2.1 An overview of The Procurement Journey for Argyll and Bute
The Procurement Journey for Argyll and Bute Council (“the Journey”) closely follows the Scottish Government’s Procurement Journey, a tool developed and promoted since 2011 as part of the Public Procurement Reform Programme. This tool has been adapted to provide detailed guidance which supports the policies and objectives of this Council.
The Journey is intended to support all levels of procurement activity where there is not already a contract in place. Following the Journey will help achieve best practice and expected contract outcomes. It will also facilitate procedural consistency throughout the Council making the procurement process easier for tenderers, commissioners, procurement staff and contract managers.
By providing guidance, templates and standardised processes, the Manual should provide the user with an end-to-end guide for the procurement process from planning to delivery.
2.2 Planning Your Procurement
Planning is a critical success factor in any procurement. The earlier in the process that PCCMT are involved, the better to help avoid limiting options at too early a stage and achieve the outcomes that will best meet service needs and expectations.
2.3 Make or Buy Decisions
For many purchases there is essentially no real “make or buy” decision to be made. The purchase will be for a good, service or work that is completely outside the scope of what the Council as an organisation, produces.
There will in other cases, however, be a decision to be made over whether a purchase has to be made or whether there is internal capacity to deliver the supplies, services or works required. In such cases it is extremely important that the “make or buy” decision is reached before a formal tendering process is undertaken.
Where a “make or buy” choice results in the decision to “make” then no purchase has been made and none of the procurement rules apply. Therefore, in order to keep work “in house” the Council are not required under any procurement rules to make any value justification.
In terms of achieving overall Best Value for the organisation however, officers considering a “make or buy” decision will want to consider the following questions:
- Does the Council have available capacity to meet the requirements of the proposed purchase in house, to the required quality and within the required timescale?
- If so, does the Council’s in-house resource deliver this at a competitive cost that is comparable with the cost of purchase?
- Can the Council deploy additional resources to meet the requirements at a cost that is comparable to the cost of purchase?
Other considerations can be taken into account when justifying a decision to deliver a requirement in-house, even if costs are above cost of purchase while still within a competitive market range, such as safeguarding staff resources within the Council, and any other strategic considerations of senior management.
For the above comparisons the cost of purchase should be estimated from previous purchases or should be arrived at through other research. No formal tendering exercise will have been carried out at this point.
If a fully costed “make” option is prepared and there is a wish to compare this to a later tender price then this should form a control bid, which should be communicated within the tender documents. In these situations, it should be noted that the Council’s “in-house” price is not prepared in competition with external prices and it is in the Council’s overall interest if suppliers can submit successful bids in this situation.
From time to time, as part of an overall service review, the Council may wish to explore an option to have services delivered by another method. This may involve services that have previously been delivered by the Council itself, being opened up to competition from other sectors.
If a make or buy decision is anticipated the basis for the decision should be noted using the process and template for decision making within Template 2 – Make or Buy Approval Template to ensure proper procedure is followed and an audit trail of decision making is available.
2.4 How to Plan
The planning process is captured in an overarching Category Strategy and Commodity Sourcing Strategy covers the planning of separate tenders and frameworks.
Please see Supplementary Guidance Note 5 – Strategy Development for full information on the Category and Commodity Sourcing Strategy process, and the contents of the templates. Template 4 – Strategy Templates provides the documents to be used in the strategy stage dependant on value. Each template provides full guidance notes for their completion.
Early engagement with the PCCMT at the planning stage should avoid any delay to the process and allow a proper consideration of all the options available. It is essential that time is allowed for relevant market testing and lead times in contracts should be assessed to ensure that there is sufficient time for handovers to be completed and contract requirements to be fulfilled.
This should be taken into account in producing the Commodity Sourcing Strategy. As an example of timescales, a low value low risk procurement would use the Quick Quote process which can be carried out within a few weeks (depending upon the complexity and state of readiness of the specification) whereas a more complex tendering process takes around 9–12 months.
2.5 Is There An Existing Contract/Framework Provider?
Consider whether your requirement could be met through an existing Scottish, UK wide, sector led or local framework or contract which would provide best value. A framework contract is one where the main elements of the contract have been agreed and which set out the terms under which specific purchases (call-offs) can be made.
If not, and the contract value, including any recurring needs over a four-year period, does not exceed £50,000 (for supplies and services)/ £2,000,000 (for works) then generally the ‘Quick Quote’ facility will be the appropriate advertising route.
