PhD Final Thesis April 2013.pdf - Anglia Ruskin Research Online

Thesis Keith Gale 20131.11 From benchmarking to frameworks used by the public sectorWithin the private sector, agreements between suppliers and clients are a matter ofcommercial privacy and not subject to external scrutiny. Terms and conditions,selection of suppliers and operation of financial mechanisms are negotiated betweenthe parties and provided these agreements are not illegal, the parties are free toengage in business using whichever methods they so wish. Private sectororganisations owe responsibility to their shareholders and matters of commercialagreement are strictly confidential. Informal and private agreements betweensuppliers have been used ever since the earliest days of commerce and the structureand content of each agreement will vary considerably according to the objectives ofeach party.Public bodies however have a duty of care when dealing with public finances andmust comply with European procurement directives and the Public ContractsRegulations 2006. Central and local government organisations can only operateunder additional constitutional rules, such as Standing Orders, and these governfinancial operations and management procedures. If a government organisationexceeds authority given by a constitution, it is considered to be ultra vires, and anydecisions made in breach can be challenged at law. This rule of control has createdvery prescriptive and detailed regulation with selection of suppliers and operation ofconstruction contracts. In order to engage recommendations offered by Latham(1994) and Egan (1998), public bodies have had to make changes to their supplierselection methods so that legislative requirements are met. This required the abilityto exclusively select multiple numbers of suppliers within a scope of service over agiven period. The theoretical basis upon this method of engagement is the creation oflonger term relationships between parties in excess of those offered by a singleproject. In return for this special relationship, suppliers are expected to perform tohigher standards, rather than the ‘cut and run’ scenario afforded by discreteprocurement. Thus, ‘frameworks’ were developed under an EU Directive2004/18/EC of the European Parliament and of the Council of 31 March 2004 for thecoordination of procedures for the award of public works contracts, public supplycontracts and public service contracts. Within this legislation frameworks weredefined as ‘an agreement with suppliers, the purpose of which is to establish the25