SECTION 2 - GENERAL PROCUREMENT INFORMATION
2. BACKGROUND
PURPOSE
2.1
2.1.1 The purpose of this document is to provide detailed guidance and procedures to assist officers who deal with any form of procurement. It is important to note that these procedures cover ALL purchasing transactions at any financial level whether revenue or capital expenditure.
2.1.2 Along with the associated procurement toolkit and strategy these procedures are here to demonstrate to all stakeholders of the organisation that public monies are being spent effectively and give confidence that value for money is being obtained.
2.2 NATIONAL GUIDANCE & BEST PRACTICE
2.2.1 The document has been written to include where applicable the key elements within all available best practice over recent years, most notably –
a) National Procurement Strategy for Local Government – ODPM
b) A review of local government procurement in England – Sir Ian Byatt
c) Re-thinking Construction – Sir John Egan
d) Constructing the team – Sir Michael Latham
2.3 CORPORATE PROCUREMENT STRATEGY
2.3.1 In response to the ODPM’s requirements, the Council has formulated its own Procurement Strategy. The strategy has been compiled within the context of the Community Strategy and the Corporate Plan and helps define the role of procurement in the delivery of the Council’s key objectives.
2.3.2 Eight strategic objectives have been identified and to achieve them a range of targeted actions have been set. The objectives have been grouped around the following 5 themes:
¨ Cultural shift: (managing change)
¨ Providing leadership and building capacity
¨ Partnering and collaboration
¨ Doing business electronically, and
¨ Stimulating markets and achieving community benefits
2.3.3 The purpose of this strategy is to enable the Council to improve “the delivery and cost effectiveness of quality public services to citizens” and realize the Council’s vision for procurement which is to:
…ensure that the Council has the right knowledge and capacity to make informed procurement decisions that will provide the best services to the community
2.3.4 The eight key procurement objectives are detailed as follows. Each of these has an Action Plan within the Strategy with agreed targets and tie in directly to the detailed procedures within this code.
Key objective 1: Managing Change
Support staff through a change management programme to build a procurement skill base that will enable the Council to explore and innovate in terms of new procurement freedoms, flexibilities, structures and procedures.
Key objective 2: Leadership and building capacity
Demonstrate commitment from the ‘top’ towards procurement excellence by resourcing it adequately, ensuring a structured approach to the delivery of the procurement strategy.
Key objective 3: Controls, standards, processes and managing risk
Ensure that all procurement is legal, ethical, auditable and transparent and that risk is managed appropriately.
Key objective 4: Improving value and efficiency
Continuous improvement, achieving value for money and efficiency gains on all procured goods, works and services.
Key objective 5: Sustainable partnerships
Deliver better value services to citizens by maximising the potential of partnering and collaboration through the creation of sustainable partnerships between the Council and public, private, social enterprise and voluntary sector organisations.
Key objective 6: Construction related procurement
Promote the Council’s policies for sustainability and regeneration through its approach to procurement.
Key objective 7: e-Procurement
Revise the procure-to-pay cycle including a reduction in cycle time and costs and use e-procurement creatively to achieve efficiencies.
Key objective 8 Community benefits
Encourage diversity and competition; engage SME’s and voluntary/community sector as suppliers and as active partners in the community.
2.4 CONTINUOUS IMPROVEMENT
2.4.1 The Procurement Strategy is subject to annual review and these procedures shall also be formally reviewed and updated on an annual basis.
2.5 COMPLIANCE
2.5.1 These procedures form part of the Councils Budget and Policy framework and as with the Procurement Strategy compliance is mandatory. Any serious breaches of the provisions of these procedures shall be reported by the relevant Assistant Director/Head of Service to their Director, S151 Officer and Monitoring Officer. Failure to follow any provision could be construed as a disciplinary issue as with all other Council Polices.
3. INTRODUCTION
3.1 Section 135 of the Local Government Act 1972 gives the Council power to make Standing Orders for Contracts. In the case of supplies or works, the Council is required to make Standing Orders, which must include provision for securing competition and for regulating how tenders are invited.
3.2 The Procurement Code (now referred to as CSO for the remainder of the document) is designed to obtain competition, ensure value for money is gained, ensure propriety and secure compliance with UK and European Law. They also provide a framework within which the contracts process is accountable, transparent and auditable.
3.3 Advice on CSO and how to procure should always be sought if you are in doubt. This is available from within your own service area via your own procurement specialists or Finance Manager and corporately via the Council’s Procurement Manager, Legal & Democratic Services, or the Audit, Risk & Information Service.
3.4 The Head of Audit, Risk & Information in consultation with the Council’s Monitoring Officer shall be responsible for the maintenance of CSO and shall advise on their implementation and interpretation and shall make any changes necessary to give effect to changes in law. Amendments and updates shall be actioned through the annual review process.
3.5 CSO are the minimum requirement expected and are designed to promote good purchasing practices and public accountability whilst deterring any form of corruption. Employees shall always adhere to these rules as they are the best defence against allegations that a purchase has been made incorrectly or fraudulently.
3.6 Linked to these CSO is a procurement toolkit. This is a set of detailed guidance documents, procedures and templates which are designed to enable you to implement the CSO. Their use will be dependent on the type of procurement being conducted.
4. BASIC PRINCIPLES
4.1 The basic principles which shall be applied for all Purchasing are to:
¨ Achieve best value
¨ Be consistent with the highest standards of integrity
¨ Ensure fairness in allocating contracts
¨ Comply with all legal requirements
¨ Support the Council’s corporate objectives.
¨ Comply with the Council’s Procurement Strategy
4.2 No contract should be awarded, unless the expenditure estimated to be involved has been included in approved capital or revenue accounts, or has been otherwise approved by, or on behalf of the Council.
4.3 The procurement toolkit guidelines should always be referred to in connection with any aspect of the CSO.
5. SCOPE
5.1 CSO shall be followed for all Purchasing and Disposal throughout the Council, with the following exceptions:
¨ Any purchasing or disposal within Schools (Separate CSO exist for this area).
¨ Contracts of employment making an individual a direct employee of the Council
¨ Land & Property Transactions - The acquisition, disposal and management of all interests in property may only be undertaken by the Chief Property Officer. Contracts relating solely to the disposal or acquisition of an interest in land and buildings are governed by procedures agreed by the Chief Property Officer and the Property Law Manager.
¨ Information Technology Hardware and Software. This will be actioned through HBS Business Service Group Ltd, the Council’s external partnering organisation. These are governed by procedures agreed by the HBS Partnership Board (see section 16 of Guidelines).
¨ Social Care Contracts for the provision of personal social services to individual clients or groups of clients.
¨ Contracts formulising the funding of particular voluntary sector bodies, where the purpose of the contract is to establish the general conditions whereby the body may be funded by the Council.
¨ Contracts for the engagement of Counsel.
¨ Use of in-house services. Where works or services are of a type normally performed by an in-house team, that team shall first be contacted to determine whether it is able to meet the project’s requirements (including timescale, specification and cost). If it is not in a position to meet these requirements a decision to contract out the work or services may be made.
5.2 Contracts for the engagement and use of consultants are now subject to the requirements of these CSO. Further guidance is also available in Guideline Section 22.
6. ETHICAL STANDARDS
6.1 All Council Officers detailed in CSO 7, must comply with the employees Code of Conduct, anti-fraud and corruption and confidential reporting policies and must not invite or accept any gift or reward in respect of an invitation to bid or the award or performance of any contract.
High standards of conduct are obligatory and it will be for the Responsible Officer or their representatives to prove that anything received was not received corruptly. Corrupt behaviour will render an employee liable to dismissal and is a criminal offence under the Prevention of Corruption Acts 1889 to 1916 or Section 117(2) of the Local Government Act 1972.
6.2 The following shall declare any financial interests and any private or personal non-pecuniary interests, which may affect the contract process to their AD:
¨ All permanent or temporary staff.
¨ Members
¨ External consultants.
¨ Community representatives
6.3 Other Officers of the Council shall declare any financial interests and any private or personal non-pecuniary interests, which may affect the contract process as follows:
¨ Assistant Directors/Heads of Service to their Director.
¨ Directors to the Chief Executive.
¨ The Chief Executive to the S.151 Officer.
6.4 Heads of Service and where relevant, Directors and the Chief Executive, shall ensure staff, consultants and community representatives appointed or agreed by them, make declarations on their appointment, on any change in circumstance (annually in the case of staff) and shall either certify them as acceptable or take the necessary action in respect of potential conflicts of interest.
6.5 Assistant Directors/Heads of Service and where relevant, Directors and the Chief Executive, shall retain complete staff declarations on the individual’s personnel file and a register of staff declarations indicating names and grades of those declaring and the nature of their declaration.
All such registers must be copied to the Councils Monitoring Officer on the 1st April each year.
SECTION 3 - OFFICER RESPONSIBILITIES
7.1 Officers of the Council responsible for purchasing or disposal must comply with these CSO by:
¨ Following the rules set out in CSO and the associated toolkit Guidelines whenever the purchase of goods, works or services is required, whatever the monetary value.
¨ Taking all necessary legal, financial and professional advice needed.
¨ Declaring any personal non-pecuniary or financial interest in a contract in accordance with Section 6 of the CSO - Ethical Standards. Corruption is a criminal offence.
¨ Identify the purchasing need, procurement methodology and criteria for selection
¨ Allowing sufficient time for submission of quotation/tender bids
¨ Keeping quotations / tender bids confidential
¨ Never negotiating with suppliers unless CSO 10.13.2 or 11.13.2 applies.
¨ Always completing an official Council Order using the Agresso Financial Management System before the supply of goods, works, services or before the work begins.
¨ Always having a written specification for any purchase over £5K.
¨ Keeping accurate and up to date written records of all dealings with suppliers.
¨ Assessing each contract afterwards to see how well it met the purchasing need and best value / value for money requirements.
¨ Ensuring that all relevant Contracts are subject to competition, unless there is an exemption in accordance with CSO 8.
7.2 The procedure to be following is dependant upon the estimated value of the procurement in question, which is detailed in the table below. (The total procurement value is the Council Budget plus any external funds):
|
Value of Procurement |
Award Procedure |
|
Up to £5,000 |
Demonstrate VFM |
|
£5,001 - £25,000 |
2 written quotations |
|
£25,001 - £75,000 |
3 written quotations |
|
£75,001 – £EU Limits |
3 written tenders |
|
Above £EU Limits |
Dependent on procedure |
|
Type of Contract |
EU THRESHOLD |
|
Supplies |
£144,371 |
|
Services |
£144,371 |
|
Works |
£3,611,319 |
DIRECTORS
Each Director:
7.3 Will have overall responsibility to make certain that all necessary procedures are in place to ensure compliance with these CSO.
