The Lambeth Procurement Guide PDF

The Lambeth Procurement Guide
Edition 15 March 2013
The London Borough of Lambeth Corporate Procurement Team

The Lambeth Procurement Guide V15 20 March 2013
Contents
Foreword Introduction to the Procurement Guide The Lambeth Procurement Strategy 2010-2014 The Lambeth Contract Standing Orders The Lambeth Procurement Gateways The Lambeth Purchasing Cycle
GATEWAY ONE: PLAN
Procurement Planning
1.0
1.0.1 1.0.2 1.0.3
Introduction to Gateway One

Using this Version of the Procurement Guide Overview of the Procurement Process Procurement Advice, Information & Training
1.1
1.1.1 1.1.2 1.1.3 1.1.4 1.1.5 1.1.6 1.1.7 1.1.8 1.1.9
Rules & Responsibilities

Regulatory Framework Overview Key Regulations The Lambeth Scheme of Delegation The Internal Procurement Framework The Boards Applying Procurement Rules Applying EU Procurement Rules The Contract Register Waivers & Urgency Fairness & Transparency
1.2
1.2.1 1.2.2 1.2.3
Getting Started
Getting Ready for Procurement Procurement Documentation Corporate Contracts & The Approved Supplier List
1.3
1.3.1 1.3.2 1.3.3
Central Purchasing Bodies

Government Procurement Service & Buying Solutions Eastern Shires Purchasing Organisation (ESPO) Other Central Purchasing Bodies
1.4 1.5 1.6

1.6.1
Audit Trails The Requirement for Records Responsible Procurement & The Public Services (Social Value) Act 2012
Introduction to Responsible Procurement at Lambeth
Social
1.6.2 1.6.3 1.6.4 1.6.5 1.6.6 Equalities & Human Rights Guidance on Contracting for Services in Light of the Human Rights Act 1998 The Equalities Impact Assessment & Procurement Community Safety Procuring Food in Lambeth
Economic
1.6.7 1.6.8 1.6.9 1.6.10 1.6.11 1.6.12 Business Ethics & Lambeth Procurement The Bribery Act Social Enterprises and the Voluntary & Community Sectors Local Businesses Contracts Finder Supply 4 London
Environmental
1.6.13 Procurement & the Environment
1.7
Markets & Market Development
1.8
Benchmarking
1.9
Stakeholders & Stakeholder Management
Gateway One: Present Business Case to Procurement Board
GATEWAY TWO: THINK
Essential Procurement Knowledge

2.0 2.1 2.2 Introduction to Gateway Two Information Technology, eProcurement and Electronic Tenders Customer and Buyer Roles
2.3 2.4
2.4.1 2.4.2 2.4.3
Contract Packaging Value for Money, Cashable & Non-cashable Savings and Whole Life Costing
Value for Money Cashable and Non-cashable Savings Whole Life Costs
2.5 2.6
2.6.1 2.6.2 2.6.3 2.6.4
Feasibility Studies and Assets The Private Finance Initiative - PFI

Features of PFI contracts PFI and Value for Money Capital Finance Arrangements Continuity of Services
2.7 2.8 2.9

2.9.1 2.9.2 2.9.3 2.9.4 2.9.5 2.9.6 2.9.7 2.9.8 2.9.9 2.9.10 2.9.11
Strategic Partnerships Outsourcing General Considerations TUPE & Guidance to Officers on Workforce Code Issues
Overview What Is A Relevant Transfer of an Undertaking? In What Situations Does TUPE Apply? Impact of a Breach of the TUPE Regulations TUPE Information Consultation & Notification Liability Passing On to the Incoming Contractor Pensions Is There Any Way to Prevent the TUPE Regulations Applying? Practical Suggestions References
2.10
2.10.1 2.10.2 2.10.3
Risk Management
Principles of Risk Management Risk Management and Procurement Risk and Insurance FAQs
2.11
2.11.1 2.11.2
Negotiation
Negotiation Skills in Procurement Large Complex Service Contracts
2.12
Council Charging & Trading Powers
2.13
2.13.1 2.13.2 2.13.3 2.13.4 2.13.5 2.13.6
Freedom of Information & Procurement