All contract opportunities over £1,000 will be advertised on Public Contract Scotland (PCS) portal. Using PCS is a way of ensuring a degree of transparency and a consistent approach amongst public authorities and provides an essential audit trail.
2.6 Which Route?
The Procurement Journey guidance should be used to ensure you select the most appropriate Procurement Journey Route:
2.6.1 Route 1 – Pricing Agreements
For step-by-step guide please see Supplementary Guidance Note 7 – Route 1 – Procurement Processes Explained.
2.6.2 Route 1 – Quick Quotes
For supplies and services the Quick Quote procedure should be used where possible for purchases between £1,000 and £50,000 using the Invitation to Quote (ITQ) Template within Template 5 – Route 1 – Pricing Agreement, ITQ, ITT & NCA Templates. For works the threshold is higher and the Quick Quote procedure is applicable for purchases between £1,000 and £2,000,000 (for detailed requirement, see Supplementary Guidance Note 7 – Route 1 – Procurement Processes Explained).
For Route 1 procurements, at least 3 formal quotes are required for all purchases or contracts over £1,000 unless an in-house provider or existing framework or contract is available.
This route provides guidance for procurements of relatively low risk, low value, and of a non-repetitive nature i.e. you should not place contracts for the same supplies, services or works on a number of occasions over 4 years unless you already have a framework in place.
2.6.3 Route 1 – Single Stage Tender Process
This process should be used for supplies and services contracts up to the value of £50k and for works contracts up to the value of £2,000,000 where it has been decided that the Quick Quote process is not appropriate as there is a requirement to advertise the procurement (for example where there are insufficient suppliers identified to be included within a Quick Quote distribution list). For the detailed requirements of this process, see Supplementary Guidance Note 7 – Route 1 – Procurement Processes Explained.
2.6.4 Routes 2 & 3
For use of Route 2 & 3, it is assumed that individuals will have been trained in all relevant regulations, the Procurement Journey and our applicable local procurement policies, guidelines and governance arrangements.
The same planning stages at 2.4 above should be followed. Services should not proceed without PCCMT involvement. The Reform (Scotland) Act 2014 introduces thresholds for regulated procurements above £50,000 for supplies and services and £2 million for works procedures set out here.
Routes 2 & 3 follow the stages below:
| Stage |
Title |
Supplementary Guidance Note/Template |
|---|---|---|
| 1 | Develop Commodity Sourcing Strategy |
SGN 5 – Strategy Development; Template 4 – Strategy Templates |
| 2 | Development of the procurement documents and issue |
SGN 8 – Routes 2 & 3 – Tender Development; Template 6 – Routes 2 & 3 – ITT Templates |
| 3 | Open Tender Returns and Evaluate |
SGN 9 – Routes 2 & 3 – Opening and Evaluating Returns; Template 7 – Police Check Template; Template 8 – Evaluation Matrix Templates; |
| 4 | Post Tender Clarification and tender review |
SGN 13 – Post Tender Clarification and Post Tender Negotiation (PTN); Template 10 – PTN Templates |
| 5 | Contract Award |
SGN 15 – Routes 2 & 3 – Contract Awards; Template 11 – CARR Templates; Template 12 – Outcome Notice Templates |
| 6 | Contract and Supplier Management |
SGN 16 – Contract and Supplier Management Toolkit; Template 14 – Contract and Supplier Management Templates |
The procurement function must operate within appropriate governance and risk management arrangements for the Council. The appropriate governance will help ensure probity, transparency and consistency of key procurement-related decisions. For large or politically sensitive projects following Routes 2 & 3 this will almost certainly mean setting up a UIG and having senior officer involvement. Consideration should be given to reporting mechanism and governance arrangements in the planning of the project.
2.7 Roles and Responsibilities
There are many stakeholders involved in procurement. The main roles of each are shown in Supplementary Guidance Note 4 – UIG Guide Roles and Responsibilities. Where there is cross-service spend then the instructing customer will normally be the Service with the biggest spend (unless otherwise agreed) for the purposes of approvals, CARRs and contract management responsibilities.
2.8 Engaging the Market
2.8.1 Annual Procurement Report:
An Annual Procurement Report must be published by the Council on regulated procurement activities as soon as reasonably practicable after the end of the financial year. The report must include a look back at the procurement activity over the year and a forward look which should include a summary of the regulated procurements the Council expects to commence in the next two financial years.
