Local Government Staff Commission for Northern Ireland
Procurement Policy and Procedures
March 2012
CONTENTS PAGE
Abbreviations Commonly Found in Procurement 1
SECTION 1 – PROCUREMENT POLICY AND GUIDELINES
1.0 Rationale for Policy and Procedures 2
2.0 Background to Procurement 3
2.1 What is Public Procurement?
2.2 Guiding Principles of Procurement
3.0 Legal Framework 5
3.1 European Union (EU) Level
3.2 UK/Northern Ireland Level
3.3 EU Threshold Levels
3.4 Bribery Act 2010
4.0 Procurement/Purchasing Over EU Threshold Values 6
5.0 Types of Procurement Procedure 7
5.1 Open Procedure
5.2 Restricted Procedure
5.3 Competitive Dialogue
5.4 Negotiated Procedure
5.5 Framework Agreements
6.0 A Typical Procurement Process 9
7.0 Role of Central Purchasing Bodies and Agencies 11
SECTION 2 – LGSC PROCUREMENT GUIDELINES
1.0 Procurement Guidelines 13
1.1 Dealing with Suppliers
1.2 Best Value for Money
1.3 Single Tender Action
2.0 Procurement/Purchasing Under EU Threshold Values 14
3.0 LGSC Procurement Cycle 15
4.0 Other Procurement Issues 18
4.1 Use of Consultants
4.2 Economic Appraisals
4.3 Freedom of Information
4.4 Unsuccessful Bids and Complaint Handling
Appendix 1 – Procedure for Ordering Supplies/Services 22
Appendix 2 – Guidance Notes on the Use of Consultants 24
Appendix 3 – Policy & Guidance on Economic Appraisals 27
ABBREVIATIONS COMMONLY FOUND IN PROCUREMENT
Abbreviation Meaning
ADR Alternative Dispute Resolution
CoE Centre of Excellence
CoPE Centre of Procurement Excellence
CPD Central Procurement Directorate (NI version of OGC)
CPV Common Procurement Vocabulary
EJC European Court of Justice
EO Economic Operative - generic term for a Contractor/Service Provider or Supplier
FoIA Freedom of Information Act
ITT Invitation to Tender
ITT Response Tender Return or formal offer from an Economic Operator/Tenderer
KPI Key Performance Indicator
MI Management Information
OCB Other Contracting Body
OGC Office of Government Commerce (UK Government - Central Procurement) www.ogc.gov.uk
OJEU Official Journal of the European Union www.ted.europa.eu/
PBO Public Buying Organisation
MEAT Most Economical Advantageous Tender
NDPB Non Departmental Public Bodies
PIN Prior Information Notice (OJEU Tenders should be preceded by a Notice)
PPP Public Private Partnership
PQQ Pre Qualification Questionnaire – successful EO’s produces “candidates”
VFM Value for Money
WTO World Trade Organisation
SECTION 1
PROCUREMENT POLICY AND GUIDELINES
1.0 RATIONALE FOR POLICY AND PROCEDURES
In common with all public bodies in Northern Ireland the Local Government Staff Commission is subject to Northern Ireland Public Procurement Policy as agreed by the Northern Ireland Executive in 2002. In approving the policy the Executive took the decision that legislation was not necessary to ensure that Departments, their Agencies, NDPB’s and public corporations complied with the policy.
This is defined in Paragraph 6 of the Financial Memorandum for the Local Government Staff Commission (April 2009) as follows: “the LGSC’s procurement policies shall reflect the public procurement policy adopted by the Northern Ireland Executive in May 2002 (refreshed May 2009); Procurement Guidance Notes; and any other guidelines or guidance issued by Central Procurement Directorate (CPD) and the Procurement Board. The LGSC shall also ensure that it complies with any relevant UK, EU and international procurement rules” and
“Periodically and wherever practicable the LGSC’s procurement shall be benchmarked against best practice elsewhere and the LGSC should utilise the expertise of other public service procurement policies”.
This document is designed therefore to assist Commission Officers to determine the most appropriate method of procurement when purchasing goods and services in line with the above provisions in the Financial Memorandum.
2.0 BACKGROUND TO PROCUREMENT
2.1 What is Public Procurement?
Public procurement is “the process of the acquisition, usually by means of a contractual arrangement after public competition, of goods, services and works and other supplies by the public service”[1]. Examples of each of these different kinds of procurement are given below:
· Supplies procurement (office supplies, vehicles, hospital equipment)
· Services procurement (e.g. externally managed ICT systems, consultancy, full facilities management services), and
· Works procurement (e.g. construction & maintenance of the infrastructure and Government Estate).