ASSISTANT DIRECTORS (AD)
Each Assistant Director (or Head of Service no AD exists in the management structure):
7.4 Will receive from the Council delegated powers to enter into and manage contracts and grant exemptions on behalf of the Council in line with CSO 8 to specified financial limits (including unlimited sums). This shall include the signing of all contracts in excess of £150,000 where instructed by their Director.
7.5 Must ensure that all officers within their service who deal with procurement are:
a) Aware of and comply with these CSO.
b) Adequately trained and have the appropriate skills and competencies. The level of skill and competency will be determined by the volume, type and financial size of purchasing they undertake.
7.6 Will compile and maintain a list of Responsible Officers (RO) for use within the Agresso Financial Management system, which details how they have delegated control of their service budget.
7.7 This list should cover all relevant Revenue and Capital budgets and will contain the names of staff within their service able to authorise official orders and invoices with their respective financial limits for each cost code (revenue and capital).
7.8 Will ensure that for each procurement process, a Responsible Officer (RO) is nominated. In most cases the RO will be as designated within the Agresso List detailed above. However in some instances, especially for large scale procurement there will be a need to identify a team or group of officers to manage the process. It is the role of the RO to ensure that all officers involved in the procurement process are aware of their responsibilities and that they must comply with CSO.
7.9 May grant exemptions after receipt of the Corporate Exemptions report from the RO detailing the reasons for exemption.
7.10 Must retain all documentation regarding the granting of exemptions on the contract file.
7.11 Will be responsible for deciding whether there is a need to compile and maintain ‘Approved Lists’ (CSO 10.11.4) of contractors in addition to any local or nationally accredited lists already in place, i.e. Exor (CSO 10.11.3) or OGC (see Section 13 of Guidelines).
7.12 May invite community organisations to appoint persons (who may not be Members of the Council) to participate in drawing up specifications, interviewing Contractors and monitoring contracts.
7.13 Must ensure that such community representative do not act as a Responsible Officer, except where the law specifically provides otherwise.
7.14 Must report any serious breach of these CSO within their own service area immediately to their Director, S151 Officer and the Monitoring Officer. This should include reasons for non-compliance, steps taken to prevent reoccurrence and a decision on whether disciplinary action is necessary.
7.15 Must seek immediate advice from Legal Services if a Council contractor becomes bankrupt or goes into liquidation during the life of the contract or they (or the Council) wish to cancel an existing contract. The RO is required to inform the AD of the financial and legal implications and recommended actions to resolve the situation. Normally the AD will be responsible for agreeing the appropriate course of action with Legal Services in each case. However, where the financial and legal consequences are of a significant level then involvement and agreement with one or more of the following may also be required; Chief Executive, Monitoring Officer, their Director and Executive Member(s).
RESPONSIBLE OFFICER (RO)
Each nominated RO for purchasing or disposal must:
7.16 Comply with the relevant part of Section 2 of these CSO which details the minimum procedural requirements at different financial levels.
7.17 Understand that the procurement procedures detailed in Section 2 are the minimum requirements expected by the Council when undertaking any purchase or disposal. Each contract should be considered on its own merit and consideration should be given to whether the individual circumstance could be enhanced.
7.18 Utilise Council ‘Corporate Contracts’ that are in place if they satisfy the purchasing need.
7.19 Utilise the Council’s Accredited Database (Exor) or any Council Standing List if they provide adequate contractors/suppliers for the procurement required where the estimated value of the procurement does not exceed the relevant EU threshold.
7.20 Consider consulting with potential suppliers to assess the market in general terms about the nature, level and standard of the supply, contract packaging and other relevant matters, providing this does not prejudice any potential candidate.
7.21 Ensure that all agents, consultants and contractual partners acting on their behalf comply with the CSO. This shall include community representatives as detailed in 7.12.
7.22 Ensure community representatives give a written undertaking to treat all information confidentially throughout the tendering process and the life of the contract and decide whether they shall have speaking rights.
7.23 Be aware that they are fully accountable for all elements of each contract for which they are responsible and if they designate responsibility for any element of a contract to another member of their staff that this member of staff complies with these CSO.
7.24 Ensure that sufficient budgetary provision has been agreed and all expenditure incurred is allocated to the correct subjective element of the cost centre. All cost centres must be agreed with the service Financial Manager prior to the commencement of the contract.
7.25 May seek exemptions from CSO from their AD after completing the Exemptions report.
7.26 Follow the Councils Budget Management Scheme set out in Section 17 of Guidelines
7.27 Ensure they use the Agresso Financial Management System to register an Official Order against every single purchase of goods, works or services.
7.28 Enter basic contract details into the Corporate Contract Register, maintained by the Audit, Risk & Information Service, for all contracts in excess of £5K.
7.29 Not split purchasing into smaller elements to avoid any need to obtain competitive bids.
7.30 Ensure that if purchasing many items from an individual supplier which totals more than £50K in any one financial year, then these items should be purchased through a single contract, in order to obtain the best possible value from that supplier. In addition when ordering many low value items from suppliers the RO must also consider the use of a Council Purchasing Card.
7.31 Retain all contract documentation according to the Councils Retention of Records Policy. As a guide, Official Orders and Invoices are automatically retained within the Agresso Financial Management System. All written documentation relating to individual procurement should be retained within a dedicated Contract file, for example:
· Invitations to quote/tender and the returned written quotations/tenders
· Any written record of any exemption sought from CSO
· Any written records of a feasibility study or business case
· Any written record of the specification and evaluation criteria
· Any written record of the financial management of the contract
· A final account including total cost compared to budget
· Any notes of contract meetings and evaluation comments
7.32 Inform their AD immediately they become aware that a Contractor has become bankrupt or goes into liquidation during the life of the contract or that they (or the Council) wishes to cancel an existing contract. In addition, they should also prepare a detailed report for the AD of the financial and legal implications & recommended actions to resolve the situation.
8. WAIVERS & EXEMPTIONS
8.1 Waivers
8.2 On consideration of a report incorporating financial and legal implications the Council Executive may waive or vary any requirement of these CSO in respect of a particular contract provided it is satisfied that special circumstances justify the waiver or variation and provided that:
a) the Council Executive gives its reasons and these are recorded in the minutes of the meeting ,and
b) all decisions in this regard, including those taken by virtue of urgency together with the reasons for them are reported for information to the Council at its next meeting.”
c) EU and National Legislation is complied with; i.e. where contract limits dictate EU Law applies, waivers cannot normally be made
Exemptions
8.3 Exemptions apply to any purchase between £5K and the EU Limits. The process is only relevant in respect of allowing exemptions from the competitive process, i.e. number of required bids and does not exempt RO’s from any other part of CSO.
8.4 If one or more of the criteria detailed in 8.6 below apply, the RO can seek an exemption from their AD or Director who is the only authorised person able to grant an exemption.
8.5 In order to carry out this process the RO must compile the Corporate Exemptions report for submission to their AD. The decision and the report must be retained on the contract file.
8.6 The areas under which the RO can seek an exemption from requesting the appropriate number of bids is whenever it can be demonstrated that one or more of the following circumstances apply:
a) That it will demonstrate significant cost and efficiency savings to the process and enable the objectives of the procurement exercise to be delivered within shorter timescales. These savings MUST be quantifiable and documented clearly within the exemptions report.
b) That time limits required for tendering cannot be met for reasons of extreme urgency, i.e. an unforeseen emergency has occurred, involving immediate risks to persons, property or serious disruption to Council Services
c) That the Council will be exposed to immediate and significant financial or other risks, (i.e. reputational). This exemption can only be used where such risks have been identified within their Risk Registers for that service or project.
d) That only one Contractor is able to carry out the work or service or to supply the goods for technical or artistic reasons or because of exclusive rights or that market conditions dictate that only one contractor is available.
e) That additional works or services are required which, through unforeseen circumstances were not included in the original contract and which are either:
¨ Strictly necessary for the completion of the contract, or
¨ For technical or economic reasons cannot be carried out separately without great inconvenience.
f) That new works or services are required which are a repetition of works and services carried out under the original contract. Provided they are required within 1 year of the original contract.
g) That goods are required as a partial replacement for or addition to existing goods or installations and obtaining them from another source would result in incompatibility or disproportional technical difficulties in operation or maintenance.
SECTION 4 - PROCUREMENT VALUE UNDER £5K
9.1 For any purchase, including the engagement and use of consultants below £5,000 the following is mandatory – (Please ensure that you have viewed and understood the following flowchart)
9.2 Please ensure that you have checked that no corporate contract exists for the goods, works or services you require. If such a contract does exist it is a mandatory requirement that you use this contract. If you are in any doubt please check with your Finance Manager, Audit, Risk & Information Service or the Council’s Procurement Manager.
9.3 There is no mandatory requirement to use the Councils Corporate Contracts register, however if you wish to use it you can. It is intended to record basic details of all procurement above £5K but it can be used at any value and it is recommended that any capital expenditure is logged through this register (see CSO 10.15.2).
9.4 IDENTIFY NEED
9.4.1 Prior to beginning any purchase, the following considerations should be taken (see Section 1 of Guidelines):
¨ Appraise the need for the expenditure and its priority.
¨ Define the objectives of the purchase and how it meets your service needs
¨ Assess the risks associated with the purchase and how to manage them.
¨ Consider what procurement method is most likely to achieve the purchasing objectives, including internal/external sourcing or use of a Corporate Contract.
¨ Consult with users as appropriate about the proposed procurement method, contract standards, performance monitoring and user satisfaction feedback.
9.5 ESTIMATING COST & FUNDING
9.5.1 After having identified the purchasing need an estimate must then be prepared of the likely procurement value. Then before making any purchase ensure that you have already identified the funding source and the correct cost centres and codes to be used within the Agresso Financial Management System.
9.6 VFM Criteria
9.6.1 If the purchase is below £5,000 you do not need to obtain a set number of bids or quotes. However you must demonstrate value of money. In this context, the RO shall achieve value for money by taking into account cost, quality, fitness for purposes, timeliness and convenience.
9.6.2 In all cases the aim of the procurement should be to contribute to the achievement of service and corporate objectives and therefore the following factors should be considered as criteria on which to assess VFM –
· Lowest Price – Where payment is to be made by the Council
· Highest Price – Where payment is to be received by the Council
· Whole-Life Costing
· Quality of goods, works or services
· Quality of service provision
· Running Costs
· Technical merit
· Previous Experience
· Environmental considerations/Sustainability factors
· Local Supplier/Contractor
· Aesthetic and functional characteristics
· Health & Safety issues
· Equalities Issues
· After-sales and technical assistance
· Site-Visits and Presentations
· Quality Standards (National and European)
· Financial Standing
· Risk Management experience
· Project Management experience
· Partnering Experience
· Resources and skills
9.7 PROCUREMENT METHOD
9.7.1 There is no requirement to place adverts or use approved lists, therefore suppliers/contractors can be contacted directly either in person, over the phone or internet. If you are unsure how to identify suitable suppliers, consider utilising the following –
· The Councils accredited database system (EXOR)
· Approved Lists retained in your service area
· Corporate Contracts
· Reference to trade/professional journals
· Use of the Internet or recommendation of other council officers
· Nationally accredited lists i.e. S-CAT
9.8 AGREEING THE PURCHASE/CONTRACT AWARD
9.8.1 At this level you may be required to use a supplier order or order over the phone or internet. However in every instance an electronic Council Official Order must be raised (even if this is a copy order) using the Agresso Financial Management System. Letters of intent shall only be used with the agreement of the Corporate and Community Law Manager and only in exceptional circumstances.
