Framework Contracts in the construction sector – "Constructing the Gold Standard" – one year on; action is needed

A year on from the independent review, "Constructing the Gold Standard", we consider what more can be done to verify compliance with the Gold Standard recommendations for public sector construction frameworks

13 January 2023

Aims and Outcomes of "Constructing the Gold Standard" review

 The “Constructing the Gold Standard” review follows from the first version of the public sector Construction Playbook, which sets out key policies for government assessment, procurement and delivery of public sector projects. The Construction Playbook included the commitment to undertake a review into construction frameworks to ensure effective contracting. Led by Professor David Mosey of the Centre of Construction Law, Kings College London, this review focussed on public sector construction frameworks which were together worth £180 billion. The following trends across public sector construction frameworks were discovered:

  • Wasted time and resources spent by bidders and public sector clients on speculative construction frameworks,
  • Consultants and contractors are not certain about how such frameworks promote improved value through long-term opportunities, and
  • Insufficient contractual mechanisms to implement Construction Playbook policies that aim to reduce risk and improve value.

To combat these issues, the Gold Standard review makes 24 recommendations that must be met on current and future public sector construction frameworks on a "comply or explain" basis. The review recommends Cabinet Office are to assess implementation of the recommendations. The objective of the Gold Standard recommendations is, as summarised by Professor David Mosey, to develop strategic actions to "improve value and safety, manage risks, meet Net Zero Carbon targets and support a profitable construction industry". There are a number of key themes covered by the recommendations, such as:

  • collaboration,
  • market engagement,
  • net zero carbon,
  • safety,
  • management processes,
  • transparency, and
  • standardisation of contracts.

How can Gold Standard compliance be verified?

The Gold Standard recommendations are designed to ensure that Construction Playbook reforms are not lost to what Professor David Mosey calls the "'Bermuda Triangle' of idealistic debate, cynical criticism and unrealised good intentions". This highlights the key challenge that the construction industry now faces as a result of the Gold Standard review: how to verify compliance with the Gold Standard recommendations. "Comply or explain" is great in theory, but how is Cabinet Office going to firmly establish that the Gold Standard recommendations are in fact being implemented by public sector clients and framework providers?

The Procurement Bill provides the potential (if not amended as it makes its way through the Houses of Parliament – it has just passed to the House of Commons) to go some way to ensuring that the Gold Standard recommendations are met in frameworks. The Bill requires contracting authorities to publish an increasing amount of information. This includes information about upcoming pipelines of work to be procured and about a contract's performance (such as when a contract has been terminated as a result of contract breach and assessment of the contractor's performance against key performance indicators). As examples of Gold Standard recommendations which could be verified by way of the Bill's transparency requirements:

1. Gold Standard Recommendation 5 proposes contractually binding Gold Standard action plans to deliver objectives reflecting Construction Playbook reforms – non-compliance with which could very well be partially captured by the Bill's reporting requirements; and

2. Gold Standard Recommendation 8 proposes that clients and framework providers spell out in all of their framework procurements the pipelines of work to which they are committing – which should be addressed by the Bill's "pipeline notice".

Assuming that such provisions remain in the Bill, public scrutiny will, once the Bill is passed, have a role to play in ensuring that public sector construction frameworks adhere to at least some of the Gold Standard recommendations. However, the Bill's transparency requirements are certainly not the full solution needed to verify Gold Standard compliance across all public sector construction frameworks – not least because of the value threshold that a framework must reach before the Bill will apply to it.

To ensure that the full benefits of the Gold Standard recommendations are seized, a thorough and wide-reaching implementation and verification solution is needed. Developing a suite of standard form framework agreements that build in the contractual commitments proposed by the recommendations seems to be the "simplest" way of ensuring compliance with a good number of the recommendations, but clear strategy and on-going framework management are also crucial. Existing collaborative contracts, including FAC-1, go some of the way, but they are not an off the shelf solution.

Compliance with the recommendations aimed at changing behaviours (for instance, Recommendation 9 which encourages pre-procurement learning with respect to emerging technologies) will be more challenging to verify. Government-led guidance and training regarding the recommendations (which is itself Recommendation 24) will help to embed such behaviours. Independent third-party certification could also be a reliable and familiar method of verification. The success of such a training programme and certification system would though depend on the construction industry's positive and voluntary engagement.

Evidence of compliance with the Gold Standard needs to be gathered and considered. Regular review of frameworks should also be carried out to garner feedback from the public sector and their supply chain to enable continuous learning – identifying obstacles and challenges to Gold Standard compliance will be important if the whole of the public sector is to move forward and progress to a "true" Gold Standard. Recognition and encouragement of continuous improvement is essential – it can’t simply be about current adoption of Gold Standard practices; it must be about progress. The action plan proposed in Gold Standard Recommendation 5 will be imperative in this regard. 

Proportionality also needs to be considered as part of any verification process – how much consistency and flexibility is appropriate across public sector clients and framework providers? Evaluation of adherence to the Gold Standard recommendations must be proportionate to the value and complexity of a procurement.

The Gold Standard recommendations drive a more collaborative, sustainable, and profitable construction industry and a better relationship between client and supplier. Positive industry engagement with feedback opportunities will be key to ensuring compliance with the recommendations and ultimately realising the Gold Standard's benefits. Any verification solution must be transparent but not cumbersome; it will require industry buy-in and positive, collaborative engagement (and, of course, funding).

This article was written by Thomas Chamberlain, Genevieve Vaughan and Nia Stewart.

The full review, Constructing The Gold Standard - An Independent Review of Public Sector Construction Frameworks, is available on the GOV.UK website.

Related article: Sustainability in the updated Construction Playbook is available on our website.

Key contact

Marcus Harling

Marcus Harling Partner

  • Construction and Engineering 
  • Transport and Regeneration
  • Modern Methods of Construction

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