Appendix 1 Contract Procedures

Procurement and Contracts Code Appendices

APPENDIX 1 – CONTRACT PROCEDURES

APPENDIX 2 – EUROPEAN UNION DIRECTIVES

ANNEX 2A – PART A SERVICES

ANNEX 2B PART B SERVICES

APPENDIX 3 – CONTRACT POLICIES – FURTHER INFORMATION AND GUIDANCE

ANNEX A – SLIDING SCALES FOR PROFESSIONAL INDEMNITY INSURANCE

APPENDIX 4 – CONTRACT MANAGEMENT

APPENDIX 5 – GUIDANCE FOR POST-TENDER CLARIFICATION (PTC) AND POST-TENDER NEGOTIATION (PTN)

APPENDIX 6 - GUIDANCE FOR TRANSFER OF UNDERTAKINGS (PROTECTION OF EMPLOYMENT) REGULATIONS 2006

APPENDIX 7 – PROTOCOL FOR CONTRACTS DELIVERED THROUGH THE CUSTOMER SERVICES INITIATIVE AGREEMENT

APPENDIX 8 – CITY COUNCIL CORPORATE SPONSORSHIP POLICY

APPENDIX 9 – CROSS BOUNDARY TENDERING

ANNEX A – CHECKLIST FOR CROSS BOUNDARY TENDERING

Appendix 10 – Property Division Related Matters

APPENDIX 12 – SUBMISSION, RECEIPT AND OPENING OF TENDERS

12A – Submission, Receipt and Opening of Tenders

12B - Submissions, Receipt and Opening of Tenders for Schools (Where the estimated value of the Contract is £30,000 or more)

APPENDIX 13 – GLOSSARY OF COMMON TERMS IN PROCUREMENT

APPENDIX 1 – CONTRACT PROCEDURES

Introduction

A.This Appendix discusses the procedures for contracts of three different values – £200-10,000, £10,000-30,000 and £30,000 and above. The requirements under the EU Procurement Directives are set out in Appendix 2, which must be used in addition to the guidance in this document.

Reporting

B.It is necessary to report to DCB/ CRB/ Members at various stages of the contract process. These stages include:

• Contract award;
• Performance monitoring;
• Extensions, variations and waivers;
• Re-let strategy;
• Approval of service levels; and
• When specific issues have arisen.

C.All reports should include a section which summarises the approval process and highlights considerations given during the approval, letting and monitoring processes. This may include DMT or Corporate Management Board. The key dates of each Board meeting should be included on the front cover of the report under the ‘Decision Maker’ heading. The cover clearance sheet in the Document Store must also be attached to all reports submitted to DCB. Reports relating to financial expenditure e.g. award of contract or variations must include a paragraph confirming that the relevant officer has the necessary authority in respect of the finance involved and for signing the contract or any deeds of variation or amendment.

D.The Document Store contains a number of Model Reports for use at various stages of the contract let, monitoring and management process. These must be used as a template for reporting.

E.All contract related reports to Cabinet Members must first be approved by the relevant DCB and where appropriate CRB. All contract related reports to the Cabinet Member for Finance and Support Services must also be cleared by CRB.

Contracts between £200 – £10,000

Contracts between £10,000 - £30,000

Quotes

F.A quote is a statement of the total costs that would be charged by a potential contractor for goods, works or services to the City Council. Upon receiving quotes NPOs need to make a judgement on which quote would provide the best value for money for the City Council. If a suitable contractor is not found then further quotes should be sought. Quotes must be given in writing (not email) and confirmed by a signature of an authorised officer from the potential contractor.

Minimum risk assessment for contracts £0-£30,000

G.If it is proposed to use a contractor or consultant who is not on the CompeteFor system, Chief Officers must:

• consider whether they are required to provide public liability, employer liability or professional indemnity insurance;
• consider what level of insurance is required;
• ensure the required level of cover is in place before the contract begins;
• where appropriate consider whether the contractor has suitable Health and Safety, Equality and Diversity, and Environmental policies to perform the individual contract; and
• undertake any financial checks that may be appropriate.

