An Introduction to Procurement Alex Hatt, PRT

What is procurement? “Act of obtaining or buying goods, services or works from an external source” external source

Public Procurement Rules Public procurement rules are there to ensure the Authority gets best value for money True False ✔ The purpose of the procurement regime is to ensure open competition, not to secure the most favorable terms for the public authority

Public Procurement Rules Treaty on the Functioning of the EU (TFEU). The key principles which should underwrite any approach to procurement are: Non-discrimination Equal Treatment Transparency

Public Procurement Rules The main regulatory mechanisms that govern public procurement are: EU Directive 2014/24/EU Public Contracts Regulations 2015

Which contracts are covered? WORKS CONTRACTS SUPPLY CONTRACTS SERVICES CONTRACTS General building and civil engineering works. Includes execution and design (e.g. buildings, highways, pipelines, demolition, building completion, plastering etc.) Includes purchase or hire, and any siting and installation of goods/supplies (e.g. reinforced doors, IT equipment, baked beans, etc.) Fully regulated services (e.g. architectural and design services) “Light touch” services (e.g. legal, educational, health and social services) Subject to full requirements Subject to “lighter touch” regime Mixed services – defined by greater value of consideration Mixed contracts (e.g. “works and services”) defined by “the main subject matter”

OJEU Financial Thresholds SERVICESSUPPLIESWORKS Central Government£106,047 £4,104,394 Other contracting authorities £164,176 £4,104,394 Light Touch regime: Services £589,148 Total estimated contract value excluding VAT

What isn’t caught Sub-threshold contracts Purchase of land or existing buildings Employment contracts Utilities (may be caught by the Utilities Regulations) Telecommunications networks Secrets and other security measures As always – check the Regulations

Sub-threshold Contracts When a contract falls below the financial thresholds, public sector bodies can follow their own procurement strategies and in-house processes, as long as they ensure that they advertise their opportunities in such a way that is sufficient to enable the market to be opened up to competition. Non-discrimination Equal Treatment Transparency o Transparency obligation is being interpreted widely o The trend of case law is to find against authorities that have not give enough information to bidders o Evaluation criteria should always be disclosed in advance, including sub-criteria and weighting The Authority can withhold certain information about how it intends to evaluate bids, otherwise it will be giving bidders the answer True False ✔ DO NOT artificially split larger requirements into smaller units to avoid the aggregation rules and thresholds. This could be judged as an avoidance of the aggregation rules.

Heritage Lottery Fund - Procurement Guidelines You must get at least three competitive tenders or quotes for all goods, works and services worth £10,000 or more (excluding VAT) that we have agreed to fund. For all goods, works and services worth more than £50,000 (excluding VAT), you must provide proof of competitive tendering procedures. Your proof should be a report on the tenders you have received, together with your decision on which to accept. You must give full reasons if you do not select the lowest tender. You must get at least three competitive tenders or quotes for all goods, works and services worth £10,000 or more (excluding VAT) that we have agreed to fund. For all goods, works and services worth more than £50,000 (excluding VAT), you must provide proof of competitive tendering procedures. Your proof should be a report on the tenders you have received, together with your decision on which to accept. You must give full reasons if you do not select the lowest tender.

Historic Scotland – Procurement Guidelines

Public Contracts Scotland Set up in response to the Review of Public Procurement report. In order to maintain a competitive environment and to support an open and transparent market environment, a single public sector ‘electronic portal’ should be established where suppliers can access essential information on opportunities to offer services and bid for contracts…in Scotland” It further stated that access to, and participation in, tenders should be free of charge!

Running a procurement exercise Restricted Procedure Open Procedure No Pre-Qualification – straight to tender process in which anyone can participate Basic minimum timescale of 35 days from advertisement to tender receipt Possible to cut to 20, or even 15 Most suitable for contracts where the subject matter and the award criteria are fairly simple v Two stage process – first stage is Pre-Qualification in which anyone can participate Minimum 5 contractors invited to tender Basic minimum timescale from advertisement to PQQ closure Basic minimum timescale of 30 days from issue of invitation to tender (ITT) to tender receipt Can be cut to 10 PQQITT HistoricFuture CapabilitySolution CapacityCost/Price Experience Qualification Reference Financial Standing

Conclusions Public Sector Procurement is: Bureaucratic o Process driven to ensure probity and an audit trail Legalistic o Driven by EU Directives and UK Regulations Slow o Up to 9 months Dangerous o Risky to buyers and suppliers Flawed o Aimed at promoting competition and procedural conformity, not necessarily value for money ESSENTIAL Seek legal adviceRead the Regulations