PROCUREMENT AND SUPPLY CHAIN


because “the tier 1s were not ‘walking the talk’ of the Fair Payment Charter.”


This feedback was taken to the Commercial Director’s Forum (CDF), after which the survey was undertaken to “turn anecdote into information”. The November meeting of the CDF saw “unanimous acceptance that we are not doing well enough as an industry”.


Blakey explained: “No-one has changed their mind, or doesn’t think it’s the right thing to do. But we recognise that we need to support its propagation quicker and faster.”


Adoption of the charter is “gathering momentum in the right direction”, he said. The charter itself and the tier 1 survey of its application will be reviewed in February, with more tier 2s encouraged to give their views so these results can be compared.


Tipping point


There will come a ‘tipping point’, Blakey said, where having the majority of subcontracts processed in the new way will lead to changes in operational practice.


“This is all about making the regime articulated in the Fair Payment Charter the norm. It’s not the norm yet, because we’re still going through the roll-out and the introduction to business and it won’t be perfect.”


Blakey described the charter as one key element of the wider Network Rail move towards collaborative working and long- term frameworks (more on page 46). “We’re driving industry change. This is about the growing pains of turning it from something that’s new into something that’s the norm. We have issued a call to arms to our tier 1s to do better in this regard, which they’ve accepted.”


‘Progressive collaboration’


The charter ties in with Network Rail’s national strategy for CP5, with greater moves towards collaboration and mutual dependency. New forms of “progressive” contract will have more emphasis on best value, rather than simply lowest cost.


It will see more long-term frameworks with “committed values” to support continuity of resource, investment, and safety. With this commitment, businesses can plan further ahead in terms of work, with the same staff doing the same work for long periods of time to improve performance.


This approach will lead to less re-tendering and fewer opportunities at the tier 1 level,


since so much work will have been let in advance, or via frameworks – but there will be greater continuity, with implications for both the workforce skill level and performance.


He said: “They can also do things like decide to employ people directly for longer, rather than trying to deal with the peaks and troughs of contingent labour.”


Over 80% of the work in CP5 is expected to be delivered in contracts that support collaboration, and by the end of summer 2014 over 60% of Network Rail’s procurement for the period is expected to be complete.


Dependent performance


An industry tier 2 conference will take place on 3 February, hosted by Amey, to “re-energise” the application of the Fair Payment Charter and encourage greater engagement between the tiers.


Blakey said: “If we believe that our


performance is dependent on the tier 1s’ performance, we also know that over 50% of the spend will go from the tier 1s to tier 2s. The tier 1s’ performance is dependent on the tier 2s’ performance. Whilst there’s more to do, we think we’re in the right space with our relationship with our tier 1s to more overtly start to have a coordinated engagement with the tier 2s.


“If it’s right and proper to have longer- term frameworks with fewer suppliers to promote continuity and performance in the dynamic between tier 1 and clients, it will be probably be a very similar dynamic in the relationship between the tier 1 and the tier 2s. At one level it’s obvious, but the difference here is we haven’t sat unilaterally and come up with this, we’ve come to that as an answer in dialogue with the tier 1s, primarily in the CDF.”


The conference will seek to boost engagement between the tiers and provide reaffi rmation to the tier 2s especially that “this is serious”. Blakey told us: “It’s not a fl ash in the pan and we will continue to drive it.”


The right message


Blakey emphasised that Network Rail was not trying to do this engagement work on behalf of the tier 1s, but in concert with them. It differs from the approach taken by TfL, where the organisation is engaging directly with tier 2s and 3s.


“That’s not what our strategy is about. We don’t suggest that we may never do it. There may


Blakey suggested that TfL is also looking into adopting the FPC or its principles for appropriate suppliers, though TfL had not confi rmed this with RTM at the time of going to press.


Blakey said: “If we were to become a policeman on this, we’d lose some of the value. We’d lose the opportunity to be seen as collaborative with our tier 1s, and become enforcers. That’s the wrong message.”


Not a panacea


There have been misunderstandings of the charter, with some contractors believing it will solve all their payment problems at once. The charter focuses on speed of payment, not the value of the payment itself.


It does however include an obligation to be fair and reasonable when deciding on payment, without vexatious or ill-advised deductions or withholdings, and calls for swift payment even in the event of a disagreement.


Blakey explained: “Someone will say ‘you owe me ten’ and they will say ‘no, we owe you six’. In those instances, the charter says that if you form that difference of opinion you shouldn’t just pay nothing until there is an agreement; you should pay six. And when you decide that you’re paying six, you pay it quickly.”


But this misconception has led some sub-contractors believing that because of these instances, the charter is not working.


“It isn’t a panacea for solving disagreements on entitlement, but it is a step-change in the way our industry wishes to do business and a cornerstone in our pursuit of effective collaboration,” Blakey concluded.


FOR MORE INFORMATION


www.networkrail.co.uk/industry-partners/ working-with-us-index


rail technology magazine Dec/Jan 14 | 57


be instances where it’s in our interests to engage with a specialist tier 2 contractor directly, but our focus is


on cross-tier collaboration.”


Signing the charter will remain a voluntary act; Blakey noted that “one volunteer is worth ten pressed men”. This has an impact on the speed with which the charter can be rolled out, but allows Network Rail to maintain its value.


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