H.Guidance on insurance and risk management can be sought from the City Council’s Risk and Insurance Managers.

Contracts £30,000 and above

The diagram below indicates the steps to be followed for contracts with a value of £30,000 and above. There are additional requirements for EU Procurement, which are set out in Appendix 2.

1Step 1 - Identify and Define Business Need

1.1A business need is a departmental or organisational requirement that has future benefits for the operations of the City Council.

1.2Business needs can be identified in a number of ways. It may be that an existing contract has come to an end, or that a contract has failed to deliver the specified requirements. Other common forms of identification are through audits, consultations and reviews.

1.3The business needs should be defined in a high level business case. This may contain no more than a summary statement outlining the business need and possible options to meet that need. All that is needed is enough information so that decision makers can outline a way forward.

2Step 2 - Develop the Strategic Business Case

2.1The business case provides justification for the procurement; it also provides the basis for managing the delivery of the project to agreed quality standards, within the budget and on time. It starts as a high level summary and is developed into a Full Business Case. The strategic business case is a summary document, with enough detail to support an informed decision on whether to proceed with the project or to revisit the project scope.

2.2The strategic business case should:

• address how the scope of the proposed project fits within the existing strategies of the organisation;
• document the wide range of options that have been considered within the broad scope identified in response to the organisation’s existing and future business needs;
• make an assessment of affordability and available funding; and
• set out a high level plan for managing the project (for example, key roles, milestones, timescales and risks).

2.3The strategic business case must be approved by the Chief Officer or authorised officer to determine if the project is feasible.

2.4Throughout the contract management phase the business case should be used as a reference document to ensure that the project is still aligned with the strategic direction.

3Step 3 - Decide Procurement Strategy

3.1The procurement strategy focuses on establishing a clear definition of the project, a plan for its implementation and the key elements and criteria for decision making. This should be informed by a market sounding exercise and take into account sustainability, black and minority ethnic businesses, small and medium enterprises and disability considerations or determine whether a waiver should be sought. It also confirms that the budget (based on these indicative assumptions) remains affordable.

3.2Market Sounding

3.2.1The success in gaining benefits from contracting depends on an effective market and the willingness of contractors to submit bids. Market sounding is the process of assessing the reaction of the market (that is, the views of potential contractors considered collectively) to a proposed requirement and procurement approach. It brings contractor perspectives to public sector procurements at an early stage, offering potential benefits in terms of making the subsequent procurement process more focused and efficient.

3.2.2Market sounding focuses on contractors as a whole, rather than the merits of individual contractors. It includes no element of contractor selection (choosing suitable contractors) or bid evaluation (looking at proposals and prices). There is no commitment of any kind involved – on either side.

3.2.3It is vital to ensure that the market sounding process remains open, and that the potential contractors involved are treated with fairness and equality.

3.2.4It is essential for NPO’s to be informed about the size and capacity of the potential market for their contract to ensure they can obtain the best outcome for the City Council. Taking decisions in isolation from the market is unlikely to allow the City Council to make best value decisions in the delivery of procurement projects.

3.3Developing Specifications

3.3.1The specification sets out the City Council’s requirements for the service in terms of service levels, inputs and outputs, defined performance targets, timescales and respective responsibilities.

3.3.2The purpose of the specification is as follows:

• to provide sufficient detail for potential contractors to price the goods, works or services required;
• to allow the City Council to evaluate tenders;
• to allow contractors to determine inputs, where the specification allows;
• to define targets and standards that as outputs may be used to monitor the contract; and
• to address requirements for continuous improvement, where appropriate.

3.3.3There are several types of specification, including:

• Output/ Performance specification – documents the outputs required (the What);
• Method or Input specification – sets out the manner in which the service is to be performed (the How);
• Resource specification – the inputs required.

A specification can be a mixture of all the above.

3.3.4The specification should provide all the information that might affect a tenderer’s proposals and should cover all issues through to the contractor’s exit from the project.