Public Authorities and Contractors Contract Clauses relating to FOI Data Protection Information Withheld by Contractors on Behalf of the Authority Exemptions Further Information
2.14 2.15
Terms & Conditions of Contract Framework Agreements
Gateway Two: Present the Procurement Strategy to Procurement Board
GATEWAY THREE: DO
Purchasing, Tendering & Contract Award

3.0 3.0.1 3.0.2 3.0.3 3.0.4 Introduction to Gateway Three Supplier Pre-qualification & the Lambeth Business Questionnaires Simple Purchases: Services & Supplies Valued Up to 25,000 The Quotation Process Using Lambeths Resources
3.1
3.1.1 3.1.2 3.1.3 3.1.4 3.1.5 3.1.6 3.1.7 3.1.8 3.1.9 3.1.10 3.1.11 3.1.12 3.1.13
Formal Tendering: Services & Supplies Valued at 25,000 and Greater

An Overview of the Tendering Process Planning Your Procurement Exercise Advertisement for Expressions of Interest Shortlisting The Specification Tender Documentation Inviting Tenders & the Tendering Period Secure Receipt of Tenders Tender Evaluation Clarification & Amendment Contract Award The Constitutional Process in Procurement Contract Variations, Extensions & Amendments
3.2
3.2.1 3.2.2
Procurement Under EU Directives

Process Overview The EU Public Sector Procurement Directive
3.3
3.3.1 3.3.2 3.3.3 3.3.4
Tendering for Consultancy Services

General Principles: What is a Consultant? The Lambeth Business Case Template Consultancy Services for Construction Management Consultancy Services
Gateway Three: Present Procurement Delegated Decision Report to Procurement Board
3.4
The Supplier Setup Process
GATEWAY FOUR: REVIEW
Contract Management
4.0
4.0.1 4.0.2 4.0.3 4.0.4 4.0.5 4.0.6 4.0.7 4.0.8 4.0.9 4.0.10 4.0.11 4.0.12 4.0.13
Introduction to Gateway Four

Preparing For Successful Contract Management What Is Contract Management? Getting the Contract Right Method Statements & Implementation Plans Service Delivery Management Relationship Management Contract Administration Seeking Improvements Handling Problems Escalation Procedures Managing Changes The Contract Management Guide Contract Novation
4.1
4.1.1
Lambeths Contract Management System

Contract Management & the Procurement Process
Gateway Four: Contract Implementation Review
4.1.2 4.1.3
Ongoing Contract Monitoring Contract Variations & Extensions
4.2
4.2.1
Effective Contract Monitoring

Overview
4.2.2 4.2.3 4.2.4 4.2.5
The Quantitative Review The Qualitative Review The Contract Management Toolkit Conclusion
The Procurement Jargon Buster
Foreword
Lambeth is committed to delivering quality public services through effective performance management and financial control. Good procurement is crucial for the provision of high quality, Value for Money public services and its importance is increasing with the growing emphasis on Value for Money, Responsible Procurement, the efficient and effective management of our contracts and the need for the Council to set targets for service improvements and to secure continuous improvement. The Lambeth Procurement Guide provides a framework for procurement in Lambeth and includes new Contract Standing Orders. It provides in-depth guidance to support Council Officers be more effective and provides a useful source of reference to what can be a complex process. We have organised the Guide into 4 sections to enable you to quickly find the guidance you need and we hope this document helps to demystify Procurement!
Sally Leigh Head of Commissioning and Partnership Strategy
Introduction to the Procurement Guide