9.8.2 This order should be raised prior to the receipt of goods, works or services. If you require any advice on how to carry this out please contact your Finance Manager and be aware of the Council’s Financial Regulations.
9.8.3 The alternative is the use of a Corporate Purchase Card, which is recommended for low value, high volume transactions. If it is assessed use of such a card would be advantageous you should make contact with your Finance Manager to arrange for an application to be made and seek authorisation from your HOS.
SECTION 5 - PROCUREMENT VALUE BETWEEN £5K AND £75K
10.1 For any purchase, including the engagement and use of consultants between £5,000 and £75,000 the following is mandatory – (Please ensure that you have viewed and understood the following flowchart)
10.2 Please ensure that you have checked that no corporate contract exists for the goods, works or services you require. If such a contract does exist it is a mandatory requirement that you use this contract. If you are in any doubt please check with your Finance Manager, Audit, Risk & Information or the Council’s Procurement Manager.
10.3 There is a mandatory requirement to use the Councils Corporate Contracts register. It is intended to record basic details of all procurement above £5K and it is recommended that any capital expenditure is logged through this register (see CSO 10.15.2).
10.4 RO should also be aware of the Councils procedures in relation to Project, Risk and VAT Management and ensure they are followed in conjunction with these procedures.
10.5 IDENTIFY NEED
10.5.1 Prior to beginning any purchase, in a manner commensurate with the complexity and value of the contract, the following considerations should be taken (see Guideline Section 1)
¨ Appraise the need for the expenditure and its priority.
¨ Define the objectives of the purchase and how it meets your service needs
¨ Assess the risks associated with the purchase and how to manage them.
¨ Consider what procurement method is most likely to achieve the purchasing objectives, including internal/external sourcing or use of a Corporate Contract.
¨ Consult with users as appropriate about the proposed procurement method, contract standards, performance monitoring and user satisfaction feedback.
10.6 ESTIMATING COST & FUNDING
10.6.1 After having identified the purchasing need an estimate must then be prepared of the likely procurement value. To some degree this will dictate the process to be followed so it is important it is accurate as possible. Before making any purchase ensure that you have already identified the funding source and the correct cost centres and codes to be used within the Agresso Financial Management System. The different funding sources are –
¨ Revenue Budget
¨ Capital Budget
¨ Grant Funding
¨ Pooled Budgets
¨ Private Finance Initiative or Private Investment
10.6.2 The RO should ensure that where any funds are to be received from outside of the Council, i.e. Grant Funding or Private Investment, confirmation of those funds and how they are to be received is made in writing prior to the start of any procurement. On no account must any procurement at this level commence without the RO having an approved budget in place with all funding sources agreed. In addition where funds are to be received externally, the RO should be aware of the mechanisms of how and when these funds will be deposited within the Council.
10.7 NUMBER OF BIDS
10.7.1 Where the total estimated value for the purchase is between:
· £5K and £25K you need to invite at least 2 written bids/quotations
· £25K and £75K you need to invite at least 3 written bids/quotations
10.7.2 It is expected that the RO will have confirmed that contractors are able and willing to bid prior to any invitations being issued. Therefore where less than the required minimum number of bids is received, then the RO should identify the reasons for this with the respective contractors. Whenever contractor selection is made via the Council’s Accredited database, the identified reasons must always be entered in the contractor record within the database.
10.7.3 Where it can be demonstrated that there are insufficient suitably qualified candidates to meet the competition requirements, all suitably qualified candidates must be invited. If this means that only one contractor is available an exemption must be sought.
10.8 PROCUREMENT METHOD
10.8.1 Deciding on the procurement methodology and form of contract is of critical importance in order to obtain the best value and deliver the purchasing objectives. Each procurement exercise must decide on its own merits what the most appropriate method should be. However all RO must be aware that the Councils Procurement Strategy promotes the use of Partnering wherever possible and consideration must therefore be given to this approach.
10.8.2 There are many different forms of standard contracts which can be used and use of some of these contracts such as NEC, JCT or PPC 2000 can dictate the methodology and approach you apply. In addition financial levels can dictate a specific approach, i.e. EU rules. However in general terms the following are examples of different methodologies to procurement, although it is likely that at this level only those methods highlighted in bold will be used:
· In-house Procurement, i.e. after a best value or overview and scrutiny review
· External Procurement in open competition, i.e. advert in paper or trade journal
· External Procurement with pre-assessed contractors, i.e. from an approved list
· External Procurement via Leasing or Hire-Purchase arrangements
· External Procurement via the Private Finance Initiative or Private Investment
· External Procurement via Partnering or Partnership contracts
10.8.3 In each case these methods can use a single or multi-stage approach, i.e. one or more stages of assessment depending on the evaluation criteria. Often a multi-stage approach is only applied for high value contracts due to the cost of evaluation and RO should bear this in mind for procurement at this level.
10.8.4 If a multi-stage approach is decided upon or any procurement involves either private investment in any form or partnering it is recommended that a team is set up to manage the procurement process. This could include ANY of the following –
· Executive Member and/or Director/HOS
· Legal
· Finance
· Health and Safety
· Technical
· IT
· Customer/User
10.8.5 Irrespective of what approach is taken, the rationale for that decision must be documented in order to demonstrate to all stakeholders why we are procuring in a certain way.
10.9 SPECIFICATION & CONDITIONS OF CONTRACT
SPECIFICATION
10.9.1 In all cases at this financial level RO are required to complete a written specification (see Section 2 of Guidelines). Once the contract has been awarded rectification of mistakes or clarification of ambiguous statements may be costly and therefore this is a vital part of the procurement process.
10.9.2 In many cases the specification will be dictated by the form of contract being used and therefore if a standard form of contract is utilised then this requirement may be satisfied.
10.9.3 However if no standard form of contract is used then the RO must detail in writing what goods, works or services are required and how it should be delivered. This would normally include consideration of the following:
· Determine who should be involved in drafting the specification
· Measuring and/or quantifying the work to be done or goods supplied
· Deciding on the frequency/timing of service
· Identifying and defining standards and monitoring arrangements
· Deciding on the approach, i.e. Input, Output based or Method statements
· Deciding on the level of detail to which the specification must go
· Detailing the goods, works or services and payment terms
· Detailing any performance measures and any mechanisms to reward or penalise
10.9.4 If there is any doubt as to what detail should be provided advice should always be sought from any of your own service based procurement specialists, Finance Manager, Legal Services, Audit and Risk Management or the Councils Procurement Manager.
CONTRACT CONDITIONS
10.9.5 In addition, contract terms and conditions must also be included (see Section 3 of Guidelines) and advice should be sought from Legal Services in relation to the adoption and wording of any of these clauses. Contract conditions usually include the following areas:
· Details on whether the contract can be sub-let or use of sub-contractors
· Insurance requirements (see Section 4 of Guidelines)
· Bonds and Parent Company Guarantees
· Health and Safety requirements (see Section 11 of Guidelines)
· Equalities requirements (i.e. Race, Disability etc) (see Section 7.3 of Guidelines)
· Data Protection and Freedom of Information requirements
· Termination/Cancellation clauses (see Guideline 3.6)
· Rights to inspection of records
10.10 EVALUATION CRITERIA
10.10.1Deciding on the criteria to be used to evaluate bids from suppliers or contractors is another important area which must be decided upon before any contract documentation is completed (see Section 5 of Guidelines). This is because it is advisable to include the process of evaluation within any documentation sent to potential contractors or suppliers in order to ensure fairness and enable them to focus on the most important aspects of the bid.
10.10.2 Traditionally ‘lowest price’ has been the standard criteria used to assess bids however this is no longer the case as best value must now be demonstrated. This will include one or several of the following factors and it is up to the RO to decide on the criterion to be used.
10.10.3 Where a multi-stage process is being used and a team of officers are involved in the process, it is mandatory that the criteria and process of evaluation are fully documented and approved prior to any issue of documentation. These criteria and all assessment documentation should also be available for inspection.
10.10.4 Again, dependent on the value of the contract the RO must consider the amount of resource and effort invested in the evaluation process against the benefits which might be delivered and size of the contract. This is especially important where price/quality models are used which include weighted factors. Often these can be made too complex and the RO must ensure everyone fully understands the process of evaluation.
10.10.5 In all cases the aim of the procurement should be to contribute to the achievement of service and corporate objectives and therefore the following factors should be considered as criteria which must be used to evaluate bids:
· Lowest Price – Where payment is to be made by the Council
· Highest Price – Where payment is to be received by the Council
· Whole-Life Costing
· Quality of goods, works or services
· Quality of service provision
· Running Costs
· Technical merit
· Previous Experience
· Environmental considerations/Sustainability factors
· Local Supplier/Contractor
· Aesthetic and functional characteristics
· Health & Safety issues
· Equalities Issues
· After-sales and technical assistance
· Site-Visits and Presentations
· Quality Standards (National and European)
· Financial Standing
· Risk Management experience
· Project Management experience
· Partnering Experience
· Resources and skills
10.11 CONTRACTOR SELECTION
10.11.1 Deciding on the method of contractor selection is one of the final key stages to be performed in order to complete the preparation for a successful procurement exercise. Identifying your market and potential suppliers is not always straightforward and so the following methods are available for use:
10.11.2 Using Supply2.gov.uk
Created by the Enterprise Directorate www.supply2.gov.uk has been designed specifically to ensure that small businesses have the opportunity to win a larger share of lower value (typically below £100K) public sector contracts. Using Supply2.gov.uk is free and is recognised as best practice by both businesses and Government, which regard the portal as a useful and effective tool for providing a route to help small businesses thrive and grow. An official interpretative document published by the European Commission has uniquely recognised Supply2.gov.uk as a best practice means for public authorities to advertise their lower-value contract opportunities to businesses.
10.11.3 Open Advert in a trade journal or local or national newspaper
This is the traditional method chosen where there is no identified supplier or little knowledge of the potential market. Often this will be used for ‘one-off’ procurement exercises where none of the other methods below can be used. Despite this the RO should make every attempt to identify the market using knowledge of other council officers, other local authorities, use of the Internet and national best practice organisations in their own service area.
All that is required is that an open advert is placed detailing the basics of the contract, timeframe of response and where expressions of interest or contract documentation or further information can be obtained.
10.11.4 Use of an approved Council Accredited Database (Exor/Sinclair)
This system is currently being jointly managed by Property and Transportation and Highways and contact should be made with those Services in the first instance for further details of its operation.