3.4Budgetary Provision

3.4.1It is the responsibility of the NPO to check that there is a budget in place for the contract before the procurement process begins. DCBs do not have a role in respect of agreeing revenue and capital budgetary provision. Members agree the budget for the service. DCBs will not agree the award of a contract if there is no adequate budget in place.

3.4.2The Director of Legal and Administrative Services or the appointed external solicitors will require evidence that finance has been approved for a contract before they proceed with engrossment.

3.5Consultation

3.5.1Appropriate consultation with users and with other departments is important. DCB’s are likely to ask NPO’s about the extent of consultations before agreeing to a contract award.

3.5.2Consultation should be tailored to the service required taking account of any statutory requirements. Consultations on service requirements should be planned in advance and with an awareness of relevant stakeholders e.g. users. NPO’s should have a clear idea of the issues to be addressed, the questions asked and the queries that may conceivably arise.

3.6Transfer of Undertakings (Protection of Employment) Regulations 2006

3.6.1It is necessary to consider any potential implications of the Transfer of Undertakings (Protection of Employment) Regulations 2006. Guidance is provided in Appendix 6.

4Step 4 – Competitive Procurement

4.1.1This section covers the initial selection and assessment of contractors from the CompeteFor system or by advertisement. This is followed by the tender process where the tender documentation is issued to potential contractors and later received and opened. Finally, the tender responses are evaluated on the basis of the most economically advantageous tender and a full business case developed.

4.2Identifying Contractors

4.2.1Potential contractors should be identified through advertising the contract on CompeteFor with a related supplier questionnaire and industry related publication as indicated in paragraph 2.13 of the Procurement and Contracts Code, identifying suitable Corporate Contracts or Framework Agreements or by utilising the CSi agreement. If the CSi Contractor is selected the contract will not need to be tendered and preparation for a contract award can be undertaken. The CSi Contractor should be used where it is determined that it can offer value for money or a high quality of provision. This should be informed by market testing and Appendix 7.

4.3Supplier Questionnaires

4.3.1For contracts between £30,001 and EU thresholds, NPOs must develop supplier questionnaires in order to assess the capability of suppliers to deliver goods, works or services for the City Council. The supplier questionnaire should be specific to the contract opportunity and should assess both a company’s readiness to deliver the specific opportunity and ensure that it has the relevant policies and financial and insurance arrangements in place.

4.3.2In developing a questionnaire, the NPO must determine what questions are essential and non-essential for a company to deliver the contract.

4.3.3The NPO should determine what information should be validated following the creation of a supplier shortlist.

4.4Pre-Qualification Questionnaire

4.4.1For contracts that have been advertised on CompeteFor, the NPO and Strategic Procurement must assess the information submitted by suppliers to determine their business readiness to deliver the contract and confirm that it meets the appropriate City Council standards.

4.4.2A Pre-Qualification Questionnaire (PQQ) may be used at this stage and is a requirement for EU procurement. A PQQ assesses a company’s financial history and legal status as well as Health and Safety, insurance and technical references. An example of a PQQ can be found in the Document Store \ Corporate Contracts Information. This PQQ can be adapted for specific contracts. Matters addressed at the pre-qualification stage do not need to be revisited at the tender evaluation stage.

4.4.3A PQQ can be used in the restricted tendering route to reduce the number of tenderers to a manageable number, without jeopardising the competitive nature of the exercise and will be part of the shortlisting function.

4.5Contingencies

4.5.1Some contracts by their nature, e.g. building contracts, need a contingency to cover costs that are either unexpected or cannot be accurately quantified when the contract begins.

4.5.2Chief Officers may agree a contingency of either 10 per cent of the contract value or an upper limit of £5,000 for contracts worth less than £50,000, when tendering a contract. However, the existence of a contingency should not be referred to in any tender documents sent to tenderers.