Welcome to the Lambeth Procurement Guide. This guidance document is the main source of Lambeth procurement information at the Council, alongside the Lambeth Contract Standing Orders, or CSOs. Both documents work together to advise staff members on what they must and must not do in procurement as well as how to do it. The CSOs are at the beginning of the Procurement Guide and serve as Lambeths Golden Rules of procurement. All Lambeth procurement policies and guidance originate from the Contract Standing Orders so read through this section at the beginning of the Procurement Guide. Our Standing Orders are at the centre of procurement at Lambeth, as you can see in the chart below:
The Guide has also been divided into four colour coded sections or Gateways that define the decision making processes in procurement from commissioning work through to contract management. More details on the Lambeth Gateways can be found in the section on Gateways. The Lambeth Procurement Strategy follows this introduction and this document not only sets out Lambeths strategic approach to procurement, it encourages the Council to challenge existing arrangements and develop new models for service delivery. The strategy recognises that effective procurement is fundamental to service improvement and the Procurement Guide directly supports the strategy. This Guide contains both mandatory requirements and good practice advice. Where the Guide states that an action is required, this is mandatory. Where an approach is suggested, or an example given, this is good practice advice and you should follow the advice unless there is good reason to depart from it.
All officers have a duty to secure the best possible value for money for the Council. You should be aware that compliance with the Guide is a serious responsibility for all those engaged in procurement activity. The Guide is a part of Lambeths management charter and it is accessible on the intranet; all managers are obliged to use it. All officers who commission contracts for goods, works or services or consultants must use the Guide. Letting service contracts can be a complex process and achieving real cost and performance success is a challenge. Everyone knows of disasters where the contractor has failed to deliver a satisfactory service, or where costs have escalated out of control, where changes in the customer base cannot be met within the contract, or where the contractor has actually gone bankrupt. Most of the problems can be attributed to some degree to weaknesses in the procurement process: mistakes in specifying requirements, failure to attract good suppliers to bid, or using the wrong criteria to assess the tenders returned.
There is an important link between procurement and both risk management and contract management. This Guide gives comprehensive advice on these topics and sets out your main obligations related to contract management.
The Procurement Guide explains the rules and regulations that surround public sector procurement and it offers good practice advice. It will help you develop a consistent and effective approach to procurement while allowing you to use your local knowledge and skills in key decisions. Use of the Guide will enable you to get through the purchasing and procurement process as effectively as possible
First Contact: Your Departmental Procurement Team

For all procurement questions and advice, officers should speak to their departmental procurement team in the first instance. This Guide contains core guidance that is applicable to the entire range of Council procurement but of course this must also bee seen in the perspective of your departments service plan. This represents a great variety of activity ranging across numerous types of goods, works and services, and from purchases worth a few pounds to multi million pound outsourcing programmes. This Guide addresses the procurement of both goods and services and whilst purchasing goods is normally simpler, in addition to cost delivery, guarantees and after-sales service also must be considered. The Guide should make clear where requirements apply to services only but, if in doubt, please seek advice from your departmental procurement team. All departments and business units will of course require local systems and procedures to underpin this guidance. Some need to consider additional specialist procurement issues which are beyond the scope of this Guide but in all circumstances the mandatory requirements will apply. If you have any questions, please contact your departmental procurement team for advice first. HRE: HR&Eprocurement@lambeth.gov.uk F&R and OCE: etendering@lambeth.gov.uk CYPS: CYPSPBSubmissions@lambeth.gov.uk ACS: acsprocurement@lambeth.gov.uk
You should note that the Councils Financial Regulations, Standing Orders and Scheme of Delegation remain as essential guidance for all officers. You may need to refer to these from time to time, but the Lambeth Procurement Guide offers comprehensive procurement guidance. There are many Council policies that are not directly concerned with contracts but have an impact on procurement activity; the Guide makes reference to these policies. For example, engagement with the local
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community is an important concern and the Council supports local business as part of its regeneration initiatives. The Guide indicates how such support can be given without infringing competition rules. We cannot avoid formality when tackling the procurement function. In many ways that formality is for the protection of the individual officer as well as for the Council; the Council owes a fiduciary duty to Council taxpayers and you are required to spend budgets wisely as you would your own money. It is inadvisable to spend long periods of time pursuing small savings. However, you need to strike a balance and you cannot enter into contracts freely without serious consideration of value for money. You will achieve the best results from yourself, your suppliers and the entire procurement process itself if you remind yourself of the key steps right at the start. I am certain that this new Procurement Guide will take some of the mystery out of the subject of procurement and I genuinely hope this revised edition will make it easier for anyone working at the London Borough of Lambeth to achieve value for money while following the rules for any type of procurement activity. Of course, use of the Lambeth Procurement Guide is not a substitute for experience, judgement or expert training. All these will come with best practice in procurement and the Guide can provide this; practice usually does, make perfect! Remember: If you follow the guidance set out in the Procurement Guide and focus on the outcome of your procurement activity and ask questions if anything seems unclear along the way - success is truly just around the corner. All the best,
Stephen Regalado Corporate Procurement Officer: Customer Engagement
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The Lambeth Procurement Strategy 2010-2014
Introduction
The Procurement Strategy for the London Borough of Lambeth sets out what the Council means by procurement the current position, our aims and objectives as well as the vision and mission for procurement. The Strategy will outline the principles we will employ in order to procure and deliver the goods, works and services that support the authoritys overall aims and objectives.
Who This Strategy Is For