In summary the system contains a listing of accredited suppliers and contractors over a vast range of procurement categories. It is a national database used by a wide range of private and public sector organisations and all checks, vetting and administration of the system is carried out externally. This not only saves the cost of advertising and time spent in identifying suitable contractors but also ensures we are only using suppliers who have already met basic quality standards and demonstrates integrity and quality is built in to our processes.
Use of the system is simple and straightforward and allows short-lists to be drawn up almost immediately of accredited contractors. As a general rule when drawing up shortlists the RO – if possible - must ensure they do not select the same contractors every time they go out for quotes. Normally the successful contractor from a previous project should be chosen, however it is important that rotation of contractors on the database is carried out in order to demonstrate fairness to all.
10.11.5 Use of an approved Council Standing List
This method is used in specific service areas where there is an ongoing purchasing need and saves the cost of repeatedly going out to open advert. The list is developed and maintained in-house and will normally contain a number (usually up to 10) contractors or suppliers who have been internally accredited to provide goods, works or services in that area. Selection of contractors from that list will then be on a rotational basis normally including the winning contractor from the last contract. Use of such lists is limited normally to very specialist areas where the Exor list in 10.11.3 cannot supply any contractors.
It has advantages in that more local factors can be included to reflect service needs however the cost of maintaining such a list can outweigh any benefits. It is recommended however that if such a list is in existence it should be used.
10.11.6 Use of an approved National List (S-CAT/L-Cat/Constructionline) -
S-CAT
This method can be used where it is difficult to identify a local market or for one-off exercises or where the Exor list cannot satisfy the need.
In summary the S-CAT list is a catalogue based procurement facility providing public sector organisations with a simplified means of procuring and contracting for, a wide range of Business, Professional and IT Consultancy and Specialist services from a variety of providers.
The key benefits apart from the saving of time and resource are compliance with EU procurement regulations and the ability to call-off urgent requirements quickly. Its range of services are –
· IT Consultancy, Services and Related Products
· Human Resources
· Management and Business Consultancy
· Financial Services
· Geographic Information Services & Systems
· Business Information & Research
L-CAT
L-Cat is a series of Framework Agreements, which have been established by OGCbuying.solutions in collaboration with the Treasury Solicitors Department and the Department for Education and Skills. It is a new and innovative arrangement offering easy access to value for money external legal services.
L-Cat reduces the cost and time associated with the procurement of legal services by offering competitively tendered framework agreements in an on-line directory. The experience, expertise and commitment to quality of all service providers have been assessed at the time of the initial completion.
L-Cat is available to use by Government Departments, Executive Agencies and Non Departmental Public Bodies.
L-Cat has 7 categories. There are a range of legal service providers within each category all of which have signed up to the Framework terms and conditions. Its range of services which can be found on www.ogcbuyingsolutions.gov.uk/LCat/ are-
¨ IT, Telecommunications & E-Commerce
¨ Property & Estates
¨ Human Resources
¨ Construction
¨ Company and Corporate Matters
¨ Financial and Banking Matters
¨ General Commercial Matters
Constructionline
This is a database very similar to the Exor database detailed in 10.11.3. It was originally a government backed national database of accredited contractors in response to various national reviews. Its development was however slow and it is now run by Capita on a commercial basis. The system is available for use within the Council and is used as a backup to the Exor system.
10.11.7 Use of a single supplier from a ‘Corporate Contract’ or Long-Term Contract
This method of procurement should be used where the purchasing need matches the goods, works or services currently being supplied by either of the following methods can be adopted:
· In respect of the Corporate Contract where the goods, works or services required match those supplied by the Corporate supplier, that supplier MUST be used.
· Where a long-term contract exists in a service area, i.e. 5 year repair and maintenance contract then if the goods, works or services required match those already being supplied under contract then that contractor may be approached to supply a bid if the original contract permits the provision of additional goods, works or services.
10.12 ISSUE & RECEIPT OF BIDS
10.12.1 When all the previous procurement stages have been completed, invitations to bid can be placed, depending on the method of contractor selection detailed in 10.11 above.
10.12.2 Wherever the instruction to bid is placed the RO should allow at least 2 weeks for bids to be returned up to £25K and 3 weeks for bids between £25K and £75K.
BID INSTRUCTIONS
a) The bid instruction should include contact details from where the specification and other contract details can be obtained.
b) The specification, terms and conditions and bid instructions can be issued in hard-copy form or electronically if necessary. It is advisable to use electronic methods where appropriate to both speed the process up and save on costs and time. However RO should ensure that in these cases they ask for a confirmation e-mail to be sent by the relevant bidder confirming receipt of documentation.
c) All bids should be returned to the same place with a closing time and date which is the same for all (see Guideline section 20). Bids can be returned in hard copy form or electronically.
d) All contractors/suppliers must be informed that they cannot ‘qualify’ their bid in any way or be accompanied by any covering letter or any statement that could be construed as placing it on a different footing from other bidders. Any such bids can be rejected by the Council immediately.
e) All contractors/suppliers cannot change the terms and conditions laid down within the specification.
f) All contractors/suppliers must be told that ‘the Council is not bound to accept any quotation or tender’
g) All contractors/suppliers must be told that an official order will be issued by the Council to the successful bidder to confirm their submitted bid.
USE OF E-AUCTIONS
10.12.3 Electronic reverse auctions (E-Auctions) are a growing method of submitting bids under which contractors use secured Internet based technology. The contractors then compete in real time by bidding against each other over a short period of time. This can mean major cost savings and efficiencies being delivered to the Client well in excess of more traditional methods.
10.12.4 At this point in time the Council does not have this technology, however when this becomes available this method will also be allowable subject to suitable checks over the controls in the system and software. The involvement and agreement of IT, Legal Services, Audit, Risk & Information Service and the Council’s Procurement Manager must be sought prior to commencing any such exercise.
10.13 BID EVALUATION, NEGOTIATION AND CLARIFICATION
10.13.1 EVALUATION & CLARIFICATION (see Guideline Section 5)
a) All received bids must be assessed in line with the evaluation criteria (CSO 10.10).
b) All information should be kept confidential until the evaluation process is complete.
c) All officers involved in the evaluation process should ensure that all queries are directed through the RO and should not make contact with either other council officers not involved in the process or the bidders direct.
d) The results of all evaluations should be clearly documented and where applicable certified by the officers involved in the evaluation process.
e) The RO should detail in writing the reasons for nominating the winning bidder before awarding the contract.
f) For all bid submissions the RO shall insure that the bids are compared with any estimates and the budgetary provision. The budget-holder must always be informed if the bid exceed the budget in question and the budget-holder shall confirm in writing to the RO whether the purchase should continue or whether amendments in the scope of the contract should be made in order to meet the budget allocation.
g) For all bid submissions the RO shall check for arithmetical & technical accuracy on every rate and calculation. Where errors are identified the bidder shall be informed of the details of these errors as follows.
· If an error is identified but the overall price is unaffected then the bidder shall be informed and asked to confirm their bid at the original price.
· If an error is identified that does affect the overall price then the bidder shall be informed and asked either to confirm their bid at the original prices or withdraw or submit a revised bid price in line with the errors identified.
· Correction of all errors should be confirmed in writing by both parties.
· Where the notification of errors to a bidder causes them to withdraw their bid then confirmation of this withdrawal must be received in writing.
h) Where all the bids received require further clarification not involving prices and quantities but are around the scope and delivery of the good and services then the RO should consider whether to invite all bidders in to give presentations or alternatively to conduct site visits of each respective bidder in order to clarify outstanding issues. In all such cases the RO must conduct these checks with another officer nominated by the AD/HOS.
i) Where all the bidders raise a large number of queries or are seeking clarification of issues within the specification prior to the receipt of bids, the RO can also invite all bidders to a presentation. This would be carried out by the RO and one other officer in order to explain more fully the good/services required and answer questions of clarification. If this method is chosen then it is recommended that the period for receiving bids should be extended.
j) Where the RO puts in writing a point of clarification around the specification in response to a query from one bidder, all bidders should be informed.
k) All unsuccessful bidders should be informed of the results of the evaluation as soon as contract award is made.
10.13.2 NEGOTIATION (PRIOR AND POST RECEIPT OF QUOTATIONS)
(see Guideline Section 6)
a) Negotiation with a supplier/contractor prior to bids being submitted is not permitted UNLESS one of the exemptions applies in CSO 8 and they are the only bidder. In such circumstances a specification is still necessary but direct contact can be made with the contractor in order to negotiate the best possible deal prior to receipt of a formal bid. In these cases negotiations should be fully documented and carried out only by the RO and one other officer nominated by the AD/HOS.
b) Negotiation with a supplier/contractor after the bids have been submitted is not permitted UNLESS:
¨ They are the winning contractor after evaluation of all the bids.
¨ Other contractors are within 5% of the winning bid.
In these circumstances direct contact can be made with a bidder(s) in order to negotiate a better deal than already received. In these cases there must be documented reasons for why it is felt that further negotiation is necessary which are approved by the HOS. If such negotiation is then carried out the results should be fully documented and involve the RO and one other officer nominated by the HOS.
c) Where a revised bid is made during or from any negotiations this must always be confirmed in writing from the respective bidder.
10.14 CONTRACT AWARD
10.14.1 Before the award of the contract the RO shall ensure the following has been carried out:
a) Check that all bids have been evaluated according to the evaluation criteria
b) Check that budgetary provision is confirmed and is adequate for the winning bid
c) Check that all documentation relating to the bid is filed either in electronic or hard copy form.
10.14.2 Once this has been done the RO can contact the successful contractor/supplier and in every case MUST ISSUE AN OFFICIAL ORDER USING THE AGRESSO FINANCIAL MANAGEMENT SYSTEM to confirm the contract. Letters of intent shall only be used with the agreement of the Corporate and Community Law Manager and only in exceptional circumstances.
10.14.3 Where the successful contractor does not wish to undertake the contract the RO may go to the contractor assessed as second following evaluation. Written confirmation should always be sought where a contractor wishes to withdraw from the procurement process.
10.15 CONTRACT REGISTER
10.15.1 The Audit, Risk & Information Service will maintain a Corporate Contract Register on the CIS and Councils network. The purpose of this register is two-fold:
¨ Firstly to exercise control and ensure consistency in approach and;
¨ Secondly to help identify opportunities to formulate future strategic procurement decisions and so assist the Authority in maximising the value from the ‘knowledge’ within the register.