This definition of public procurement covers both conventionally funded contracts and more innovative types of procurement such as Public Private Partnerships (PPP) and Private Finance Initiatives (PFI).
The procurement process spans the whole life of the product from conception and definition of need through to the end of the useful life of an asset or the end of a contract. It includes pre-contract activities such as market sounding, sourcing and post contract activities such as contract management and supplier relationship management activities.
2.2 Guiding Principles of Procurement
There are 12 guiding principles to govern the administration of public procurement:
1. Accountability: effective mechanisms must be in place in order to enable Officers and their equivalents to discharge their personal responsibility on issues of procurement risk and expenditure.
2. Competitive Supply: procurement should be carried out by competition unless there are convincing reasons to the contrary.
3. Consistency: economic operators should, all other things being equal, be able to expect the same general procurement policy across the public sector.
4. Effectiveness: public bodies should meet the commercial, regulatory and socio- economic goals of government in a balanced manner appropriate to the procurement requirement.
5. Efficiency: procurement processes should be carried out as cost effectively as possible. Where possible and allowed, Collaborative procurement is to be encouraged.
6. Fair-dealing: suppliers should be treated fairly and without unfair discrimination, including protection of commercial confidentiality where required. Public bodies should not impose unnecessary burdens or constraints on suppliers or potential suppliers.
7. Integration: the procurement policy should pay due regard to the Commission’s other economic and social policies, rather than cut across them.
8. Integrity: there should be no corruption or collusion with suppliers or others.
9. Informed decision-making: public bodies need to base decisions on accurate information and to monitor requirements to ensure that they are being met.
10. Legality: public bodies must conform to the European Community and other legal requirements.
11. Responsiveness: public bodies should endeavour to meet the aspirations, expectations and needs of the community served by the procurement.
12. Transparency: public bodies should ensure that there is openness and clarity on procurement policy and its delivery.
3.0 LEGAL FRAMEWORK
3.1 European Union (EU) Level
The internal market of the EU is a single market in which the free movement of goods, services, capital and persons is ensured.
Northern Ireland Public Procurement Policy emphasises that public sector organisations are responsible for ensuring that they comply with the law on procurement. The legal framework within which public sector procurement operates is as follows:
· EU procurement rules (the Treaty and procurement directives)
· international obligations, notably WTO agreements
· specific domestic legislation, including subordinate legislation implementing directives;
· contract and commercial law in general
· relevant European Court of Justice case law domestic case law.
Sound practice in the pursuit of best value for money, under appropriate award procedures, and meeting the required publicity and information requirements will ensure compliance with EU rules and other international obligations.
3.2 UK/Northern Ireland Level
Under the Northern Ireland Act 1998 procurement is a transferred matter. The Assembly may make its own laws in respect of all transferred matters but, as the UK Public Contracts and Utilities Contracts Regulations were made prior to the restoration of a Devolved Administration in Northern Ireland, the UK took the lead in drafting these Regulations and subsequent amendments. As a result, public sector procurement in Northern Ireland falls within the scope of UK Procurement Regulations (which cover England, Wales and Northern Ireland).
3.3 EU Threshold Levels
EU Treaty principles apply to all procurement, but there are specific rules that apply to most contracts where the estimated value exceeds a specified threshold.
In determining the value of a contract, for the purposes of assessing whether it is above the EU threshold, all options and renewals must be taken into consideration. Where the Commission has a single requirement for goods, services or works contracts and a number of contracts are to be entered into to satisfy the requirement, the figure to be considered is the total value of all the contracts.
Even when a Tender or Quotation process is not subject to the EU legislation, for example the value is below threshold, EU treaty based principles of non-discrimination, equal treatment, transparency, mutual recognition and proportionality apply and some degree of advertising, appropriate to the scale of the contract, is likely to be necessary to demonstrate transparency. This is also in line with the Executives objective of achieving value for money in all public procurement – not just those covered by the EU procurement directives.
3.4 Bribery Act 2010
The Bribery Act has been incorporated into procurement legislation since October 2011 and contains two general offences covering the offering, promising or giving of a bribe (active bribery) and the requesting, agreeing to receive or accept, a bribe.
