Concern that tenderers get too much price advice

The States policy of announcing the estimated cost prior to going out to tender makes no sense at all.

Surely they should first of all establish the genuine necessity of the work, then to go out to tender and when the prices come in, get the capital expenditure approved.

This of course is currently impossible taking into account the timescales involved for decisions to be made, with of course the contractor’s normal 90-day price validity.

Things need to change. By all means employ the services of a quantity surveyor to (privately) advise estimated costings, but common sense dictates that contractors should not be given what amounts to a ‘target’ price.

Guernsey plc is not always a popular phrase, with some islanders stating that one can’t be commercial about peoples’ lives. This is true when it comes to things like health, education and social matters.

A strong dose of commercial sense however, should be part of the ‘bricks and mortar’ stuff so that true value for money is obtained.

If the current procedures don’t allow for this, then perhaps they’re not fit for purpose.

Andre Quevatre

La Portiere, Rue de l’Essart, Vale, GY3 5QQ

Deputy Bob Murray, Policy & Resources Committee member responds:

Thank you for the opportunity to respond to your reader’s letter. I sympathise very much with their view, but I think it would be helpful to explain some of the reasons why high-level figures for such projects are published.

Your reader rightly points out that a private business seeking tenders for a significant capital project would not disclose to the market what they believe it will cost and what they may have budgeted for the project. They would simply issue a scope of works and specification, together with other terms and look to the market and those responding to propose prices they have each developed for themselves.

However the decision-making body for large capital spends in Guernsey (which is not unique as a government in this regard) is the elected Assembly. Ultimately, they are the custodians of the public purse and have a duty to scrutinise, question and vote for or against such projects on behalf of the community they represent. And this is what creates the difficulty – it is not realistically possible for States members to discharge this duty without some indication of what the project in question will cost. In a private business such decisions can be made confidentially in the boardroom, but the States must be transparent in its decision-making. The alternative would be to ask the States, and the public, to endorse significant capital expenditure without any indication of how much is involved, and for many in the Assembly and the community this is understandably unacceptable. However, it is recognised that this does mean potential suppliers who may be interested in submitting a tender for a given project are given some insight into the costs and this could be detrimental from a commercial standpoint. We do however, where possible, seek to consolidate and summarise project costs in such a way as to obfuscate the costs of individual line items or elements of work. To mitigate the risks your reader highlights, the figure provided to States members for debate is a high-level figure and one that reflects the overall anticipated cost of a project, rather than providing the market with any form of breakdown. It is also a figure informed by expert input into the project in question, meaning that it is not over-inflated from the outset but presents a realistic figure for a good value-for-money solution (in fact, this can sometimes mean that the final cost after tender is higher because the initial assessment has been too conservative compared with the actual market proposals, which can lead to criticism in itself, but it is in my view better to assume a lower-end figure initially). Furthermore, and importantly, the tender process is a competitive one and while the States will have approved an anticipated overall cost, any successful contractor must still provide the best cost and best solution against others bidding for the contract.

Finally, where the costs of projects are £5m. or less, the Policy & Resources Committee does have delegated authority to proceed without seeking additional approval from the Assembly, and this again helps in these cases to avoid some of the challenges your reader highlights. So while I fully recognise the arguments your reader makes, I hope this helps to explain the process we follow and the reasons for it.