Welsh Procurement Policy Note WPPN 008: Sourcing steel in major construction and infrastructure projects in Wales

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• A prosperous Wales
• A resilient Wales
• A more equal Wales
• A globally responsible Wales

• This Welsh Procurement Policy Note (WPPN) is effective from the date of commencement of the Procurement Act 2023 and the Procurement (Wales) Regulations 2024. For procurements started prior to this date (24 February 2025), please refer to WPPN 10/21.
• It has been updated to reflect changes introduced by the Procurement Act 2023 and the Procurement Regulations 2024, such as new terminology. It does not constitute a change in policy.
• Any policy should be read in conjunction with the Wales Procurement Policy Statement, the Procurement Act 2023, the Procurement (Wales) Regulations 2024 and the Social Partnership & Public Procurement (Wales) Act 2023.
• It should not be treated as legal advice and is not intended to be exhaustive – contracting parties should seek their own independent advice as appropriate. Please also note that the law is subject to constant change and advice should be sought in individual cases.
• The note assumes a certain level of knowledge of public procurement. It is available via the Welsh Government website GOV.WALES and any queries should be directed to CommercialPolicy@gov.wales or via the Welsh Governments’ customer services.
• References to the ‘Procurement Act 2023 and the Procurement (Wales) Regulations 2024’ will be expressed herein as “the Procurement Regime”.

This WPPN addresses public procurement actions to support the strategically important steel sector in the UK.

This WPPN is directly applicable to all Devolved Welsh Authorities (DWAs)whose functions are wholly or mainly Welsh devolved functions and is to be applied to any major procurement project following publication of this Note where steel is a ‘critical component' (‘critical component’ is considered to be a structural steel product(s) such as steel frames, reinforcing bars).

There is no set value as to what constitutes a major procurement project, as this will differ between DWAs. It is, therefore, for DWAs to determine which of their procurements are, ‘major’ projects.

Major projects in which steel is likely to be a critical component, may include, but not be limited to the following:

• Infrastructure – such as rail and roads
• Construction – such as the building of and or refurbishment of prisons, hospitals, universities, housing, community centres, bridges and schools, and
• Flood defences.

This WPPN should be circulated (for information) within your organisation, particularly drawing it to the attention of those with a procurement or contract management role.

The British steel industry directly employs over 32,000 people in high skilled and high paying jobs and supports a further 40,000 jobs in UK supply chain (COVID-19 - Restart and recovery), continuing to be strategically important to the UK economy as both a major employer and supplier of quality steel products.

The 2016 Public Procurement of Steel report identified opportunity to support the steel sector through interventions in public procurement processes; its recommendations remain relevant and in 2019 the Welsh Government signed up to the UK Steel Charter, committing to work with industry to consider how our construction, infrastructure and civil engineering design decisions and resulting procurements can create opportunities for the UK steel industry (UK steel is defined by UK Steel a trade association for the industry in the UK as ‘any steel made in a UK-based blast furnace or electric arc furnace’).

DWAs should use the procurement life cycle to identify any opportunity to support the UK steel industry to maximise the socio economic and environmental impact of the contract delivered.

4.1 Pre-procurement planning 

DWAs’ pre-procurement planning should include an assessment for all projects where steel will be a critical component and where the DWA has the opportunity to influence the way in which the steel component is sourced.

Future steel demand should be a part of the DWAs’ published procurement pipeline; projects should be included as far in advance as possible to stimulate the market. It is important to consider how and when steel inputs will be procured through the supply chain. Advance notice of relevant programmes or individual projects allows the steel sector to better prepare and cater for future needs by ensuring that the right capabilities are in place. In addition, the steel sector can help deliver better project outcomes through early dialogue and identifying the potential for innovative solutions.

Consider your design options and their implications for steel requirements, identifying specific steel products and volumes that will be required against the potential to source these from within the UK.