CORPORATE CONTRACT REGISTER
10.15.2 The register will be used to record basic details for all purchasing above £5K. However it can be used for any value and it is recommended that any capital expenditure is logged through this register. The basic details that will be recorded are as follows:
· Contract Reference (allocated electronically)
· Goods, works or services being purchased
· Responsible Officer
· Estimated Procurement Value
· Contract Period
· Budgetary Provision
· Evaluation Criteria
· Method of Contractor Selection
· Number Selected
· Number Returned
· Name of successful contractor
· Contract Value
· Award Date
10.16 CONTRACT MONITORING & EVALUATION
10.16.1 During the course of the procurement the RO shall monitor the performance of the contractor/supplier. Key areas are in respect of:
· Performance
· Compliance with contract specifications
· Price
· User satisfaction
· Ongoing best value and risk
10.16.2 Formal evaluation should always take place at the end of major projects and contracts involving all the relevant personnel and stakeholders. This is recommended in all cases but is mandatory where the cost of the contract exceeds £75,000.
10.16.3 Where the EXOR database is used the performance of the contractor should be entered through the relevant module. It is always advisable that if there are any significant positive or negative comments these are discussed with the contractor first during the course of the contract as part of good contract management. The contractor should be made aware of poor performance so that they have an opportunity to improve or address the concerns raised.
10.16.4 In many cases and for a wide variety of reasons contracts are not delivered exactly as specified. Examples and actions to be taken are as follows:
a) Variations to the scope of the contract after the bid has been agreed can occur but must be carried out through the RO via written instructions.
b) Any extensions of time to delivery of goods, works or services can occur but must be agreed in writing with the RO.
c) Any damages clauses which may be invoked must be controlled and authorised by the RO in writing to the contractor/supplier.
d) Any overspends resulting from any of the above changes must follow the reporting arrangements set out in the Council’s Budget Management Scheme.
e) The RO should inform their HOS immediately they become aware that a Council contractor has become bankrupt or goes into liquidation during the life of the contract or that they (or the Council) wishes to cancel an existing contract. In addition, they should also prepare a detailed report for the HOS of the financial and legal implications and recommended actions to resolve the situation. Legal services must be contacted anytime that a cancellation clause is planned to be invoked.
f) Any claims received from a contractor/supplier against the Council which exceed £75,000 must be referred to the Corporate and Community Law Manager for consideration of the Councils legal liability and Assistant Director (Finance) for financial consideration before any settlement is considered.
SECTION 6 - PROCUREMENT VALUE OVER £75K
11.1 For any procurement exercise, including the engagement and use of consultants, above £75,000 the following is mandatory – (Please ensure that you have viewed and understood the following flowchart)
11.2 Please ensure that you have checked that no corporate contract exists for the goods, works or services you require. If such a contract does exist it is a mandatory requirement that you use this contract. If you are in any doubt please check with your Finance Manager, Audit, Risk & Information Service or the Council’s Procurement Manager.
11.3 RO should also be aware of the Councils procedures in relation to Project and Risk Management and ensure they are followed in conjunction with these procedures. In addition the Councils VAT Accountant should be consulted when any project exceeds the EU limits to ensure the Councils position in relation to VAT is properly controlled.
11.4 IDENTIFY NEED
11.4.1 Prior to beginning any purchase, in a manner commensurate with the complexity and value of the contract, the following considerations should be taken (see Guideline Section 1)
¨ Appraise the need for the expenditure and its priority.
¨ Define the objectives of the purchase and how it meets your service needs
¨ Assess the risks associated with the purchase and how to manage them.
¨ Consider what procurement method is most likely to achieve the purchasing objectives, including internal/external sourcing or use of a Corporate Contract.
¨ Consult with users as appropriate about the proposed procurement method, contract standards, performance monitoring and user satisfaction feedback.
11.5 ESTIMATING COST & FUNDING
11.5.1 After having identified the purchasing need an estimate must then be prepared of the likely procurement value. To some degree this will dictate the process to be followed so it is important it is accurate as possible. Before making any purchase ensure that you have already identified the funding source and the correct cost centres and codes to be used within the Agresso Financial Management System. The different funding sources are:
¨ Revenue Budget
¨ Capital Budget
¨ Grant Funding
¨ Pooled Budgets
¨ Private Finance Initiative or Private Investment
11.5.2 The RO should ensure that where any funds are to be received from outside of the Council, i.e. Grant Funding or Private Investment, confirmation of those funds and how they are to be received is made in writing prior to the start of any procurement. On no account must any procurement at this level commence without the RO having an approved budget in place with all funding sources agreed. In addition where funds are to be received externally, the RO should be aware of the mechanisms of how and when these funds will be deposited within the Council.
11.6 NUMBER OF BIDS
11.6.1 Where the total procurement value, i.e. Council Budget plus any external funds is between:
¨ £75K and £EU Limits you need to invite at least 3 tender bids
11.6.2 It is expected that the RO will have confirmed that contractors are able and willing to bid prior to any invitations being issued. Therefore where less than the required minimum number of bids is received, then the RO should identify the reasons for this with the respective contractors. (Whenever contractor selection is made via the Council’s Accredited database, the identified reasons must always be entered in the contractor record within the database). These should be reviewed by each service on a regular basis to ensure that the likelihood of future occurrences are minimised so that the costs of tendering to that service are reduced.
11.6.3 Where it can be demonstrated that there are insufficient suitably qualified candidates to meet the competition requirements, all suitably qualified candidates must be invited. If this means that only one contractor is available an exemption must be sought.
EU THRESHOLDS/OUTLINE OF PROCESS -
11.6.4 At certain procurement levels EU Regulations apply and the processes laid down through EU law supercede many of the requirements detailed in CSO. Dependent on the EU procedure you follow these can affect –
o The number of bids you may invite and receive;
o Evaluation methods;
o Negotiation process;
o Tender Advertising process;
o Overall timetable for the procurement process.
If you believe your procurement will exceed these levels and is in the following categories you must apply the EU procedures:
o WORKS – This is where the contract is for carrying out civil engineering or building works – ABOVE £3.6 M (Approx depending on value of Euro)
o SUPPLY – This is for the purchase, lease or hire of goods and for any siting or installation of those goods - ABOVE £144K (Approx depending on value of Euro)
o SERVICES – This is when the Council engages a person or persons to provide services - ABOVE £144K (Approx depending on value of Euro)
When you have identified which category your procurement applies you must then consider which EU procedure to use. These include:
o OPEN PROCEDURE;
o RESTRICTED PROCEDURE;
o COMPETITIVE DIALOGUE;
o NEGOTIATED PROCEDURE
It is strongly recommended that framework agreements are considered irrespective of the procedure being adopted as substantial cost savings can be made.
It is vital you seek advice when you have to use an EU procedure and more information on the EU rules and process is provided through the attached link and is also detailed in each of the remaining procurement stages.
11.7 PROCUREMENT METHOD
11.7.1 Deciding on the procurement methodology and form of contract is of critical importance in order to obtain the best value and deliver the purchasing objectives. Each procurement exercise must decide on its own merits what the most appropriate method should be.
All RO must be aware that the Councils Procurement Strategy promotes the use of Partnering wherever possible and serious consideration must therefore be given to this approach. It is also strongly recommended that you consider the use of framework contracts to reduce the costs of future tendering exercises and allow officers to both better manage the procurement process and maximise service delivery benefits.
11.7.2 There are many different forms of standard contracts which can be used and use of some of these contracts such as NEC, JCT or PPC 2000 can dictate the methodology and approach you apply. In addition financial levels can determine a specific approach, i.e. EU rules. However in general terms the following are examples of different methodologies to procurement –
· In-house Procurement, i.e. after a best value or overview and scrutiny review
· External Procurement in open competition, i.e. advert in paper or trade journal
· External Procurement using EU procedures
· External Procurement with pre-assessed contractors, i.e. from an approved list
· External Procurement via Leasing or Hire-Purchase arrangements
· External Procurement via the Private Finance Initiative or Private Investment
· External Procurement via Partnering or Partnership contracts
11.7.3 In each case these methods can use a single or multi-stage approach, i.e. one or more stages of assessment depending on the evaluation criteria. Often a multi-stage approach is only applied for high value contracts due to the cost of evaluation and RO should bear this in mind for procurement at this level.
11.7.4 If a multi-stage approach is decided upon or any procurement involves either private investment or any form or partnering or has to apply EU procurement rules it is recommended that a team is set up to manage the procurement process. This could include ANY of the following:
· Executive Member and/or Director/HOS
· Legal
· Finance
· Health and Safety
· Technical
· IT
· Customer/User
11.7.5 Irrespective of what approach is taken, the rationale for that decision must be documented in order to demonstrate to all stakeholders why we are procuring in a certain way.
11.8 SPECIFICATION & CONDITIONS OF CONTRACT
SPECIFICATION
11.8.1 In all cases at this financial level RO are required to complete a written specification (see Section 2 of Guidelines) and seek advice from Legal Services at the commencement of this exercise on contract conditions. Once the contract has been awarded rectification of mistakes or clarification of ambiguous statements may be costly and therefore this is a vital part of the procurement process.
11.8.2 In many cases the specification will be dictated by the form of contract being used and therefore if a standard form of contract is utilised then this requirement maybe satisfied. Legal Services must be contacted to agree the standard contract conditions to be included.
11.8.3 However if no standard form of contract is used then the RO must seek advice from Legal Services before detailing in writing what goods, works or services are required and how they should be delivered. This would normally include consideration of the following:
· Determine who should be involved in drafting the specification
· Measuring and/or quantifying the work to be done or goods supplied
· Deciding on the frequency/timing of service
· Identifying and defining standards and monitoring arrangements
· Deciding on the approach, i.e. Input, Output based or Method statements
· Deciding on the level of detail to which the specification must go
· Detailing the goods, works or services and payment terms
· Detailing any performance measures and any mechanisms to reward or penalise
· Detailing any incentives or performance based mechanisms linking to KPI’s
11.8.4 If there is any doubt as to what detail should be provided, advice should always be sought from any service based procurement specialists, Finance Manager, Legal Services, Audit and Risk Management or the Councils Procurement Manager.
CONTRACT CONDITIONS
11.8.5 In addition contract terms and conditions must also be included (see Section 3 of Guidelines) and advice should be sought from Legal Services in relation to the adoption and wording of any of these clauses. Contract conditions usually include the following areas:
¨ Details on whether the contract can be sub-let or use of sub-contractors
¨ Insurance requirements (see Section 4 of Guidelines)
¨ Bonds and Parent Company Guarantees
¨ Health and Safety requirements (see Section 11 of Guidelines)
¨ Equalities requirements (i.e. Race, Disability etc) (see Section 7.3 of Guidelines)
¨ Data Protection and Freedom of Information requirements
¨ Termination/Cancellation clauses (see Guideline 3.6)
¨ Rights to inspection of records
11.8.6 Every contract exceeding £150,000 shall be executed under seal and shall be consecutively numbered and recorded. The seal must not be fixed without prior authority of the Council or Officer acting under delegated powers. A contract must be sealed where:
· The Council wishes to enforce the contract for more than 6 years after its end, or
· The price paid or received under the contract is a nominal price and does not reflect the value of the goods, works or services, or
· Where there is any doubt about the authority of the person signing for the other contracting party.
