FINAL (07/01/08)

CONTRACT PROCEDURE RULES

(FINAL as at 7th January 2008)

CONTENTS / page

GLOSSARY OF TERMS FOR THE CONTRACT PROCEDURE RULES

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1. /

SCOPE OF THE CONTRACT PROCEDURE RULES

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1.1 / Introduction / 6
1.2 / Value for Money and other objectives / 6
1.3 / Transparency and accountability / 6
1.4 / Stockport Homes and Stockport Council / 7
1.5 / Basic Principles of Procurement / 7
1.6 / Responsibilities / 8
1.7 / Thresholds / 8

1.7.1Thresholds for supplies and services

1.7.2Thresholds for works / 9
9
1.8 /

Exemptions

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1.8.1 Collaborative Arrangements

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1.9 /

E-Procurement

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1.10 /

Relevant Contracts

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2. /

COMMON REQUIREMENTS

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2.1 /

Procurement Process – before you start

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2.2 / Records / 12
2.3 / Advertising and Specification of Requirements / 12
2.3.1Advertisement of contracts
2.3.2Compliance with EU Public Procurement Processes
2.3.3Specification of Requirement / 12
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13
3. / CONDUCTING PURCHASING / 13
3.1 / Competition Requirements / 13
3.2 / Pre-tender Market Research and Consultation / 15
3.4 / Tendering in Excess of £50,000 / 15
3.5 / Nominated or Named Sub-Contractors / 15
4 / CONTRACTS / 16
4.1 / Signature of Contracts / 16
4.2 / Content of Contracts / 16
4.3 / Extension of Contract / 17
4.4 / Declaration of Interests / 18
4.5 / Prevention of Corruption and Cancellation of Contracts in Case of Corruption / 18
5 / CONTRACT MANAGEMENT / 19
5.1 / Contract Managers / 19
5.2 / Contract Monitoring, Evaluation and Review / 19
5.3 / Restrictions on Contracts with Certain Persons / 19

GLOSSARY OF TERMS FOR THE CONTRACT PROCEDURE RULES

Award Criteria / The criteria that should be used to determine the successful Candidate
Best Value / The duty, which Part I of the Local Government Act 1999 places on local authorities to secure continuous improvement in the way in which functions are exercised, having regard to the combination of economy, efficiency and effectiveness as implemented by the organisation.
This terminology has in many instances been superseded by Value for Money
Board / Stockport Homes Board
Candidates /

Any persons who ask or are invited to submit a quotationortender

Contracting Decision / Any of the following decisions:
  • Composition of Approved Lists (if applicable)
  • Withdrawal of Invitation to tender
  • Who to invite to submit a quotation to tender
  • Shortlisting
  • Award of contract
  • Any decision to terminate a contract

CIPFA / The Chartered Institute of Public Finance and Accountancy
Director / Executive Director of the Company
EU Directives / The rules on procurement for works, supplies and services above theEU thresholds.
European Economic Area / The 27 members of the European Union and Norway, Iceland and Liechtenstein.
EU threshold / The contract value at which the EU Public Procurement Directives (updated and published 1st January 2008) apply. These are:
Threshold for Supplies and Services - £139,893
Threshold for Works - £3,497,313
Government Procurement Agreement / The successor agreement to the General Agreement on Trade and Tariffs. The main signatories other than those in the European Union are the USA, Canada, Japan, Israel, South Korea, Switzerland, Norway, Aruba, Hong Kong, China, Liechtenstein and Singapore.
Invitation to Tender / Invitation to tender documents in the format required by Stockport Homes Contract Procedure Rules
Officer / An employee of Stockport Homes who is not a Director
OJEC / This stands for the Official Journal of the European Community. This is the publication in which all contracts from the public sector that are over £139,893 (for goods and services) and £3,497,313 (for works) must be published before they can be published elsewhere.
Quotation / A written statement of the price and any other relevant matter in relation to the supply of goods, works or services (without the formal issue of an Invitation to tender)
Relevant Contracts /

Contracts to which Stockport Homes Contract Procedure Rules apply (see 1.9)

Service Contract /

Stockport Homes purchases some of the services it requires from Stockport Council. For each service, that is bought in, there is a Service Contract in place. The Service Contract describes the service to be provided and includes details on the cost of the service, the standards required from the provider and the arrangements for monitoring whether the provider is delivering what is expected of them. Service Contracts are part of the overall Management Agreement between Stockport Homes and Stockport Council.