2.8.2 Prior Information Notice (PIN):
Buyers may issue a Prior Information Notice (PIN) for early market engagement, and/or as a call for competition to reduce procedural time limits (upon publication of Contract Notice) in restricted procedures or competitive procedures with negotiation, for regulated level procurements.
PINs will follow a standard form and will outline: who the buyer(s) is/are, what is required, the anticipated contract value, the type of contract, and when the requirement should be fulfilled.
The table below advises on the types of PIN and what/when they may be issued for:
| Type of PIN | Used for | Applicable to |
|---|---|---|
| PIN - Standard | Early market engagement e.g. market research questionnaires, advertising of supplier events. | Any unregulated and regulated procedure. |
| PIN – For reducing time limits | Early market engagement (as above), as well as a call for competition to reduce procedural time limits (upon publication of Contract Notice). This PIN must have been published for a minimum of 35 days before it can be used to reduce procedural time limits. | Restricted procedures or competitive procedures with negotiation, for regulated level procurements. |
The following are some further key notes about PINs:
- The PIN is valid for a period of twelve months from issue.
- The PIN does not create any commitment from the Council to proceed with a tendering exercise.
2.8.3 Request for Information (RFI) – Market Tests:
RFIs are primarily used to gather market information to help make a decision on what steps to take next. In addition to gathering basic information, an RFI is often sent to a broad base of potential suppliers for the purpose of conditioning suppliers' minds, developing strategy, building a database, and preparing for a future tender.
2.9 Advertising the Contract
The Commodity Sourcing Strategy will identify the tender procedure to be used commensurate with the tables at section 1.8. The most commonly used procedures are listed at (a) to (f) below. The Regulations provide for the following procedures
- (a) Open Procedure
- (b) Restricted Procedure
- (c) Single Stage Procedure
- (d) Dual Stage Procedure
- (e) Closed/Quick Quote Procedure
- (f) Frameworks which includes reference to Mini competitions
- (g) Competitive procedure with negotiation- use when justifiable
- (h) Competitive Dialogue – use when justifiable
- (i) Innovation Partnership - use when justifiable
- (j) Negotiated Procedure without prior publication – only in permitted instances
The key differences between the commonly used award procedures adopted by Argyll and Bute Council are summarised below.
2.9.1Open Procedure:
Relevant to regulated level procurements, above the WTO GPA threshold.
Under the open procedure all interested parties are entitled to request tender documents. In general, the use of the open procedure is not recommended as best practice except in cases where the market is extremely restricted in the number of likely bidders.
Where the open procedure is used, the capability is firstly assessed using the Single Procurement Document and if a pass achieved contract award criteria is thereafter evaluated on a Technical/Commercial basis, with the award going to the Most Economically Advantageous Tender (MEAT). This award criteria is the only way that procurements within the scope of Public Contracts (Scotland) Regulations 2015 may be carried out.
2.9.2 Restricted Procedure:
Relevant to regulated level procurements, above the WTO GPA threshold.
Under the restricted procedure, the Single Procurement Document (SPD) is used to allow suppliers to demonstrate their qualifications and how they are selected to bid. The SPD is mandated for use for all procurements with an estimated value of regulated threshold and above commenced on or after 18th April 2016. It is important to note that while a Technical/Commercial mix is used in tenders issued under the restricted procedure, no further judgements should be made on the bidder’s ability or capacity to perform the contract. Having gone through a selection procedure the short-listed bidders are deemed to be capable of carrying out the contract. Their approach to the contract may still be subject to scoring as part of a quality assessment.
2.9.3 Single Stage Procedure:
Relevant to regulated level procurements, up to WTO GPA threshold.
This is the national equivalent of the open procedure – all interested parties are entitled to request tender documents. In general, the use of the single stage procedure is not recommended as best practice except in cases where the market is extremely restricted in the number of likely bidders.
Where the single stage procedure is used, the capability is firstly assessed using the Single Procurement Document and if a pass achieved contract award criteria is thereafter evaluated on a Quality/Price basis, with the award going to the Most Economically Advantageous Tender (MEAT).
2.9.4 Dual Stage Procedure:
Relevant to regulated level procurements, up to WTO GPA threshold.
This is the national equivalent of the restricted procedure; the Single Procurement Document (SPD) is used to allow suppliers to demonstrate their qualifications and how they are selected to bid. It is best practice to use the SPD for regulated procurements below regulated thresholds.