11.8.7 Where contracts are completed under seal, it is recommended that the relevant Director or HOS shall in addition certify the contract.
11.8.8 Every other contract at this level must be signed by the relevant Head of Service or Director, except that in an emergency contracts awarded need not be in writing before the commencement but must be confirmed in writing as soon as possible.
11.8.9 The RO must ensure that the person signing on behalf of the successful Contractor has authority to bind the contractor.
11.8.10 All contracts must be documented and signed prior to the supply, service or construction work commences, except in exceptional circumstances and then only with the written authority of the relevant Head of Service. An award letter is insufficient.
11.8.11 All contract documentation relating to the successful tendered must be retained for a period of 6 years following the date of the final payment and 12 years when the contract has been made under seal. All documentation relating to unsuccessful tenderers must be retained for a period of 1 year.
11.9 EVALUATION CRITERIA
11.9.1 Deciding on the criteria to be used to evaluate bids from suppliers or contractors is another important area which must be decided upon before any contract documentation is completed (see Section 5 of Guidelines). It is also advisable to include the process of evaluation within any documentation sent to potential contractors or suppliers in order to ensure fairness and enable them to focus on the most important aspects of the bid.
11.9.2 Traditionally ‘lowest price’ has been the standard criteria used to assess bids however this is no longer the case as best value must now be demonstrated. Therefore one or several of the factors detailed below must be considered and it is up to the RO to decide on the criterion to be used.
11.9.3 Where a multi-stage process is being used and a team of officers are involved in the process it is mandatory that the criteria and process of evaluation are fully documented and approved prior to any issue of documentation. These criteria and all assessment documentation should also be available for inspection.
11.9.4 Again, dependent on the value of the contract the RO must consider the amount of resource and effort invested in the evaluation process against the benefits which might be delivered and size of the contract. This is especially important where price/quality models are used which include weighted factors. Often these can be very complex and the RO must ensure all officers to be involved in the process fully understand the process of evaluation.
11.9.5 In all cases, the aim of the procurement should be to contribute to the achievement of the service and corporate objectives and therefore the following factors should be considered as criteria, which must be used to evaluate bids –
· Lowest Price – Where payment is to be made by the Council
· Highest Price – Where payment is to be received by the Council
· Whole-Life Costing
· Quality of goods, works or services
· Quality of service provision
· Running Costs
· Technical merit
· Previous Experience
· Environmental considerations/Sustainability factors
· Local Suppliers/Contractors
· Aesthetic and functional characteristics
· Health & Safety issues
· Equalities Issues
· After-sales and technical assistance
· Site-Visits and Presentations
· Quality Standards (National and European)
· Financial Standing
· Risk Management experience
· Project Management experience
· Partnering Experience
· Resources and skills
11.9.6 The Councils Procurement Strategy has detailed that the following must be considered for procurement at this level:
a) Use of SOAP (Service Option Appraisal Pack)
b) Use of Rethinking Construction Principles to construction projects at this level.
c) Assessing procurement on a Whole-Life Costing basis whenever the procurement value exceeds the EU levels (see 11.6.3).
11.9.7 What is SOAP?
The Service Option Appraisal Pack is a document developed by the Council and should be completed (see Guideline Section 15) by services as part of their Best Value Review, or earlier where:
¨ Contracts are reaching their end or a review point
¨ Particular difficulties are experienced, for example in:
- meeting performance targets.
- recruiting and/or retaining staff
- attracting or resourcing investment.
¨ Procurement or partnership opportunities emerge.
¨ Opportunities to bid for, or attract external funding emerge.
11.9.8 What is Rethinking Construction?
This has now been re-named as ‘Achieving excellence in Construction’. It was launched in 1999 and sets a route map with challenging targets under four main headings:
1. Management
¨ Commitment and Leadership
¨ Empowerment and Skilling
¨ Consistent and skilled project management
2. Measurement
¨ Standard KPI’s
¨ Post Project Implementation reviews
¨ Client Performance Surveys
3. Standardisation
¨ On procurement decisions on total value for money
¨ On use of risk and value management
¨ On output/performance specifications
¨ On Whole Life Costing
¨ On robust change control
¨ On Information Technology and Document handling
4. Integration
¨ Teamwork and partnering
¨ Focus on design and build, PFI, design and build and maintain, prime contracting
More details, checklists and toolkits can be found at www.constructingexcellence.org.uk
11.9.9 What is Whole Life Costing?
There are a number of definitions for whole life costing, but one currently adopted is:
“The systematic consideration of all relevant costs and revenues associated with the acquisition and ownership of an asset”.
Essentially whole life costing is a means of comparing options and their associated cost and income streams over a period of time. Costs to be taken into account include both initial capital or procurement costs, opportunity costs and future costs. Only options which meet the performance requirements for the built asset should be considered – those with lower costs over the period will be preferred.
Initial Costs – Include design, construction and installation, purchase or leasing, fees and charges.
Future Costs – Include all operating costs, such as rent, rates, cleaning, inspection, maintenance, repair, replacements/renewals, energy and utilities use, dismantling, disposal, security and management over the life of the built asset. Loss of revenue may also need to be taken into account – for example to reflect the non-availability of the revenue-generating building during maintenance work for example.
The timing of future costs must be taken into account in the comparison of options. Future cost flows are discounted by a rate that relates present and future money values – which may include an allowance for inflationary changes.
Opportunity Costs – Represent the cost of not having the money available for alternative investments (which would earn money) or the interest payable on loans to finance work.
There is a growing awareness that unplanned and unexpected maintenance and refurbishment costs may amount to half of all money spent on existing buildings. Estimates of the value of the unplanned portion in UK construction output, range from £8 Billion to £20 Billion per annum.
11.10 CONTRACTOR SELECTION
11.10.1 Below EU Thresholds the following needs to be considered. Deciding on the method of contractor selection is one of the final key stages to be performed in order to complete the preparation for a successful procurement exercise. Identifying your market and potential suppliers is not always straightforward and so the following methods are available for use. (Please note that where EU limits are exceeded the process in 11.10.4 MUST always be followed).
11.10.2 Using Supply2.gov.uk
Created by the Enterprise Directorate www.supply2.gov.uk has been designed specifically to ensure that small businesses have the opportunity to win a larger share of lower value (typically below £100K) public sector contracts. Using Supply2.gov.uk is free and is recognised as best practice by both businesses and Government, which regard the portal as a useful and effective tool for providing a route to help small businesses thrive and grow. An official interpretative document published by the European Commission has uniquely recognised Supply2.gov.uk as a best practice means for public authorities to advertise their lower-value contract opportunities to businesses.
11.10.3 Open Advert in a trade journal or local or national newspaper
This is the traditional method chosen where there is no identified supplier or little knowledge of the potential market. Often this will be used for ‘one-off’ procurement exercises where none of the other methods below can be used. Despite this the RO should make every attempt to identify the market using knowledge of other council officers, other local authorities, use of the Internet and national best practice organisations in their own service area.
All that is required is that an open advert is placed detailing the basics of the contract, timeframe of response and where expressions of interest or contract documentation or further information can be obtained.
11.10.4 Advert in OJEU for either Open, Restricted, Negotiated or Competitive Dialogue EU procedure
When one of the financial thresholds detailed in section 3 above are exceeded one of the following methods must be chosen:
· OPEN – Advertise in OJEU and any company who replies to the advertisement can tender.
· RESTRICTED – Advertise in OJEU and companies express an interest in tendering in response and after a preliminary vetting procedure (limited to financial & technical capability) a short-list of companies are invited to tender. (Similar to the select list procedure below)
· COMPETITIVE DIALOGUE – Advertise in OJEU and companies express an interest and following a selection process the authority enters into dialogue with bidders to develop one or more suitable solutions for its requirements and on which chosen bidders will be invited to tender
· NEGOTIATED – The Council enters into negotiations with usually at least 3 companies before awarding the contract. Concrete reasons for using this method must be documented and advice sought from Legal Services because the scope for proceeding is limited both under EU regulations and CSO
Within the Council, the Restricted procedure is normally used and recommended, as this provides the most manageable method of organising a tender. We also recommend the use of Framework Contracts to reduce future tendering costs
11.10.5 Use of an approved Council Accredited Database (Exor/Sinclair)
This method is the long-term preferred method for all procurement within the Council. The system is currently being jointly managed by Property and Transportation and Highways and contact should be made with those Services in the first instance for further details of its operation.
In summary the system contains a listing of accredited suppliers and contractors over a vast range of procurement categories. It is a national database used by a wide range of private and public sector organisations and all checks, vetting and administration of the system is carried out externally. This not only saves the cost of advertising and time spent in identifying suitable contractors but also ensures we are only using suppliers who have already met basic quality standards and demonstrates integrity and quality is built in to our processes.
Use of the system is simple and straightforward and allows short-lists to be drawn up almost immediately of accredited contractors. As a general rule when drawing up shortlists the RO – if possible - must ensure they do not select the same contractors every time they go out for quotes. Normally the successful contractor from a previous project should be chosen, however it is important that rotation of contractors on the database is carried out in order to demonstrate fairness to all.
11.10.6 Use of an approved Council Select List
This method is used to generate a list of contractors for a specific job. This will usually involve a 2 stage process of expressions of interest and initial evaluation followed by submission of detailed bids and possibly presentations. It is usually used for large value contracts where a higher level of vetting and scrutiny is required and more stringent quality checks are included.
11.10.7 Use of an approved Council Standing List
This method is used in specific service areas where there is an ongoing purchasing need and saves the cost of repeatedly going out to open advert. The list is developed and maintained in-house and will normally contain a number (usually up to 10) contractors or suppliers who have been internally accredited to provide goods, works or services in that area. Selection of contractors from that list will then be on a rotational basis normally including the winning contractor from the last contract. Use of such lists is limited normally to very specialist areas where the Exor list in 11.10.4 cannot supply any contractors.
It has advantages in that more local factors can be included to reflect service needs however the cost of maintaining such a list can outweigh any benefits. It is recommended however that if such a list is in existence it should be used.
11.10.8 Use of an approved National List (S-CAT/L-Cat/Constructionline)
S-CAT
This method can be used where it is difficult to identify a local market or for one-off exercises or where the Exor list cannot satisfy the need.
In summary the S-CAT list is a catalogue based procurement facility providing public sector organisations with a simplified means of procuring and contracting from a wide range of Business, Professional and IT Consultancy and Specialist services from a variety of providers.
The key benefits apart from the saving of time and resource are compliance with EU procurement regulations and the ability to call-off urgent requirements quickly. Its range of services are:
¨ IT Consultancy, Services and Related Products
¨ Human Resources
¨ Management and Business Consultancy
¨ Financial Services
¨ Geographic Information Services & Systems
¨ Business Information & Research
L-CAT
L-Cat is a series of Framework Agreements, which have been established by OGCbuying.solutions in collaboration with the Treasury Solicitors Department and the Department for Education and Skills. It is a new and innovative arrangement offering easy access to value for money external legal services.
