15 July 2007
London 2012 has the most thorough approach to diversity and inclusion that has ever been on a major
programme in the UK. Service suppliers must address issues such as fair employment, diverse supply
chains and equal opportunities to strengthen their competitive position. Lucy Jeynes explains
FIVE YEARS, ONE MONTH, fifteen days, eleven hours and 55 minutes. At the time I’m writing, that’s how long we have to wait until the Games start. Still some way off, but the opportunities to be a part of the Olympics have already begun. By June 2007 the original budget had trebled to £9.3bn. Look on the bright side - this is an extra £6bn to be spent on goods, services and works and presents an evergrowing opportunity for UK firms.
No one can have missed the controversy over the unveiling of the branding at the start of June. But for those of us in business, there was a more interesting - if much quieter - launch earlier this year in March of the Procurement Policy by the Olympic Delivery Authority. This document makes it clear how the supply chains for the Games will work. It sets out the process for finding out and bidding for opportunities, and explains the criteria that will be used to assess suppliers. The bid itself focused significantly on the business and legacy benefits, and the Procurement Policy starts to flesh out the way in which the aims and ideals will be achieved on the ground in practical terms.
Underpinning the procurement of the Games is the principle that the ODA will be a ‘smart and thin client’. In plain English this means that they won’t place all of the contracts themselves, but will used tiered supply chains to procure on their behalf. In September last year, the CLM consortium was appointed as the construction services delivery partner for the Olympic Park and will therefore undertake most of the procurement associated with the construction programme on behalf of the ODA (which remain the contracting authority). CLM is a consortium of CH2M Hill, Laing O’Rourke and Mace.
The Lend Lease consortium (which also includes East Thames Group, First Base and Crosby Lend Lease) is the preferred bidder for the Olympic Village (housing the athletes during the Games) which will comprise about 5,500 homes, 1m sq ft of offices and other legacy facilities including hotels. Westfield, an Australian-listed shopping mall centre company will be constructing the majority of the adjoining Stratford City scheme. This project is a commercial scheme and so sits out the ODA Procurement Policy but still represents an important opportunity further down the line for FM companies. So far, few other contracts have been placed but all opportunities and contract awards will be published on the www.london2012.com website. It is estimated at this stage that around 2,000 contracts will be placed in total.
All Olympic procurements will be carried out using electronic tendering. This means that opportunities will be advertised on the internet and responses will be received electronically rather than as paper copies. It’s important to note that using e-tendering does not in any way imply the use of e-auctions (although these might well be a feature of some contracts). The e-tendering site will advertise all tier-one contracts, and the contractors for the five main venues will be required to set up space on the ‘Business’ section of the www.london2012.com website to advertise sub-contract opportunities.
“Delivering a multi-venue park on this scale within a fixed timetable is a task unprecedented in UK construction”, says Sir Roy McNulty, Acting Chair of the ODA. Time and cost are obviously important evaluation factors in the ODA Procurement Policy. A balanced scorecard approach will be used, and will also include five additional themes - Safe and Secure, Equalities and Inclusion, Environment, Quality and Functionality and Legacy.
Each contract will have its own scorecard, weighting the seven criteria according to the nature of the work. A Procurement Plan will also be developed for each contract. The themes, and their underpinning values and objectives are to be adopted by all main contractors and applied to the procurement of sub-contractors and suppliers and throughout the supply chain. Some of these issues are already second nature for major programmes, but others have not traditionally played a significant role in development schemes.
London is one of the planet’s most diverse cities, and this capacity to touch the world was a powerful element in the bid. Therefore it is appropriate that equality of opportunity sits at the heart of the procurement evaluation rather than on the sidelines. The Olympic programme has the most thorough and comprehensive approach to diversity and inclusion that has ever been seen on a major programme in the UK. The ODA has made a commitment to:
● Actively promote equality and inclusion throughout the supply chain
● Involve, engage, communicate and consult with local communities throughout the design, construction and legacy conversion programme
● To enable physical access for all, applying inclusive design principles throughout
● To ensure the Olympics will provide employment opportunities (experience, qualifications and training), air employment terms and decent working conditions
● To ensure that procurement throughout the supply chain is transparent, fair and open to diverse suppliers, and in particular that there are opportunities for SMEs and BAMEs (black, asian and minority ethnic enterprises).
It doesn’t mean that there will be ‘positive discrimination’ (the correct term for this is affirmative action - and it’s illegal in the UK) but it does mean that companies which can show a proactive approach to diversity, with demonstrable results and outcomes, are likely to attract more marks in that section of the scorecard than companies that merely pay lip service to these values.