Council Members - so that they can lead, challenge and monitor the way procurement is carried out in the Council Lambeth Senior Management - so that they can manage their departments adherence to the principles and actions contained in the Strategy Procurement Managers - so that they can support Lambeths aims and goals as outlined in the Strategy in order to shape their procurement processes accordingly Procurement Officers - to help explain the background behind the need for areas of procurement development Suppliers & Potential Suppliers - so that they can see the direction the Council is taking in procurement Suppliers & Potential Suppliers in the Charitable, Voluntary and Community Sectors - so that they can comment, input and be aware of the Councils procurement agenda Customers - so that they can comment, input and be aware of the direction the Council is taking in procurement Partners - so that our policies and strategic direction can be aligned to key procurement aims, goals and initiatives Other Stakeholders - such as other Councils, Government Agencies, Trades Unions, the Audit Commission, Environmental and Quality agencies
The Lambeth Procurement Mission Statement

Procurement at Lambeth will strive to be a first class, professional, customer-focused and responsive procurement service that will enable the Council to obtain the maximum possible benefit from the money it spends on the goods and services it requires and deliver savings for re-investment in front line services. We will listen, advise, teach and develop procurement skills, knowledge, experience, ethics and confidence.
The Vision for Lambeth Procurement

The Councils vision for effective procurement is to procure goods, services and works by the most efficient and sustainable means to ensure that the needs and aspirations of the community are furthered, within a clear framework of accountability and responsibility. In doing so, the Council will strive to become best in class by adopting world-class procurement practices and techniques.
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Lambeths approach to procurement is to achieve Value for Money and savings through effective procedures and robust option appraisal leading to a clear mix of service and goods provision. We will dedicate ourselves to the improvement of procurement staff capability and will encourage procurement officers to obtain professional procurement qualifications. The Council can demonstrate its strength in building sound relationships through a variety of models, whilst recognising the value that SMEs, local businesses and Third Sector Organisations can offer.
Commercial Considerations In Lambeth Procurement

Strategic procurement at Lambeth will address, embrace and develop the following commercial issues in public sector procurement: The consistent pursuit of savings in all our procurement activity, encouraging our suppliers to innovate in order to do more for less A dedication to the attainment of Value for Money in our procurement and contract management activities The development of robust commercial relationships, the placement of aggregated corporate contracts and the use of partnering, PFI and PPP contracts Collaboration will be at the heart of Lambeth procurement. Where practical Lambeth will pursue collaborative opportunities in contracting for services and supplies and seek to join with other public sector bodies in the procurement of contracts and contract management to deliver savings through volume. Wherever practicable we will make our contracts available for use by other public bodies Development of internal and external strategic partnerships, including a commitment to ensure that our approach to individual contracts, large contracts and framework agreements is supported by a sound business case and options appraisal A dedicated commitment to the use and development of electronic procurement solutions, including the use of a secure contract document library Regular reviews of contract terms and conditions Effective risk management in the procurement process, ensuring that probity is maintained throughout according to internal, UK and EU procurement regulations We will strive to make our procurement processes efficient, effective and streamlined, reducing waste and duplication of effort wherever practicable
Responsible Procurement: The Aims & Goals of Lambeth Procurement