L-Cat reduces the cost and time associated with the procurement of legal services by offering competitively tendered framework agreements in an on-line directory. The experience, expertise and commitment to quality of all service providers have been assessed at the time of the initial completion.
L-Cat is available to use by Government Departments, Executive Agencies and Non Departmental Public Bodies.
L-Cat has 7 categories. There are a range of legal service providers within each category all of which have signed up to the Framework terms and conditions. Its range of services which can be found on www.ogcbuyingsolutions.gov.uk/LCat/ are-
¨ IT, Telecommunications & E-Commerce
¨ Property & Estates
¨ Human Resources
¨ Construction
¨ Company and Corporate Matters
¨ Financial and Banking Matters
¨ General Commercial Matters
Constructionline
This is a database very similar to the Exor database detailed in b). It was originally a government backed national database of accredited contractors in response to various national reviews. Its development was however slow and it is now run by Capita on a commercial basis. The system is available for use within the Council and is used as a backup to the Exor system.
11.10.9 Use of a single supplier from a ‘Corporate Contract’ or Long-Term Contract
This method of procurement should be used where the purchasing need matches the goods, works or services currently being supplied by either of the following methods can be adopted:
· In respect of the Corporate Contract where the goods, works or services required match those supplied by the Corporate supplier, that supplier MUST be used.
· Where a long-term contract exists in a service area, i.e. 5 year repair and maintenance contract then if the goods, works or services required match those already being supplied under contract then that contractor may be approached to supply a bid if the original contract permits the provision of additional goods, works or services. The RO should always consider the need to obtain additional bids - to demonstrate VFM - especially for higher value contracts.
11.11 ISSUE OF TENDER/BID INSTRUCTIONS
11.11.1 When all the previous procurement stages have been completed, invitations to tender can be made, depending on the method of contractor selection detailed in 11.10 above.
11.11.2 Where EU Rules are not being followed the RO should allow at least 3 weeks for tenders to be returned in the instructions to tenderers.
Bid/Tender Instructions
a) The tender instruction must include a specification with contract terms and conditions which clearly and accurately describes the Council’s requirements in sufficient detail to enable the submission of competitive bids.
b) The Tender instruction should include contact details from where the specification and other contract details can be obtained.
c) The specification, terms and conditions and bid instructions can be issued in hard-copy form or electronically if necessary. It is advisable to use electronic methods where appropriate to both speed the process up and save on costs and time. However RO should ensure that in these cases they ask for a confirmation e-mail to be sent by the relevant bidder confirming receipt of documentation.
d) All tenders have to be returned to the same place with a closing time and date which is the same for all. Bids can be returned in hard copy form or electronically.
e) Except where the Open procedure applies (EU), all candidates invited to provide a quotation or tender must be issued with the same information at the same time and subject to the same conditions. Any supplementary information must be issued on the same basis.
f) Tenderers should be asked to declare that the tender content, price or any other figures or particulars concerning the tender have not been disclosed by the tenderers to any other party (except where such a disclosure is made in confidence for a necessary purpose)
g) All contractors/suppliers must be informed that they cannot ‘qualify’ their bid in any way or be accompanied by any covering letter or any statement that could be construed as placing it on a different footing from other bidders. Any such bids can be rejected by the Council immediately.
h) All contractors/suppliers cannot change the terms and conditions laid down within the specification.
i) All contractors/suppliers must be told that ‘the Council is not bound to accept any quotation or tender’
11.11.3 The following table details the timescales when EU Rules are being followed –
|
Procedure |
Text |
Days |
|
Open |
Minimum time for receipt of tenders from date contract notice sent |
52 |
|
|
Reduced when prior information notice (PIN) published (subject to restrictions) to, generally, -
And no less than - |
36
22 |
|
Restricted |
Minimum time for receipt of requests to participate from the date contract notice sent |
37 |
|
|
Minimum time for receipt of tenders from the date invitation sent |
40 |
|
|
Reduced when PIN published to generally –
An no less than - |
36
22 |
|
Restricted Accelerated |
Minimum time for receipt of requests to participate from the date contract notice sent |
15 |
|
|
Minimum time for receipt of tenders from the date invitation sent |
10 |
|
Competitive Dialogue and Competitive negotiated |
Minimum time for receipt of requests to participate from the date contract notice sent |
37 |
|
Competitive Negotiated Accelerated |
Minimum time for receipt of requests to participate from the date contract notice sent |
15 |
11.12 RECEIPT OF TENDERS/BIDS
11.12.1 The RO must decide in what format tenders are to be received, i.e. in hard copy form or electronically. The process to follow in each case is as follows –
HARD COPY (see Guidelines Section 21)
11.12.2 All tenderers must be given the same time, date and place to which tenders must be returned. A tender envelope with the contract reference should be supplied with a pre-printed address. The return time is recommended to be 12 Noon to coincide with the opening times and availability of staff within the Councils post rooms.
11.12.3 All tenders must be returned to the respective post room at either the Guildhall or Riverside in a sealed envelope, clearly marked for the attention of the Administration Manager who will be responsible for their security until the appointed closing date.
11.12.4 Receipt of tenders must be:
· Date Stamped with the time of receipt recorded
· Initialled by the receiving officer
11.12.5 Following the prescribed closing date/time all tenders shall be opened at the same time and place in the presence of a member of the Audit and Risk Management service. The RO must arrange the tender opening with Internal Audit.
11.12.6 The following details must be recorded on the Corporate Tender Opening Form –
· Name and estimated value of the contract
· Executive Portfolio holder or Service
· Closing date and if tenders were received on time
· Name of each tenderer
· Tender amount/details from summary page and the order in which tenders were opened
· Record of all tenders not received (NTR will be entered)
· Each tender shall be date stamped and initialled by all persons present at the opening on the tender summary page
· The tender opening form will then be signed and dated by those officers present
11.12.7 Any qualified tender or tender received after the closing time/date shall be recorded on the tender opening form but disqualified unless in exceptional circumstances. Those circumstances must be detailed in a report from the RO to the their relevant Head of Service who will make a decision as to whether the tender is deemed acceptable.
ELECTRONIC
11.12.8 Where tenders are to be submitted by e-mail then they must be submitted to only one e-mail box which is only accessible by officers independent of the process. For the purposes of these CSO that shall be officers within Audit & Risk Management as they conduct the tender opening procedure.
11.12.9 All tenderers must be given the correct e-mail reference with the instructions to send their tender to this e-mail box by a specific time/date using the contract reference in the title of the e-mail. This is a mandatory requirement to ensure that only those e-mails with the correct contract reference in their heading shall be opened. Failure to do this may prejudice not only that particular contract but affect other tenders being received into the same e-mail box.
11.12.10 E-Mails and relevant attached bid information will then be opened as detailed in the ‘HARD COPY’ section above. In addition the same details will be detailed on the Corporate Tender Opening Form.
11.12.11 When all tender e-mails have been opened they will be forwarded to the RO who will then issue a confirmation e-mail to the respective tenderers to inform them their bid has been received and is being evaluated.
USE OF E-AUCTIONS
11.12.12 Electronic reverse auctions (E-Auctions) are a growing method of submitting bids under which contractors use secured Internet based technology. The contractors then compete in real time by bidding against each other over a short period of time. This can mean major cost savings and efficiencies being delivered to the Client well in excess of more traditional methods.
11.12.13 At this point in time the Council does not have this technology, however when this becomes available this method will also be allowable subject to suitable checks over the controls in the system and software. The involvement and agreement of IT, Legal Services, Audit and Risk Management and the Council’s Procurement Manager must be sought prior to commencing any such exercise.
11.13 BID EVALUATION, NEGOTIATION AND CLARIFICATION
11.13.1 EVALUATION & CLARIFICATION (see Guideline Section 5)
a) All received bids must be assessed in line with the evaluation criteria (CSO 11.9)
b) All information should be kept confidential until the evaluation process is complete.
c) All officers involved in the evaluation process should ensure that all queries are directed through the RO and should not make contact with other council officers not involved in the process or the bidders direct.
d) The results of all evaluations should be clearly documented and where applicable certified by the officers involved in the evaluation process.
e) The RO should detail in writing the reasons for nominating the winning bidder before awarding the contract.
f) For all bid submissions the RO shall insure that the bids are compared with any estimates and the budgetary provision. The budget-holder must always be informed if the bid exceeds the budget in question and the budget-holder shall confirm in writing to the RO whether the purchase should continue or whether amendments in the scope of the contract should be made in order to meet the budget allocation.
g) For all bid submissions the RO shall check for arithmetical & technical accuracy on every rate and calculation. Where errors are identified the bidder shall be informed of the details of these errors as follows.
· If an error is identified but the overall price is unaffected then the bidder shall be informed and asked to confirm their bid at the original price.
· If an error is identified that does affect the overall price then the bidder shall be informed and asked either to confirm their bid at the original prices or withdraw or to correct the error and agree a revised bid price.
· Correction of all errors should be confirmed in writing by both parties.
· Where the notification of errors to a bidder causes them to withdraw their bid then confirmation of this withdrawal must be received in writing.
h) Where all the bids received require further clarification not involving prices and quantities but are around the scope and delivery of the good and services then the RO should consider whether to invite all bidders in to give presentations or alternatively to conduct site visits of each respective bidder in order to clarify outstanding issues. In all such cases the RO must conduct these checks with another officer nominated by the HOS.
i) Where all the bidders raise a large number of queries or are seeking clarification of issues within the specification prior to the receipt of bids, the RO can also invite all bidders to a presentation. This would be carried out by the RO and one other officer in order to explain more fully the good/services required and answer questions of clarification. If this method is chosen then it is recommended that the period for receiving bids should be extended.
j) Where the RO puts in writing a point of clarification around the specification in response to a query from one bidder, all bidders should be informed.
k) All unsuccessful bidders should be informed of the results of the evaluation as soon as contract award is made.
11.13.2 NEGOTIATION (PRIOR AND POST RECEIPT OF TENDERS)
(see Guideline Section 6)
If you are using the Negotiated Tender Route following EU rules then NONE of the following section will apply and you MUST abide by the EU rules.
a) Negotiation with a supplier/contractor prior to bids being submitted is not permitted UNLESS one of the exemptions applies in section 8 of CSO and they are the only bidder. In such circumstances a specification is still necessary but direct contact can be made with the contractor in order to negotiate the best possible deal, prior to receipt of a formal bid. In these cases negotiations must be fully documented and carried out only by the RO and one other officer nominated by the HOS.
b) Negotiation with a supplier/contractor after the bids have been submitted is not permitted UNLESS:
¨ They are the winning contractor after evaluation of all the bids.
¨ Other contractors are within 5% of the winning bid.
