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Partnering in the spotlight after Hills sale

The partnering arrangements under the Building Schools for the Future (BSF) programme look set to come under scrutiny after Hills Electrical & Mechanical was sold to a rival last month for the nominal sum of £1.


The family-owned firm, which had been trading since 1967, was acquired by Southern Electric Contracting (SEC) after it became mired in debt following in a number of “disastrous” Public Finance Initiative and BSF contracts.


Eight days after the acquisition, SEC sold Hills’ London City office to Lowe and Oliver, a building services engineering firm, for an undisclosed sum. Currently, only one member of Hills’management team – Jeremy Belcher, operations director - remains with the firm.


According to a report in Building magazine, Hills - which has an annul turnover of £45 million – had experienced “difficulties in meeting the performance criteria set out by main contractors on the BSF initiative. This had led to losses of millions”.


The Major Contractors’ Group (MCG), however, rejected the suggestion that poor partnering relationships between main and sub contractors could lead to a firm’s demise by questioning whether it was possible for the lead contractor to specify the performance criteria.


Partnership for Schools (PfS), the agency responsible for delivering BSF, was swift to absolve itself from any responsibility for managing the relationship within the consortia.


A spokeswoman said: “We take the issue of effective partnering throughout the BSF process very seriously, and we are pleased that the importance of partnering emerged strongly in our recent consultation for the procurement review.


“However, as the national body overseeing the delivering of BSF across the country, our focus has to be on ensuring that the Local Authority and the Local Education Partnership (LEP) are working effectively, and the LEP is managing its supply chain appropriately.


“It would not be appropriate for PfS to be involved in the discussion about partnering agreements, or the risks and rewards, at the supply chain level.”


Unfortunately, this response back-peddles from an earlier one issued at the time of the BSF procurement review in which PfS said it intended to pay closer attention to partnering arrangements:


“Throughout the consultation phase we heard that successful partnering makes for successful BSF projects. Through the recommendations we are putting an emphasis on effective partnering – this means bidders devoting more time and attention to ensure that the right partners are working together, and working effectively.


“If this recommendation is accepted, then PfS will be revising documentation to ensure that all parties have a common understanding of mutual objectives, how they will work together, how they will monitor performance, and how they will develop a solid governance structure.”


Rod Pettigrew, HVCA head of commercial and legal, said: “The key issue here is what steps is PfS taking to ensure that the LEP is managing its supply chain properly and effectively.


“It might be quite difficult to ensure this happens if PfS does not want to get engaged in the risks and rewards of the supply chain. Proper partnering arrangements occurs where all the parties are properly involved and engaged in developing the best possible solutions.”