Western Isles council leader presents facts on contracts

There has been a lot of public comment recently on the procurement process that the Comhairle goes through for contracts and in particular that of our very successful Schools Project.

Much of what has been said is inaccurate and I think it is important that the record be set straight in terms of the facts surrounding what the Comhairle can and cannot do in terms of procurement.

The Procurement Strategy for the schools was developed after a lot of discussion between the Scottish Government and ourselves over a number of years.  This strategy was eventually agreed in 2009 by both Members of the Sgoiltean Ùra Board and the Comhairle.  Indeed it was agreed unanimously by all Members of the Comhairle and of the Board.  The conclusion of that strategy was that the Schools Project had to go out as a single contract.  This decision was in line with the procurement regulations as set out by both the Scottish Government and European Law for contracts.

The best form of contract was a design and build in terms of producing the most efficient and best managed project and transferring the risk of overspend and unforeseen events to the contractor in order to ensure the project was affordable within the money available to the Comhairle.

It was also to maximise the economies of scale and get a standard type of school across all five, later to become six schools.  This was done working to the guidelines with the Scottish Futures Trust, an independent company established by the Scottish Government which has the responsibility to deliver value for money across all public infrastructure investment.  We had many a long and hard discussion with them as to how we could maximise the local content into our Schools Project.

The importance of acheiving benefits from the project for the local construction sector and the wider community of the Western Isles was recognised from the outset and was emphasised by the Comhairle during all stages of the procurement process.  Many of the large contractors recognised the benefits of an involvement of the Island construction supply chain and many told us as early as January 2009 that they were in discussions with local construction companies and the supply chain for the project.  Despite encouragement there was little interest from local contractors in forming a joint tender bid.  I am sure they had very good business reasons why they felt they could not do that.

Significant benefits have come to the local construction and engineering sectors from the schools construction.  Of the £51.1m construction expenditure spent up to the end of December 2011, approximately £13.3m (26%) has been paid directly to some 70 island-based subcontractors and companies. The total spend, both direct and indirect to the local community, is estimated to be 37% or nearly £20m. This is all additional to the Comhairle’s other construction spend.

It should also be remembered that regardless of who won the contract, much of the material has to be bought from outside.  So in the remaining monies for instance, approximately £2.5m had to be spent on steel which could not be sourced locally or even in Scotland.  The vast majority of all materials which amount to 40% of the overall contract have to be spent in this way.

There have also been significant other benefits. Some 73 trainees to date have gone on to successful outcomes with qualifications or employment.  There are still further numbers to undergo training as part of the project and the figure is expected to be more than 100.  Many local schools and sports organisations have received sponsorship and a number of local personnel who now possess construction skills certificate schemes cards has increased significantly.

It has been claimed that the Comhairle, in some way, would want to stop local contractors from tendering.  Why anyone would imagine we would want to do that is beyond me, in fact the opposite has been true.  We have tried in every way to let local contractors take a part, either directly or as sub contractors and many have significantly benefitted from that. Over the past five years £84m has been invested in capital projects. This is in addition to the schools project.

The Scottish Building Federation have themselves recognised the difficulty of some procurement rules to allow a recognition of local input.  They have lobbied Government on this and we have joined that effort.  The Scottish Government has stated it will bring forward a Bill to make it easier for Scottish companies to win Public Sector Contracts and we very much welcomed this in our press release on 28 February 2012.

I will be writing to the MSP to make it clear that the Bill coming forward can only be effective if, working within European Law, a tender evaluation includes an assessment of the effect on the local economy of local companies getting work at an economic price.  I suspect this will be as much a challenge for the Scottish Government as it has been for ourselves, but it is something I feel must be done for the future.

I hope this information helps inform, rather than much of the speculation and mis-information we have had recently.

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