Preliminary market engagement (PME) is a useful method to engage with suppliers in the market. Under the Procurement Act 2023 it can be used to assist DWAs in developing their steel requirements and approach to the procurement. It can help design the procedure and conditions of participation or award criteria and assist DWAs in identifying suppliers in the market, or even build capacity among suppliers in the market to deliver steel requirements. DWAs should refer to sections 16 and 17 of the Procurement Act 2023 for information PME and PME notices. Guidance on PME is also available on the ‘Procurement Act 2023: guidance documents’ page. Trade bodies such as UK Steel can advise on how to engage effectively with the domestic sector; the UK Steel directory gives a list of UK organisations and products available.

4.2 Procurement

DWAs might consider setting conditions of participation (in accordance with section 22 of the Procurement Regime) as a means to tackle the problem of steel dumping and non-compliance with acceptable standards of health, safety and welfare and environmental standards.

Further information on how DWAs should collect pre-qualification/selection stage questions and available questions sets, please refer to WPPN 001 Standard Selection Questionnaire for Works Contracts and WPPN 002 Wales Procurement Specific Questionnaire (WPSQ) and its use for Goods, Services and Works Contracts.

Conditions of participation

The nature of steel production is such that compliance with social, labour and environmental law outside of the UK and EU is a significant issue; this may be a useful differentiator when selecting suppliers.

DWAs should consider specifying the Building Research Establishment (BRE) Standard, BES 6001 Responsible Sourcing of Construction Products or equivalent when procuring projects with steel component. The BES 6001 standard covers a range of construction foundation products, including steel reinforcement ‘rebar’.

Third party accredited BES 6001 provides DWAs with assurance that constituent materials of products covered by the standard have been responsibly sourced. The standard describes a framework for the organisational governance, supply chain management and environmental and social aspects to address in order to ensure the responsible sourcing of construction products; it provides the ability to prove that an effective system for ensuring responsible sourcing exists.

In support of supply chain transparency, DWAs should:

1. Require BES 6001 or equivalent as part of the qualification criteria for bidders
2. Require Tier 1 contractors to submit supply chain plans when bidding for contracts which include how steel will be sourced
3. Include a contract condition to ensure that the Tier 1 contractor and its subcontractors openly advertise via sell2wales.gov.wales any remaining supply chain opportunities for the provision of steel (i.e. where no contractual arrangements have been agreed by the date of the main contract award).
4. Require Tier 1 contractors to record the origin of critical steel components to be used, maintaining this throughout the contract.

4.3 Awarding the contract

The Procurement Regime has introduced a new approach to assessing tenders in a competitive tendering procedure for a public contract utilising “MAT”, “most advantageous tender” (section 19 of the Procurement Act), instead of “MEAT” (most economically advantageous tender).  DWAs should therefore not base their decisions to award contracts simply on lowest purchase price.

While cost to the public purse is important DWAs should recognise that abnormally low pricing could signal the contract is unlikely to be properly performed; unfairly undercutting domestic providers may result in job losses with significant economic and social impacts on affected communities.

Including but not limited to:

• The Procurement Act 2023
• The Procurement (Wales) Regulations 2024
• The Well-being of Future Generations (Wales) Act 2015
• The Social Partnership and Public Procurement (Wales) Act 2023

This WPPN applies to procurements commenced under the Procurement Regime and is therefore effective from the commencement of the Procurement Act 2023 and the Procurement (Wales) Regulations 2024 until it is superseded or cancelled.

More information on the UK Steel Charter.

Commercial Policy – Polisi Masnachol - CommercialPolicy@gov.wales / PolisiMasnachol@llyw.cymru

Reference has been made to the following in the preparation of this WPPN:

• ‘Public Procurement of Steel – A report into the future Welsh public steel requirements and the capacity and capability of the steel sector’ (Welsh Government 2016)
• Procurement Policy Note - Procuring Steel in Major Projects
• Action Note 16/15 30 October 2015 (Crown Commercial Service, 2015)
• Procuring Steel in Major Projects – revised guidance. Action Note 11/16 13 December 2016 (Crown Commercial Service, 2016)
• The UK Steel Charter 2019