A survey by the Government prequalification register Constructionline has found that 27% of a sample of 32 local authorities believe scrapping frameworks will help to secure lower bids.

In further good news for the industry’s small and medium sized contractors, half of local authorities said that they planned to do more to help smaller firms from their area compete for tenders.

The survey reveals a swing away from received wisdom that frameworks deliver lower out-turn costs.

The survey revealed that local authority procurers are also acutely aware of the financial strength of firms bidding for work.

More than nine in 10 local authorities said that a contractor’s financial stability has become much more of a concern to them during the tender process in the last 12 months.

The survey found that 70% had been stung by a regular supplier they used going to the wall in the last year.

According to business information firm Experian more than 650 construction firms entered insolvency during the first three months of this year.

A contractor’s health and safety competency has also become a more important consideration in the selection process for 95% local authorities, while 88% said they were under increased pressure to reduce the cost of their procurement processes.

Philip Prince, a director from Constructionline, said: “There are a myriad of different issues which local authorities must deal with during the procurement stage, but the recession has made a contractor’s financial well being the biggest concern.

“A contractor or even one of its suppliers going bust mid-project can easily lead to delays and an inevitable rise in costs as the local authority attempts to clear up the mess.

“Increasingly, the public sector is employing more sophisticated techniques at the pre-qualification stage, such as real time financial monitoring, as well as placing tougher demands on their main contractors to thoroughly assess their own supply chains.”