4.0 PROCUREMENT/PURCHASING OVER EU THRESHOLD VALUES
Almost all public procurement contracts for business worth more than the EU threshold must be published in the supplement of the OJEU (Official Journal of the European Union). The threshold changes every two years and varies according to the type of contract (supplies, works or services) and the public sector entity (Central Government, another public authority or Utility).
From 1 January 2012 the threshold values that apply for the purposes of EU Procurement regulations are:
All bodies £173,934
Works £4,348,350
When goods or services are over the EU threshold values the following principles must be used as a guide:
1. Start with the user requirement;
2. Specify it clearly, bearing in mind that it cannot be extended (though it can be narrowed);
3. Make reference to recognised standards, where relevant, making provisions for equivalents to be offered where appropriate;
4. Leave room for innovation, to the greatest extent possible, describe the requirement in terms of what is to be achieved rather than precisely how the outcome should be constituted;
5. Include economic, social and environmental policy objectives where appropriate;
6. Avoid specifying any bias directly or indirectly in favour of UK suppliers;
7. Set out how bids will be evaluated;
8. Keep the costs of the bidding process to the minimum necessary for effective competition;
9. Design a competition which will work for the widest range of sizes and kinds of firms, without discrimination;
10. Publish procurement and project timetables and stick to them;
11. When advertising smaller value contracts that are below EU thresholds, refer to CPD Guidance Note 01/04 on Procurement Control Limits (see Appendix 1).
5.0 TYPES OF PROCUREMENT PROCEDURE
The EU Procurement Directives provide for four main procurement procedures to be used by contracting authorities.
For straightforward procurements, for example of commodity supplies and services, the open or restricted procedures are used. For complex procurements, contracting authorities normally use the Competitive Dialogue procedure. This can be used where a contracting authority wishes to award a particularly complex contract and considers that the open or restricted procedure will not allow the award of that contract. In exceptional circumstances or where other procedures fail to produce a contract the authority may use the Negotiated Procedure.
5.1 Open Procedure
Under the Open Procedure, all interested suppliers who respond to an OJEU advertisement must be invited to tender. This procedure does not allow any form of pre-qualification. If the supplier meets the selection criteria, the authority must consider and evaluate the submitted tender.
5.2 Restricted Procedure
Under the Restricted Procedure, interested suppliers are invited to respond to an OJEU advertisement by submitting an “Expression of Interest” (a completed PQQ) in which they reply against defined selection criteria such as technical capability, financial standing, or experience of supplying similar projects. A shortlist of suppliers is then drawn up and invited to submit tenders (an ITT).
The submitted tenders are then evaluated against the award criteria, e.g. price, quality and time of delivery. The authority will then award the contract to the tenderer that best satisfies all the criteria.
5.3 Competitive Dialogue Procedure
For complex procurements, the restricted procedure is usually too inflexible as it allows only limited discussion and dialogue with suppliers. Authorities will therefore normally follow the Competitive Dialogue Procedure, unless there are exceptional circumstances that would justify the use of the Negotiated Procedure.
Competitive Dialogue is a flexible procedure, suitable where there is a need for authorities to discuss aspects of the proposed contract with suppliers. For example, the procedure would be used where authorities cannot define clearly in advance the technical means capable of satisfying their needs or objectives, or where there is a range of options for the legal and/or financial structure of a project.
Under Competitive Dialogue, a similar pre-selection procedure is undertaken to that used for the restricted procedure. Shortlisted suppliers are then invited to participate in dialogue, which may have several stages. This helps to refine the requirement through supplier input and gives the opportunity for meaningful dialogue. Once this stage is concluded, suppliers are invited to submit a final tender.
5.4 Negotiated Procedure
The Negotiated Procedure is a procedure leading to the award of a contract whereby the authority negotiates the terms of the contract with one or more economic operators selected by it. It is limited to specified circumstances for each type of contract and is intended for use when other procedures will not work. It may be valid when: competition is not viable, or appropriate; other procedures have not produced an acceptable tender; work is needed for research and development purposes; or where prior overall pricing is not possible. There are also circumstances where this procedure can be used without a call for competition for example, where it is strictly necessary for the completion of a project and the services cannot be provided separately without major inconvenience to the authority or where the services are a repetition of the services already provided and the notice advertising the original contract provided for such a repetition.
5.5 Framework Agreements
Framework Agreements are put in place with one or more suppliers of the same product or service. The Framework Agreement sets out the general terms and conditions under which specific purchases can be made as and when they are required. They are mainly used when the quantity of supplies, works or services is undetermined.