The ODA, in its Policy and already in its tenders, is making it explicit that it fully supports the London Living Wage and employment practices including trade union recognition. It will ask suppliers and contractors if they will be prepared to adopt these measures, and these issues will form part of the overall value for money judgement. In simple terms, they want suppliers to sign up to the measures, and recognise that this will have an impact on the overall cost of the contract, and will accept this cost impact.
Larch has been flagging up for some years the increasing emphasis that the Greater London Authority has been placing on the campaign for fair employment and a London Living Wage. What does it actually mean? According to the Living Wage Campaign (www.livingwage.org.uk).
“London is an expensive city. The principle of London Weighting, that wages should reflect these higher costs, is long accepted. However, the statutory minimum wage is set nationally and does not take regional variations into account. Due to the high cost of living in the capital, the national minimum wage keeps families below the poverty line. It is currently estimated that 400,000 Londoners fall into this working poverty gap. The Living Wage is the level of pay and conditions that enables a full time worker to make ends meet for themselves and their family. Workers in London should be at least: Paid a Living Wage; Eligible for 10 days full sick pay; Eligible for 28 days paid holiday (including Bank Holidays); Given access to a recognised trade union.”
In June 2007 the National Minimum Wage stands at £5.35 an hour, the London Living Wage is £7.20. Many FM service providers still have a significant number of staff paid working at or around the minimum wage - and so a pay increase of this scale would mean major changes to the business model.
We have heard for a long time the message that London 2012 will be the most sustainable Olympics ever. Now this has crystallised into a serious of sustainable development commitments from the ODA that will be applied to each contract and form part of the tender evaluation model.
The Procurement Policy also expresses support for suppliers that use ethical sourcing and have a good track record in human rights. Although we have seen similar issues becoming a part of smaller projects (such as the Arsenal Stadium Redevelopment), the Olympics is providing the breakthrough opportunity for the public sector to use its buying power to achieve its wider social, community and citizenship objectives. Reflecting the aims and values explicitly in the procurement policy and bid evaluation process - deep into the supply chain - will drive change in commercial organisations by moving these issues up their agenda in order to become an attractive supplier and gain more evaluation points.
As with so many major developments and initiatives over the years, there is no explicit reference to the critical role that facilities management plays in the life of the Olympic Park, both during the Games and then on into the legacy period. According the ODA, “to deliver world class venues and infrastructure, and a permanent positive legacy for east London, we will need to work with the best in design and construction”. I think they’ll wise to work with the best in facilities management too!
There are some mentions of whole life cost in the procurement document, but it is clear to those of us in the profession that the same old risks are being faced: lots of emphasis on design and construction, with insufficient thought and priority being given to the full end-to-end life of the facilities. It would be a shame to miss the opportunity to think smarter about the whole life of the venues and supporting developments, when so much thought, imagination and innovation has gone into the procurement of the construction phase. A 17 day period (the Games and Paralympics) is less than the blink of an eye in a building’s lifecycle.
Opportunities for all Hosting the Olympics in the UK is tremendously exciting but it’s important to keep a sense of proportion. The Construction Industry Council estimates that at its peak in 2010, work on the Olympic Park will account for 0.25 per cent of UK construction work underway at that time. Larger companies should look actively on the www.london2012.com website for opportunities to tender, and should start work now to address issues such as fair employment, diverse supply chains and equal opportunities to strengthen their competitive position.
Smaller firms, in particular SMEs and BAMEs, who see their opportunities coming further down the supply chain, should look out for the launch of the Olympic Supplier Database coming later this summer. This will present the chance to register your business and showcase it to the organisations further up the supply chain. To register on this database firms need to be ‘fit to supply’, able to demonstrate capability and experience but also provide evidence of business probity and appropriate financial standing. London-based small and medium sized firms can join the Supply London programme www.supplylondon.com and receive information, help and support with these issues.
If you still can’t see a business opportunity with your name on it, there’s always the opportunity to volunteer. 70,000 volunteers will be needed to run the Games and many of us FMs with our skills such as fire wardens, health and safety or first aid training will no doubt be handy to have around. You can register your interest in volunteering on the main website.
And as for the logo? My prediction is, we’ll probably get used to it soon, and by 2012 we’ll have come to love it and it will be as much a part of Britain as red post boxes and double decker buses. Place your bets.
● Lucy Jeynes is managing director of FM strategy advisors, Larch Consulting. Her work on the Supply London, Trade Local, Fit To Supply and Buying A Better London programmes makes her one of the country’s experts on inclusive, fair and transparent contracting, whether you are on the buying or selling side of the table.
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