What You Need to know about Procurement- Working together to get Best Value   Pippa Dooley, Northern Representative for Crescent Purchasing Consortium

AGENDA Legislation and Rules for Academies -EU Rules, the basics -Academies Financial Handbook Importance of procurement -Difference between purchasing and procurement -How to manage the risk of buying the wrong thing/paying too much

AGENDA How to achieve value for money   -Both as an individual institution and through collaboration Benefits of using Consortia What help is out there What CPC can offer

Rules and Legislation Public procurement rules and EU Procurement Legislation Academies Financial Handbook http://media.education.gov.uk/assets/files/pdf/a/academies%20financial%20handbook%20sept%202012v11.pdf

Rules and Legislation Academies must: Ensure regularity, propriety and value for money in their management of public funds Avoid waste and extravagance Ensure efficient and effective use of all the resources in their charge Ensure a competitive tendering policy is in place and applied

Rules and Legislation EU Rules – the basics THEY ARE LAW! Public Contracts Regulations 2006 (SI 2006/05) Fundamental principles Transparency, non-discrimination, equal treatment and proportionality Public spending is open to competition

Rules and Legislation EU Rules – the basics Contracting Authorities MUST tender via OJEU requirements where aggregated spend for is above threshold Outcome of OJEU exercise must be published

Rules and Legislation Thresholds Supplies and Services £173,934 (€200,000) Works £4,348,350 (€5,000,000) Aggregated spend over contract period or 4 years (maximum framework period). Change every 2 years on 1st January next change in 2014

Importance of procurement Purchasing vs Procurement Purchasing is… The specific activity of committing expenditure It tends to focus on issues of price rather than of value It’s placing the orders – doing the buying

Importance of procurement Purchasing vs Procurement Procurement is… The entire process of acquiring goods and services The identification of requirements, specifications, assessment of risk, management of tendering processes, ordering, contract award and the management and monitoring of suppliers‘ performance

Importance of procurement Purchasing vs Procurement Procurement is… It takes into account factors such as the cost over the life (whole life costs) of the good or service, and the quality necessary to meet users' requirements

Importance of procurement The Procurement Cycle Identify the Need Manage Performance Specify the Requirement Purchasing is the ‘buying’ Develop Market Identify Potential Suppliers/ Procedures Award & implement Contract Agree Prices & Terms Invite Proposals Evaluate Proposals

Importance of procurement Organisation’s total expenditure A – Staff Pay B – Capital C – Revenue Sound procurement practices will improve the School or Academy’s overall value for money activities on both these areas of expenditure

Importance of procurement Planning your purchase Budgets are tight, so you must plan before you purchase Assess the need Consider alternatives to purchase

Importance of procurement Planning your purchase Could you collaborate with other schools to increase your buying power? Check if there is an existing deal available to you Estimate the total contract value    

Importance of procurement Possible thresholds less than £10K, low value purchase, write a statement of requirement, framework or 3 quotes (written ideally) £10k to £40K, medium value purchase, write a business case and a specification, framework or at least 3 written quotes

Importance of procurement Possible thresholds £40K + (but below the EU threshold), high value purchase, write a business case and a specification, framework or tender purchases with a value above the EU thresholds, write a business case and a specification, must use the OJEU tendering process

Importance of procurement Business Cases Regarded as good practice Adopt for all new projects / initiatives over a specific value Opportunity to explore alternative sourcing options and truly test out the actual need

Importance of procurement Contract Management keep copies of all related documents build a good relationship with your supplier ensure the goods or service is delivered correctly, meeting your requirements

Importance of procurement Contract Management manage risks effectively change control procedures exit strategy

How to achieve value for money What is value for money? Achieving financial savings that can then be re-invested in your priorities for driving up standards Ensuring that the goods or services purchased are fit for purpose

How to achieve value for money What is value for money? Ensuring suppliers deliver (and continue to deliver) as agreed Ensuring legal and financial obligations are complied with

How to achieve value for money What is value for money? Paying less for the same product Paying the same for a better quality of product - Where you need the better quality Getting added value at no extra cost Reducing the Academy’s exposure to risk Streamlining your processes Becoming more sustainable

How to achieve value for money Practical Steps Analyse expenditure Review your contracts Identify opportunities for rationalisation Deliver admin savings Collaborate across key spend areas

How to achieve value for money Practical Steps Benchmark and compare Use consortia frameworks to access compliant and competitive arrangements

Benefits of using Consortia Compliance with legislation Use of frameworks that have followed best practice procurement protocols Terms available that represent collaborative spend, not just your Institution’s spend

Benefits of using Consortia Support from professional procurement team if suppliers are not performing Reduces time spent on procurement activity and frees up resource for front-line delivery Freeing up savings to re-invest in educational priorities

Benefits of using Consortia What is a framework? A purchasing framework is an ‘umbrella agreement’ that sets out the terms (particularly relating to price and quality) under which individual purchases (call-offs) can be made throughout the period of the agreement.

Benefits of using Consortia What are the benefits of using a framework? The panel of suppliers has been vetted and approved Economies of scale, competitive pricing Where a panel has more than one supplier, the suppliers are engaged in constant and repeated competition for business throughout the life of the framework, which tends to keep them on their toes!

Benefits of using Consortia What are the benefits of using a framework? ‘Calling off’ from a framework is typically a quicker and simpler process than setting up a new contract by yourself from scratch. Better service levels Reduced risk On-going support from the Consortia

Who can help? www.buyways.co.uk Free online training course developed to provide an introduction to procurement for non-procurement professionals working in schools. www.education.gov.uk/procurement Contains information about the procurement process, including useful links to deals, training and further resources.

Who can help? Crescent Purchasing Consortium 1500+ Academy and School memberships Dedicated website for Academies and Schools www.thecpc.ac.uk Government Procurement Service http://gps.cabinetoffice.gov.uk

What can CPC offer? Free membership (no cost, hidden or otherwise, to join) 75 Framework Agreements Successful Academies Insurance Framework Proven value for money on all arrangements Contract management Access to free professional purchasing advice

What can CPC offer? Procurement related resource – template policies / procedures / guidance Benchmarking Professionally operated consortium web site E-Newsletters No obligation to use CPC deals once a member Low cost Introduction to Procurement training workshop for CPC members in the North East, Sept ‘13

And to Finish….

And to Finish…. Questions? Contact information Pippa Dooley, Northern Representative p.dooley@salford.ac.uk 07788 285941 Customer Helpdesk 0161 295 5354 Cpc-finance@salford.ac.uk 0161 295 6729