4.6Shortlist Tenderers

4.6.1Tenderers should be shortlisted based on the experience, suitability, financial standing and technical expertise of the supplier. The outcome of the assessment of potential contractors should be recorded in writing. Notify suppliers of the outcome of the selection stage.

4.7Tender Reference Number (TRN)

4.7.1Before inviting tenders for contracts, officers must obtain a TRN from the Strategic Procurement Team, using the Standard Contract Control Document in the Document Store.

4.8Invitation to Tender

4.8.1Invitations to tender must be in writing and sent to a minimum number of tenderers, as detailed in the table below.

4.8.2Appendix 12A contains details on the submission, receipt and opening of tenders. Consideration should always be given to asking more than the minimum number of Tenderers to bid. The Invitation to Tender (ITT) must include:

• ITT response document (including evaluation criteria in priority order, tender instructions and tender timetable);
• Specification;
• Contract terms and conditions;
• Form of tender; and
• Pricing schedule.

4.8.3In the invitations to tender, tenderers must be asked to confirm that they have received the documents and intend to submit a tender. If their circumstances change such that they are unable to tender, they should inform the City Council as soon as possible, so that where appropriate and if time allows another contractor/consultant can be invited to tender in their place. Where appropriate NPOs are advised to have in place a ‘reserve list’ of potential contractors/ consultants who might be asked to tender to replace an original tenderer who has advised that they will not be submitting a tender.

4.9Late Tenders

4.9.1The City Council’s policy is that tenders received after the date and time specified in the invitation to tender shall not be accepted unless it meets one of the criteria specified in Appendix 12 paragraph 7. Any tender received after the date and time specified in the invitation to tender, and rejected, shall be opened for the purpose of identifying the tenderer; the tender shall then be returned to the tenderer with an explanation. A record of the person or body submitting the late tender shall be entered in the register of tenders.

4.10Tender Evaluation

4.10.1The tender evaluation should be based on the requirements of the specification. The evaluation criteria should be set out clearly in the contract documents and instructions. The criteria should be set out in priority order. Matters addressed at the pre-qualification stage need not be revisited at the tender evaluation stage. Each evaluation will depend on the nature of the contracted service but should include the considerations below.

• Price and financial issues;
• Adequate resources to deliver the required outcome;
• Delivery or completion date;
• Technical merit;
• Experience, competence and management qualifications and quality issues;
• Running costs including whole life costs and cost effectiveness;
• Policy issues including Health and safety, Equal opportunity and Environmental issues, Whistleblowing (seek advice from Internal Audit); and
• References.

4.10.2An assessment model based on its predetermined criteria and incorporating scores will help to provide an objective framework for evaluation.

4.10.3A clear audit trail is needed throughout the tender process to demonstrate a justification for the award and for audit purposes or in the event of a challenge from an unsuccessful tenderer. The audit trail will also need to include records of any post tender clarification or negotiation meetings.

4.10.4Some important early decisions:

• Decision making is based on logical proposals and contingency plans;
• The client side is clear about what is needed;
• The evaluation team is rigorous and thorough in its evaluation; and
• The tenderers have provided sufficient information in an accessible format.

4.10.5The tender evaluation process will be managed and co-ordinated by the NPO. The evaluation team must consist of at least two officers. It is important that financial, legal and health and safety advice is brought to the evaluation team where necessary and that such advice is included in the contract award report. The team will be expected to:

• Check to ensure that the tender conditions are met and that the tenders have not been “qualified” (see note below)
• Carry out an arithmetical check of the tenders
• Undertake a technical and quality assessment, including (where appropriate) an assessment of methods proposed and projections of future service requirements
• Undertake a financial assessment (usually by departmental finance team)
• Undertake post-tender clarification (where appropriate)
• Undertake post-tender negotiation (where appropriate)

4.10.6Guidance on Post-Tender Clarification and Post-Tender Negotiation is provided in Appendix 5.

4.11Qualified Tenders

4.11.1Qualified tenders are received from time to time by the City Council. Qualified tenders may or may not be considered. There are two key areas of judgement: