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Press Release

Carillion: Government should make greater use of the 'abnormally low' tender rule on contracts

17/01/2018

Locations

United Kingdom

John Cassels puts forward three pre-Brexit 'quick-wins' which he believes could be helpful in securing a more sustainable contracting system following the collapse of Carillion.

Government should make greater use of the 'abnormally low' procurement rules in light of the recent Carillion collapse says John Cassels, regulatory partner at Fieldfisher.

Cassels argues that where one or more bidders submit bids with what appear to be the market beating margins, Government "can and should" probe hard.

This recommendation runs alongside challenging assessment of corporate governance and a more creative application of selection criteria as other ways Cassels believe could be helpful in securing a more sustainable contracting system.

"The selection criteria for choosing which bidders to take forward should be treated as a 'for example' list, but instead many contracting authorities use it as a 'this is all we can ask for list'," says Cassels.

"Effective corporate governance is also crucial to business sustainability and selection criteria can relate to technical and professional ability which means that the business has the necessary human and technical resources and experience to perform the contract to an appropriate quality standard.

"This could include having an appropriately incentivised board and robust corporate governance – including clawback provisions for senior executives."

The way Government lets contracts is regulated by public procurement rules, which are implemented in the UK via secondary legislation derived from the EU Directive.

These rules are regularly criticised for being "too rigid" and making the process of letting contracts "too onerous and costly".

It is these three pre-Brexit 'quick-wins' which Cassels argues are the way forward to prevent the domino effect now being seen on contracts after the Carillion collapse.  

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