Shortlisting /

The process of selecting candidates who are to be invited to quote or bid to proceed to final evaluation

Supplier /

Any person, partnership, company or other organisation that provides/offers to provide any supply to the company.

Supplies / The purchase, lease hire or other procurement of any works, materials, goods or services offered or provided by Stockport Homes.
Tender / A written offer to contract goods or services at a specified cost or rate, resulting from a public notice by the Company inviting such tenders.
Value for Money / Value for money is not the lowest possible price; it combines goods or services that fully meet customer needs, with the level of quality required, delivery at the right time and at the appropriate price.
Whole Life Cost / The whole life cost or estimated value (in money or equivalent value) for a single purchase or disposal calculated as follows:
  • Where the contract if for a fixed period, by taking the total price to be paid or which might be paid during the whole life of the contract;
  • Where the purchase involves recurrent transactions for the same type of item, by combining the value of those transactions in the coming 12 months;
  • Where the contract is for an uncertain duration, by multiplying the monthly payment by 48; and
  • For feasibility studies, the value of the scheme or contracts which may be awarded as a result.

Works / Improvements and/or repair works to any property that is managed by Stockport Homes.

1.SCOPE OF THE CONTRACT PROCEDURE RULES

1.1 Introduction

Stockport Homes’ Contract Procedure Rules are adapted from the Joint Local Government Task Force/CIPFA publication ‘Contract Procedure Rules’ (updated 2006) recommended for public authorities. They illustrate best practice in the public sector and accommodate the principles of the National Procurement Strategy (2003), Gershon Review (2004) and Rethinking Construction Agenda (1998). As such, they enable Stockport Homes to procure and contract its business professionally as an Arms Length Management Organisation (ALMO). These rules have been revised following a review of the existing Contract Procedure Rules, which were approved when the ALMO was first established in October 2005.

Stockport Homes Ltd has developed Contract Procedure Rules as a foundation for obtaining Value for Money in the way we provide services and run our business. As part of this, it is vital that all aspects of the procurement process are examined to make sure they are fit for purpose and help deliver the services Stockport Homes provides. Therefore, these rules provide the link between the Stockport Homes Procurement Methodology (as outlined the in the Value for Money Strategy 2008-2011) and the development of detailed codes of practice, training and the establishment of operational procedures (embodied in the Stockport Homes Procurement toolkit). All of these tools have been provided to:

  • Enhance service provision to Stockport Homes’ customers and ensure they receive the Value for Money services; and
  • Support the government drive for efficiency savings.

1.2Value for Money and other objectives

Effective and efficient procurement is not just about getting the desired quality at the best price. Whilst economy is fundamental in providing best value, effective procurement must also be measured by the social outcomes and community benefits that result to ensure that value for money is being achieved. Because of this Stockport Homes procurement will be considered in the context of the Mission “to develop a customer driven service, providing quality homes where people want to live”. Stockport Homes will use its procurement power to achieve this and the corresponding aims. In doing so, the organisation will also ensure that procurement is pursued as per the key priorities outlined in the Stockport Homes Value for Money Strategy 2008-2011 and the Service Improvement Plan 2008-2011.

1.3Transparency and accountability

The Contract Procedure Rules are intended to promote good purchasing practice. Stockport Homes is an Arms Length Management Organisation that uses public funds to run the organisation. The highest standard of transparency and accountability is therefore paramount to be able to demonstrate that the organisation is purchasing correctly and achieving Value for Money.

This means that all procurement decisions must stand up to scrutiny. Officers undertaking procurement activity must comply with the Contract Procedure Rules and a clear audit trail should always be provided to demonstrate that the procurement process has followed these rules.

All procurement processes where the Whole Life Costs are above certain thresholds (please see 1.7 for more information) must be approved by the Board. In practice this Board responsibility may be delegated to the Finance and Audit Sub-Group whilst the Board will retain an overview of this.

