B) which should be reflected in the construction procurement policy and actions of NHSScotland bodies.

2. The policy expresses the wider Scottish Executive construction procurement policy in a NHSScotland context.

Background

3. The updated policy reflects consultation with colleagues in NHSScotland and the Scottish Executive. It completes work aimed at providing an up to date definition of Departmental policy on all property related matters. Fire Safety Policy was revised in March 2001; Property Transactions Policy in November 2000; Environment Management Policy in August 1999 and Property Management Policy in May 1999. All of these statements are intended to assist NHSScotland bodies by clearly and concisely articulating Departmental policy which colleagues must have regard for when formulating and implementing their own operational policies. Each of these policies will continue to be the subject of a triennial review and of other periodic consideration where that is considered necessary.

11th June 2001

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4. The fundamental principle upon which the new policy is founded is that it must be supportive of the Scottish Executive's construction procurement policy and consistent with its construction procurement practice all as set out in its newly issued construction works procurement guidance Client Pack. That Client Pack provides Executive Departments and Executive Agencies, as clients, with consolidated financial and procurement policy and procedural guidance for construction works project. It should be available on the Internet in due course but in the meantime any NHSScotland body wishing to see a copy should contact the Department.

5. As colleagues will be aware, this new alignment reflects a significant change from the existing which was founded on a common approach, pre-devolution, across the NHS-UK. The new alignment should benefit the public sector client, the construction industry and the wider economy and is, of course, a proper reflection of the establishment of the Scottish Parliament. One immediate implication is that our policy and practice and that of the NHS in England may be quite different, eg NHS Estates is placing an emphasis on partnership through its Procure 21 initiative whilst the Scottish Executive's emphasis is on improving the performance of the client and on teamworking and partnership where possible but not exclusively.

6. Although, as stated above, the updated policy reflects a fundamental change in principle the practical range of procurement strategies is unchanged. Consequently the immediate impact may be seen as limited. However, that should not be the case. What is important, and what the policy and guidance is intended to support, is an overall improvement in the performance of NHSScotland bodies as clients of the construction industry. As stated in the guidance the primary consideration in the choice of a procurement strategy is a need to obtain overall value for money in the whole life of the building. A number of options are available, but the intention should be for all the parties involved in its use, construction, operation and maintenance to be involved as early as possible in its development in order to establish an integrated team, to encourage innovation and to manage risk in the most effective manner. Such an approach, together with intelligent monitoring, analysis and feedback will benefit both the immediate client and "contractor" and over the longer term the wider range of client bodies and the construction industry.

7. The policy and associated guidance will be assimilated in the planned web-based Scottish Capital Investment Manual.

Implementation

8. Whilst the range of procurement options is unchanged, albeit there is now an emphasis on partnership and teamworking, the major policy emphasis, as previously noted, is on increased client effectiveness with the aim of achieving best practice status. It is recognised that improvements in practice are not achieved through the issue of a policy statement but only as a result of the commitment and actions of those directly involved. Such actions require preparation and time and may require training for client personnel. Having regard for these facts the mandatory requirements associated with this policy will not come into force until 1 June 2002. For those requirements which are project related this should be taken to mean contracts signed after that date.

9. NHSScotland's adoption of this policy with the resulting potential benefits arising from a common approach across a broadening swathe of the public sector also enables a common use of policy and operational guidance and of training. The policy guidance at Annex B is the first fruit of that approach. As set out at policy Statement 9 the Department will liaise with the NHSScotland Property and Environment Forum with a view to agreeing the changes needed to the latters Procode and ensuring that NHSScotland is provided with operational guidance on matters particular to the construction procurement of healthcare property. This liaison will be further reinforced by the Department's active participation in the Scottish Executive's Construction Procurement Forum which is lead by its Department of Administrative Services Building Division. The NHSScotland Property and Environment Forum will also be invited to nominate a person to represent NHSScotland on the Construction Procurement Forum. Arising from this liaison and involvement in the Construction Procurement Forum the Department will also collaborate with the NHSScotland Property and Environment Forum to advise NHSScotland bodies of available training for client personnel.

Action

10. As noted before the mandatory requirements associated with this policy come into effect on 1 June 2002 (see paragraph 8). Colleagues are asked to ensure that this letter, the updated policy and the policy guidance is brought to the attention of all persons with an interest in order that all necessary preparations can be made, including agreement of a construction procurement policy by 1 June 2002, action on training needs and the introduction into procurement strategies and contract drafting of the various mandatory requirements set out at Annex A.

Yours sincerely

JOHN ALDRIDGE
Director of Finance

Annexes A and Annex B are published in electronic format as a PDF file (288 KB). Click here to view.