It is important to note that while a Quality/Price mix is used in tenders issued under the dual stage procedure, no further judgements should be made on the bidder’s ability or capacity to perform the contract. Having gone through a selection procedure the short-listed bidders are deemed to be capable of carrying out the contract. Their approach to the contract may still be subject to scoring as part of a quality assessment.
2.9.5 Quick Quote Procedure:
Under the quick quote procedure, the tender documentation is to be issued to a restricted list of at least 3 suppliers with every effort normally being made to identify a minimum of 5 companies who may be interested in tendering.
Whenever possible, where the closed procedure is used, the contract award criteria should be based on a quality / price mix, with the award going to the Most Economically Advantageous Tender (MEAT). In other cases, where quality is an absolute (mandatory or legislative), award can be made on the basis of lowest price, provided it meets the legislated threshold.
The Quick Quote should normally be issued via the ‘Quick-Quote facility’ on Public Contracts Scotland.
2.9.6 Framework Agreements:
The Council is only allowed to participate in framework agreements that they have been named as part of from the offset, i.e. named on the contract notice during the advertising stage. This may be in the form of Framework Agreements specifically set up by the Council or Framework Agreements set up by other Contracting Authorities such as other Councils, Scotland Excel, Scottish Government, UK Government (Crown Commercial Services) and Procurement Consortium. If the service wishes to use a particular framework agreement, then they should contact their relevant procurement officer in the first instance, and they will check if the framework agreement can be used.
A framework agreement is often used where the extent of the purchase is not known or where it is anticipated that several suppliers will be engaged on the contract over a specific period of time. A framework agreement may be let to either a single economic operator or several economic operators. It is possible that a framework can be tightly specified in terms of unit price and deliverables, but this is not always the case. Where it is not possible to arrive at specific prices it is possible to apply only pricing to core items or indeed have quality only criteria for inclusion in the framework. In such case, selection to specific supply under the framework would be undertaken by mini bid, which may itself be price only or quality of submission for a specific supply.
The term of a framework agreement must not exceed 4 years, save in exceptional cases duly justified, in particular by the subject of the framework agreement.
2.9.7 Framework Agreement Call-Off Options:
Where framework agreements, set up by other Contracting Authorities are awarded to several economic operators, please consult the terms laid out in the framework agreement regarding call off methods. Generally, there are two options for awarding a contract (call-off) under a framework agreement;
- (a) Apply the terms of the framework agreement (Direct Awards)
- (b) Hold a mini competition
Under option (a) – where it is possible to determine the Best Value supplier as the tender assessed as having submitted the most economically advantageous tender from the pricing and quality submitted to get onto the framework agreement then direct award is the only option available. Suppliers may be ranked or non-ranked.
Where a framework agreement has ranked suppliers, the first ranking supplier would be directly awarded the requirement, where they can meet the requirements. If that supplier cannot supply or does not have capacity, then the next ranked supplier may be approached. This process can continue per ranked supplier, until a supplier that meets requirements, still providing Best Value is achieved. If no clear supplier can be found from this, then option (b) should be used.
Where a framework agreement has not ranked suppliers, it may still be possible to determine a supplier that provides Best Value, for example, by undertaking a desktop analysis based on the specific requirements. If no clear supplier can be found from this, then option (b) should be used.
Under option (b) - where the terms laid down in a framework agreement are not precise enough or complete for the call-off using option (a), a further or mini competition may be held with all those suppliers within the framework capable of meeting the particular need. It is important that all suppliers on a framework agreement are invited to take part in the mini competition in the first instance; assumptions should not be made regarding their capability.
Where a framework agreement is set up by the Council, call off methods, in line with Procurement Regulations, such as the above methods will need to be included in the terms of the framework agreement.
2.10 Other Considerations
2.10.1Benchmarking:
The primary concern of benchmarking is measuring and assessing performance against identified best practice, with the aim of developing ways of matching or bettering that performance.
Competition is not always a perfect measure and the lack of a ready market for some services combined with barriers to entry in some industries, means that competition does not always ensure value for money. Key indicators that competition is not perfect may include;
- Few available bidders
- One or two dominant suppliers
- Lack of new entrants to bidding lists
- Demarcation between suppliers
Public Contracts Scotland portal can be used as a tool to aid benchmarking recent contract awards can be identified which might suggest a similar way of working. The Scottish Procurement Information Hub holds the procurement spend by supplier for every Scottish public sector body and those spends, either collectively or individually for named organisations, by commodity category can be compared to our own.