1.4Stockport Homes and Stockport Council

Stockport Homes takes procurement decisions in the interests of its customers. This means that it will seek to attain value for money in all its procurement decisions, including those that relate to support services supplied by Stockport Council. In practical terms this suggests that services provided by Stockport Council will not be favoured above those provided by other suppliers. Provision of services and goods will be market tested and procurement decisions will be based on Value for Money, risk management and broader community objectives.

Service Contracts with Stockport Council will be reviewed on an annual basis (unless otherwise stipulated) using the Service Contract Review toolkit.

Should the duration of any new contract, or the extension of an existing contract, run beyond the term specified between Stockport Homes and Stockport Council, this must be agreed between both parties.

1.5Basic Principles of Procurement

All procurement processes must:

  • AchieveValue for Money for Customers and Stockport Homes
  • Be consistent with the highest standards of integrity
  • Ensure fairness in the allocation of contracts
  • Comply with all European Union (EU) Public Procurement Process
  • Ensure that non-commercial considerations do not influence any contracting decision
  • Support Stockport Homes’ Mission and Aims
  • Comply with Stockport Homes Procurement Methodology and Value for Money key priorities

1.6Responsibilities

Officers responsible for procurement should receive the appropriate training and advice to ensure that they fully understand Stockport Homes Procurement Methodology and all associated procedures to comply with them in all respects.

Officers that are responsible for any procurement process must:

  • Comply with Stockport Homes’ Contract Procedure Rules and Financial Regulations;
  • Ensure any suppliers, contractors or consultants acting on behalf of Stockport Homes comply with the Contract Procedure Rules and Financial Regulations;
  • Check whether a suitable Service Contract already exists before seeking to let another contract;
  • Seek all necessary advice (legal, financial and professional) from their Director or the Performance and Value for Money Team and implement this advice; and
  • Keep a sufficient audit trail.

1.7Thresholds

A number of thresholds will determine the level of formality required in the procurement process, depending on the Whole Life Costof the contract. These are outlined in the table below. This table indicates the minimum requirements of the Contract Procedure Rules. However, a Director should always consider whether Value for Money will be achieved in the selected process and whether a more comprehensive method would be more desirable (for example, wider consultation with colleagues and/or Board/Sub-Group members and customers).

The EU Thresholds as at 1 January 2008 are:

  • £139,893 for supplies and services; and
  • £3,497,313 for works.

It is the responsibility of each Director to comply with all current EU procurement requirements.

1.7.1Thresholds for Supplies and Services

Whole Life Cost / Minimum process
under £7,000 / Managers should consult their Director and provide an audit trail of decisions taken
£7,001 – £50,000 / Three written quotations and Director’s approval
£50,001 – £139,892 / Open tender (at least three tenders must be sought).
£139,893 (EU Threshold) and above / Board approval must be sought on the process and EU procurement process must be followed the Whole Life Cost is above £139,893 (as outlined in the main body of the Procurement Methodology)

1.7.2Thresholds for Works

Whole Life Cost / Minimum process
£7,000 or under / Managers should consult their Director and provide an audit trail of decisions taken
£7,001 – £50,000 / Three written quotations and Director’s approval
£50,001 – £250,000 / Open tender (at least three tenders must be sought)
£250,001 to £3,497,312 / Board approval must be sought on the process and there must be an open tender (at least three tenders must be sought)
£3,497,313 and above / The EU Procurement process must be followed where the Whole Life Cost is above £3,497,313 (as outlined in the main body of the Procurement Methodology). Board approval must also be sought on the process

In respect of procurement exceeding EU thresholds, the process is governed by European Directives and is more restricted in terms of minimum number of bids and public notices.

1.8Exemptions

An exemption to the Contract Procedure Rules is a permission to let a contract without complying with one or more of the Rules. Please see Appendix 1 for a list of purchases andsuppliers that are exempt from the Contract Procedure Rules, and the processes that must be undertaken in these circumstances.

