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Steven Morgan, capital director of BAA, has revealed that controversial changes to procurement have saved the airport operator 拢300m in his first year in charge.

When Morgan took over at BAA in January 2009, it was 拢300m over its 拢4.1bn spending limit, but he says the 2008-2013 five-year programme is now back on budget, thanks to measures

that included tendering work outside the framework, cash rewards for good performance and slashing red tape.

He said: 鈥淲e鈥檝e made a saving of around 拢260m. There were also a few projects we decided not to do, which brings it up to 拢300m, and inflation hasn鈥檛 been as high as we had expected. But the biggest saving has been from competition.鈥�

The nine primary framework contractors 鈥� Balfour Beatty, Carillion, Costain, Ferrovial Agroman, Laing O鈥橰ourke, Mace, Morgan Ashurst, Skanska and Taylor Woodrow 鈥� had previously been allocated

projects by BAA under the framework but now have to compete for work up to 拢20m, while larger projects are being offered to the market.

Morgan, a former US Navy rear admiral who served in Vietnam, said: 鈥淚nitially there were big gulps, but they seem happy now, at least to my face. Everyone can compete for everything, rather than being handed a corner of the work, and they鈥檙e rather attracted to the award fees.鈥�

The award fees 鈥� up to 2.5% of the contract 鈥� are given to contractors at BAA鈥檚 discretion for good performance.

One major contractor on the framework welcomed the changes. 鈥淲e鈥檙e very positive about the new regime 鈥� if you offer keen prices, and if you do a good job, then that鈥檚 the way to get work.鈥�

Meanwhile, Morgan said the Laing O鈥橰ourke and Ferrovial Agroman joint venture on the 拢812m Terminal 2A deal was being forced to make 80% of

the subcontracting work competitive rather than provide work in-house. 鈥淭here鈥檚 been a little whingeing about that,鈥� he said.