2.10.2 Demand Management:
While procurement activity and strategic sourcing in particular focus on the price and quality of purchases that are made, demand management concentrates largely on the quantity that is purchased. The focus of demand management is on consumption.
Managing Consumption:
The greatest single cost saving that can be made from any procurement exercise is the single, simple decision made at the beginning of the process, not to make the purchase. This obviously is not a decision that is available on many purchases; otherwise saving money through procurement would be an extremely simple business.
While the Council will be initiating individual demand management programmes for areas of indirect expenditure the following principles should be applied generally to purchasing decisions. Some examples are provided below:
Paper and Stationery:
- The Council purchases paper and stationery from national contracts. Ensure that you are using the contracted supplier for all purchases.
- Ensure that the purchase is necessary and that no better alternatives are available from the large catalogue of stock that the contracted supplier has made available through the national contract.
Office Equipment:
- Printing, scanning and photocopying devices (multi-functional devices) are the largest items of office equipment used by the Council. The Council leases this equipment through a national contract. Please ensure that all purchases are made from the contracted supplier.
- The national contract is designed so that the supplier benefits from the number of prints, scans or copies produced rather than the number of multi-functional devices deployed across the Council. Reducing the number of devices benefits the Council through reduced leasing charges and benefits the supplier through reduced capital and maintenance costs. Ask for assistance from the contracted supplier in deploying the machines as effectively as possible within individual offices.
- Direct as much print as possible away from desktop printers to the contracted multi-functional devices and save money on print costs.
ICT Hardware and Software:
- Ensure that purchases of IT hardware and software are only made to meet a defined business demand and that specifications are tailored to the most cost effective means of meeting that demand.
- Always use the IT Service desk when purchasing IT hardware, software or peripherals to ensure that the specified equipment will be compatible with present and planned applications.
Consultants:
- Can the project be delivered in- house. Never employ a consultant in order to deliver more bodies on the ground, whatever the task. The Council has a large workforce with diverse skills and has access to temporary recruitment agencies who can supply staff to work under Council management at competitive rates - access Guide to recruiting agency workers on the Hub.
- Always have a clear specification of the work to be carried out and be aware of the clear advantages that the specialist skills of a consultant will bring to the task. Ensure the consultant is provided with a copy of the guide on engaging external consultants
- Ensure that the contract has clear and specified deliverables and that it is clear that those have to be met in order for payment to be released.
- Use Supplementary Guidance Note 19 – Guide for Consultants Engaged with Argyll and Bute Council.
2.11 Lessons Learned
Planning is a continual process and PCCMT should use lessons learned to inform current and future plans. Lessons learned reports should be prepared for all route 3 contracts, for route 2 contracts if there is a substantial issue in relation to quality, time or cost and a sample of route 1 contracts where considered appropriate by the Procurement Officer. The Lessons Learned Template within Template 14 – Contract and Supplier Management Templates can be utilised throughout the procurement process or at contract award stage
2.12 Contract and Supplier Management (CSM)
We are all experiencing increasing demands on our services as budgets are reducing and the Council needs to deliver significant savings as well as improving the quality and sustainability of what we provide. Procurement, and improved purchasing outcomes, are key in assisting the Council in delivering these objectives. Contract and supplier management (CSM) is a key component in ensuring that procured services provide best value for all stakeholders. The PCCMT has been rolling out a Project aimed at embedding CSM across all commercial contracts used by Services to ensure that this key component is met and best value achieved. To ensure effective contract management and compliance with Part E of the Council’s Contract Standing Orders a Contract Manager /Owner should be identified for every contract tendered or awarded.
Supplementary Guidance Note SGN 17 sets out how PCCMT can support the implementation of a consistent contract and risk management process across the Council and achieve objectives:
- To build good working relationships between parties;
- Proactively anticipating future risks and appropriately dealing with them in a manner consistent with the Council’s Risk Management Manual and SGN 17;
- Aiming for continuous improvement in performance over the life of the contract;
- Identifying and driving best value over the life of the contract; and
- Delivering community benefits for our local community.
Following agreed processes and using the related templates where appropriate and working with the PCCMT will enhance officers’ ability to manage Suppliers and deliver commercial contract objectives on time and within budget.
All contract implementation and management should be undertaken in line with Supplementary Guidance Note 17 – Contract and Supplier Management Toolkit.