1.8.1Collaborative arrangements

Stockport Homes may enter into collaborative arrangements in order to secure value for money. These arrangements are only acceptable where they have received Board approval and any consortium entered into must have clear procurement arrangements that are subject to audit.

When collaborative arrangements have been approved, all purchases and contracts entered into by the consortium will be deemed to have satisfied Stockport Homes Contract Procedure Rules. No exemption is required.

1.9E-Procurement

The use of e-procurement technology requires full compliance with the Contract Procedure Rules. Exemptions in relation to e-procurement will only apply where there are any circumstances as set out in Appendix 1.

1.10Relevant Contracts

All relevant contracts must comply with the Contract Procedure Rules. A relevant contract is any arrangement made by, or on behalf of Stockport Homes for the carrying out of works or the supply of materials, goods or services. The table below shows inclusions and exclusions for relevant contracts.

Inclusions / Exclusions
a)Supply or disposal of goods / a)Contracts of employment, which make an individual a direct employee of Stockport Homes
b)Hire, rental or lease of goods or equipment / b)Agreements regarding the acquisition, disposal or transfer of land (Financial Regulations apply in this case)
c)Delivery of services, including (but not limited to) those related to:
- recruitment of staff
- land and property transactions
- financial and consultancy services
  1. COMMON REQUIREMENTS

2.2Procurement Process – Before you Start

The following questions will aid Officers in the planning of the procurement process:

  • Why do we want to do this (i.e. what are the objectives of the purchase)?
  • Do we really need to do this (appraising the needs for the expenditure and its priority)?
  • What is the best way of doing this?
  • Who will do it best?
  • Do we have the resources to do this?
  • How can we ensure Value for Money?
  • Is this in line with Stockport Homes Mission and Aims?
  • Is it in line with objectives we need to achieve in the Service Improvement Plan?
  • How will the selection of a supplier/development of a partnership add value to the services our customers receive and meet wider community objectives (i.e. equality & diversity and sustainability)?
  • What is the risk of selecting one supplier over another in terms of reliability and the effect of failure of a particular supply chain?
  • How can we encourage longer-term partnerships that achieve the aims of the Gershon agenda?

Officers planning a procurement process should also consider the following points before beginning:

  • Is there sufficient time to take a critical view of existing arrangements and potential alternatives?
  • Where necessary, have users been consulted (e.g. staff and customers as appropriate) about the proposed procurement, contract standards and performance and user satisfaction monitoring?
  • Has the appropriate level of approval been sought, depending on the size of the project? (Please see section 1.7 Thresholds, page 9 for details of levels of approval)
  • Has a schedule of evaluation criteria been prepared? The evaluation should be based on the most economically advantageous criteria which includes:

-Technical Merit

-Quality of outputs

-Environmental impact

-Equality and diversity issues

-Sustainability issues

  • Has an accurate estimate of value of the contract over its duration been acquired? (This will help to determine the most appropriate procurement route) If the term is not specified, four years must be used.
  • Does the procurement comply with EU thresholds
  • Has legal advice been sought on the procurement process?

2.2Records

Stockport Homes will ensure that all procurement undertaken is supported by a robust audit trail. This will include evidence that all procurement decisions are committed to Stockport Homes Value for Money Priorities as detailed in the organisation’s Value for Money Strategy. Compliance will be checked by the Performance and Value for Money Team who will also keep a copy of the records once procurement is completed. The Stockport Homes Procurement Toolkit (section 1) includes a table that details the records that must be kept when the Whole Life Cost of the procurement exceeds the thresholds set out in the Contract Procedure Rules (please see section 1.7 for Thresholds).

2.3Advertising and Specification of Requirements

2.3.1Advertisement of contracts

All contracts, which are estimated to exceed £50,001 in value must be subject to at least ten days public notice by way of public advertisement in the appropriate media. This is usually the local press or any specialist magazine or journal circulating amongst such persons or firms who undertake such contracts. The advertisement must express the nature and purpose thereof, inviting tenders for its execution or supply and stating the last date when tenders will be received.

The wording of any public advertisement must be approved by the relevant Director.

This process does not apply when the contract is subject to any of the exemptions outlined in Appendix 1.