In these circumstances direct contact can be made with a bidder(s) in order to negotiate a better deal than already received. In these cases there must be documented reasons for why it is felt that further negotiation is necessary which are approved by the HOS. If such negotiation is then carried out the results should be fully documented and involve the RO and one other officer nominated by the HOS.
c) Where a revised bid is made during or from any negotiations this must always be confirmed in writing from the respective bidder.
11.14 CONTRACT AWARD
11.14.1 Before the award of the contract the RO shall ensure the following has been carried out:
a) Check that all bids have been evaluated according to the evaluation criteria
b) Check that budgetary provision is confirmed and is adequate for the winning bid
c) Check that all documentation relating to the bid is filed either in electronic or hard copy form.
d) A signed specification/contract has been prepared.
e) Where procurement has followed EU rules, the RO should allow at least 2 weeks between the decision to award and actual award (Alcatel Judgement).
11.14.2 Once this has been done the RO can contact the successful contractor/supplier and in every case MUST ISSUE AN OFFICIAL ORDER USING THE AGRESSO FINANCIAL MANAGEMENT SYSTEM to confirm the contract. Letters of intent shall only be used with the agreement of the Corporate and Community Law Manager and only in exceptional circumstances.
11.14.3 Where the successful contractor does not wish to undertake the contract the RO may go to the contractor assessed as second following evaluation. Written confirmation should always be sought where a contractor wishes to withdraw from the procurement process.
11.15 CONTRACT REGISTER
11.15.1 The Audit & Risk Management service will maintain a Corporate Contract Register on the CIS and Councils network. The purpose of this register is two-fold:
¨ Firstly to exercise control and ensure consistency in approach and;
¨ Secondly to help identify opportunities to formulate future strategic procurement decisions and so assist the Authority in maximising the value from the ‘knowledge’ within the register.
CORPORATE CONTRACT REGISTER
11.15.2 This register will be used to record basic details for all purchasing above £5K. However it can be used for any value and it is recommended that any capital expenditure is logged through this register. The basic details that will be recorded are as follows:
· Contract Reference (Electronically allocated)
· Goods, works or services being purchased
· Responsible Officer
· Estimated Procurement Value
· Budgetary Provision
· Evaluation Criteria
· Method of Contractor Selection
· Number Selected
· Number Returned
· Name of successful contractor
· Contract Period
· Contract Value
· Award Date
11.16 CONTRACT MONITORING & EVALUATION
11.16.1 During the course of the procurement the RO shall monitor the performance of the contractor/supplier. Key areas are in respect of:
¨ Performance
¨ Compliance with contract specifications
¨ Price
¨ User satisfaction
¨ Ongoing best value and risk
11.16.2 Formal evaluation should always take place at the end of major projects and contracts involving all the relevant personnel and stakeholders. This is recommended in all cases but is mandatory where the cost of the contract exceeds £75,000.
11.16.3 Where the EXOR database is used the performance of the contractor should be entered through the relevant module. It is always advisable that if there are any significant positive or negative comments these are discussed with the contractor first during the course of the contract as part of good contract management. The contractor should be made aware of poor performance so that they have an opportunity to improve or address the concerns raised.
11.16.4 In many cases and for a wide variety of reasons contracts are not delivered exactly as specified. Examples and actions to be taken are as follows:
a) Variations to the scope of the contract after the bid has been agreed can occur but must be carried out through the RO via written instructions.
b) Any extensions of time to delivery of goods, works or services can occur but must be agreed in writing with the RO.
c) Any damages clauses which may be invoked must be controlled and authorised by the RO in writing to the contractor/supplier.
d) Any overspends resulting from any of the above changes must follow the reporting requirements set out in the Council’s Budget Management Scheme.
e) The RO should inform their HOS immediately they become aware that a Council contractor has become bankrupt or goes into liquidation during the life of the contract or that they (or the Council) wishes to cancel an existing contract. In addition, they should also prepare a detailed report for the HOS of the financial and legal implications and recommended actions to resolve the situation. Legal services must be contacted anytime that a cancellation clause is planned to be invoked.
f) Any claims received from a contractor/supplier against the Council which exceed £75,000 must be referred to the Corporate and Community Law Manager for consideration of the Councils legal liability and Head of Strategic Resource Planning for financial consideration before any settlement is considered.
SECTION 7 - DISPOSALS
12.1 Disposal of goods or materials may be made in compliance with the Council’s Financial Regulation’ Code of Practice No. 14 – Inventories, either:
¨ when they are identified as obsolete, or
¨ Have no further use within a particular Council service.
12.2 Disposals of the following are not permitted –
Land and Property – Disposals of land and buildings must be referred to the Head of Property and Legal Services before any action is taken and shall only take place in accordance with procedures agreed by the Chief Property Officer and the Property Law Manager.
IT Hardware and Software – All potential disposals must be referred to the IT Helpdesk in the first instance before any action is proposed.
Failure to follow these instructions is a potential disciplinary issue.
12.3 For all other remaining assets the following process should be applied:
a) Place all assets for disposal on the Councils Intranet or via an e-mail to all Assistant Directors for re-distribution to services and NOT for private use. All such assets should be offered for a nil charge as the service has already deemed them obsolete. A recommended maximum period of 4 weeks should be allowed for expressions of interest from Services.
b) If no Council Service offers to take the asset after 4 weeks it can be offered either internally to staff or to a local auction house or charity. Items can then be placed internally on the CIS ‘Items for Sale’ Board on the Intranet, via E-BAY etc. All income should be received via a cheque or BACS payment to the Council.
c) If following the above 2 stages the Asset has not been redistributed or sold then Services must make arrangements for their disposal and destruction via Waste Services.
SECTION 8 - DEFINITIONS
8.1 Within these CSO, the following terms are used and mean:
|
Best Value |
- |
The duty on Local Authorities to secure continuous improvement in the way in which functions are exercised, having regard to a combination of economy, efficiency, and effectiveness as implemented by the Council. |
|
Bond |
- |
An insurance policy: if the contractor does not do what it has promised under a contract with the Council, the Council can claim from the insurer the sum of money specified in the Bond. A Bond is intended to protect the Council against a level of cost arising from the contractor’s failure. |
|
Candidate |
- |
Any person who asks or is invited to submit a quotation or tender for the supply of goods, works, materials or services, the execution of works and the awarding of concessions. |
|
Capital Expenditure |
- |
Budgets set by the Council for the following in relation to these CSO:
¨ The acquisition, construction, preparation, enhancement or replacement of roads, buildings and other structures.
¨ The acquisition, installation or replacement of movable or immovable plant, machinery and apparatus and vehicles and vessels. |
|
COP |
- |
Code of Practice |
|
Code of Conduct |
- |
The code regulating the conduct of employees of the Council. |
|
Constructing the team – Sir Michael Latham |
- |
www.constructingexcellence.org.uk
www.ogc.gov.uk |
|
Contract |
- |
An agreement made between two or more parties with the intention of creating a legal relationship, enforceable by law, for the supply of goods, works, materials or services, the execution of works and the awarding of concessions. Any agreement to supply goods, works, materials or services in return for payment that falls within this definition is a contract. As such, all parties to the contract have legally binding obligations to fulfil its conditions. |
|
Contract File |
- |
A written record of all matters relating to a contract. |
|
Contract Register |
- |
A comprehensive financial record of all Contracts valued in excess of £5,000. |
|
Contractor |
- |
The Council nominated supplier of goods, works, materials or services, the execution of works and the awarding of concessions.
|
|
Corporate Contract |
- |
A contract arranged for use by all Services of the Council i.e. stationery or mobile telephones. |
|
CSO |
- |
Contract Standing Order. |
|
Council Approved List |
- |
A list of suitable Contractors and Consultants drawn up for Corporate use. |
|
Director |
- |
Those officers identified in the constitution as being responsible for the management of contracts in their service area. |
|
EU Procedure |
- |
The procedure required by the EU where the Total Value exceeds the EU Thresholds, listed below. |
|
EU Threshold |
- |
With effect from January 2006, the contract value at which EU public procurement directives must be applied are:
- £144,371 (€211,000) for the supply of goods or services.
- £3,611,319 (€5,278,000) for building, engineering and construction contracts. |
|
Grant Funding |
- |
Monies received from Central Government for the funding of specific initiatives applied for by the Council. |
|
HoS (Head of Service) |
- |
Those officers identified in the constitution as being responsible for the management of contracts in their service area. |
|
Liquidated Damages |
- |
Liquidated Damages clause should be included in all construction contracts which exceed £75,000. Liquidated Damages should be calculated as a genuine pre-estimate of the monetary loss which the Council would sustain in the event of late completion of the work (except when extension of time applies). Liquidated Damages shall be deducted where the contractor fails to complete the contract within the time specified. |
|
Monitoring Officer |
- |
|
|
National Procurement Strategy for Local Government |
- |
See Attached
www.ogc.gov.uk |
|
OJEU |
- |
Official Journal of the European Union. |
|
Open Procedure |
- |
A procedure leading to the award of a contract whereby all interested persons may tender for the contract. |
|
Parent Company Guarantee |
- |
A contract which binds the parent of a subsidiary company in circumstances when the subsidiary company fails to do what it has agreed to under a contract, the Council will require the parent company to do so instead. |
|
Pooled Budget |
- |
An arrangement where the cost of a service or project is funded from other providers as well as the Council. Separate governance and management arrangements normally exist in these circumstances to manage this budget. |
|
Private Finance Initiative |
- |
Is a government initiative which provides one form of public-private partnership in which the Council can gain access to new or improved capital assets. Unlike traditional procurement, the Council does not buy the assets but rather pays for the use of the assets held by the private sector and the services associated with those assets. |
|
Private Investment |
- |
Funding obtained from any Private Sector source falling outside of the Private Finance Initiative. |
|
Quotation |
- |
A formal offer from a nominated Candidate to supply or purchase goods or materials, execute works or provide services at a stated price. |
|
Restricted Procedure |
- |
A procedure leading to the award of a contract whereby only persons selected by the Council may submit tenders for the contract. |
|
Re-thinking Construction – Sir John Egan |
- |
http://www.dti.gov.uk/construction/rethink/report/
www.constructingexcellence.org.uk
www.ogc.gov.uk |
|
Revenue Budget |
- |
A budget set by the Council for expenditure on recurring items, including the running of services. |
|
Review of local government procurement in England – Sir Ian Byatt |
- |
See Attached
www.ogc.gov.uk
|
|
RO (Responsible Officer) |
- |
Any permanent or temporary member of staff or any person properly authorised to carry out any of the Council’s contracts functions. |
|
S.151 Officer |
- |
The officer having responsibility for the purpose of Section 151 of the Local Government Act 1972 for the administration of the Council’s financial affairs. |
|
Tender |
- |
A formal written offer or a document prepared and issued by the Council based on a detailed description or specification of the goods, materials, services or works required. |
|
Total Value |
- |
The whole of the value or estimated value for a single purchase or disposal. |