Procurement routes for JCT contracts

Where a client has an on-going or rolling construction programme such as planned maintenance work by a local authority or the building of houses by a housing association, then a framework or term service arrangement is often used. Such contracts have many advantages including introducing an element of continuity for those contractors on the framework and avoiding repeated tendering (a particular problem for public sector clients subject to public procurement regulations). For the client, there is probably more cost certainty in that prices are agreed upfront and there are savings on tendering costs.

Framework arrangements generally consist of 2 contracts. The overarching contract, which is usually for a period of time (typically 4 years in the public sector) and does not guarantee any work, and from this contract will drop out works contracts (sometime called call-off contracts or works orders) as and when the client requires construction work.

There has been some criticism of framework arrangements in that they aggregate small pieces of work and this is then tendered to large contractors. As a result small and medium firms lose out. Some public bodies are very aware of this problem and will request the practitioners address this issue although this can be difficult. The government has provided some guidance on this matter such as Flagging your contracts to SMEs.

Many framework agreements were bespoke forms often prepared by law firms. The JCT Framework Agreement (FA) 2016 was amended and is a good standard form framework agreement.

Term service contracts are a single contract with the client and contractor agreeing a plan or schedule of works to be performed over the period of the contract. This form of contract is probably best for maintenance type programmes where the scope of works is predictable and can be planned in advance.

In recent years, public sector procurement has become subject to both more regulation (particularly from the EU) and challenges (via the courts) from unsuccessful bidders. This has resulted in a more complex legal environment for public sector procurement, particularly for frameworks. As a result it is essential that public sector clients obtain specialist advice on public procurement requirements if they wish to set up long term arrangements for construction works.