Procurement at Lambeth is committed to sustainable, or Responsible Procurement - a process whereby organisations meet their needs for goods, services, works and utilities in a way that achieves Value for Money on a whole life basis in terms of generating benefits not only to the organisation but also to the society and the economy, whilst minimising the damage to the environment. Responsible Procurement is about looking at what our products and services are made of, where they come from and who has made them. Lambeth procurement officers and contract managers will strive to achieve Value for Money by employing sustainable procurement processes and considering the triple bottom line of the economic,
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environmental and social aspects of their contract or procurement project; Lambeth procurements further aims and goals are outlined using this methodology:
Economic
Procurement will be based on a partnering approach in which the Council and its partners will seek to gain mutual advantage through continually improving relationships. Strategic service delivery partnerships will play a central role in modernising the way in which the Councils public services are delivered. In developing strategic partnerships, consideration will be given to exploiting synergies that exist between services across the public sector or across geographical or administrative boundaries. The Council believes in a procurement process that demonstrates openness, transparency, propriety, probity and fairness and consistency to all providers. Suppliers and service providers will be paid in a timely manner, in line with the Councils corporate performance measures. Procurement performance progress will be formally benchmarked with peer organisations. Procurement managers at Lambeth will undertake strategic supply chain analysis for the Councils key areas of procurement, in order to identify savings and economies of scale opportunities. Managers will consider partnership and collaboration working possibilities and work towards avoiding duplication of effort. The framework of rules by which the Council will operate its procurement will be those laid down by the European Union and UK law and those set out by Lambeths Contract Standing Orders and in the Lambeth Procurement Guide; officers must be fully conversant with these before undertaking any procurement exercise, or seek appropriate advice. Lambeth officers will ensure that they comply with the Councils standards of conduct identified in the Managers Charter and the Council will ensure that all its procurement activity complies with all relevant and appropriate Lambeth standards. Effective risk management will be applied at every stage of the procurement and contract management process. Lambeth procurement officers will seek to develop packaging solutions for contracts, which consider the most attractive and cost efficient way of presenting service and supply requirements. In the competitive tendering process, bidders will be invited to demonstrate their track record in achieving Value for Money through effective use of their supply chain. Accountability and responsibility will be key elements in the procurement process. All Council Officers must recognise and accept their responsibilities before embarking on a procurement process. The Council requires officers to use electronic processes to minimise tendering and transaction costs wherever possible, as well as providing a commitment to support the eGovernment agenda with electronic trading. Council officers will ensure that, where practicable, electronic procurement solutions such as e-catalogues, e-marketplaces, electronic ordering and invoicing are used to purchase from contractors and approved suppliers. The Council will ensure that the supplier selection and contract award process will be conducted as separate processes. The selection process will seek to select the most competent suppliers and the award process will award contracts based upon either lowest price or the consideration of whole life costing and the achievement of an appropriate balance between price and quality. All procurement processes which result in a legally binding agreement will be managed by an appropriately skilled officer throughout the implementation, development and throughout the life of the contract.
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All contracts will contain and be managed against clear performance targets. The Council will take a long-term view regarding the procurement of its requirements, including the potential for innovative funding and the management and balance of risk. The Council will use its position and procurement power to influence and stimulate the development of markets and competition. It will seek advice where necessary from the marketplace concerning capacity, the latest innovative methodologies and funding opportunities. All procurement documentation will be maintained in line with the Lambeth Procurement Guide, Lambeth Financial Regulations and the Councils document management policy. These records will clearly document the process and the decision-making authority and ensure the existence of a clear audit trail.
Environmental
Lambeth Corporate Procurement will maintain and develop The Lambeth Sustainable Procurement Charter that will communicate our position on sustainable procurement. Lambeth has signed the Small Business Friendly Concordat and has adopted the Local Authority Sustainable Procurement Strategy & Flexible Framework. We have also signed up to and will support the Mayor of Londons Green Procurement Code. Benefits from sustainable procurement activities at Lambeth will be clearly evidenced, reported and promoted. Independent audit reports will be made available on the Lambeth website. Lambeth procurement officers will strive to remove barriers to sustainable procurement and will reward contractors based upon their sustainable procurement progress. Suppliers are essential to the delivery of Lambeths Responsible Procurement agenda and they will be encouraged to continually improve their sustainability profile. Procurement specifications for tendering projects and contract management practice at Lambeth will incorporate key sustainability performance indicators and deliverables. Lambeth procurement officers will consider and challenge suppliers on key sustainable procurement initiatives, including: o Environmental impact CO2, other emissions (including noise and light) waste products, energy use, the impact of DNA modified species on the natural environment, loss of natural habitat or eco-systems o Use of scarce natural resources, including fossil fuels and water o Use or production of dangerous or hazardous substance o Depletion of resources e.g. chemicals derived from oil, resources that are used faster than the natural process of replenishment (e.g. fish stocks in the North Sea, or tropical deforestation) o Diversity bio diversity, the depletion of species either directly or through loss of habitat o Animal Welfare treatment, transportation and use of animals, DNA modification, animal testing. Animal welfare is less commonly referred to but is a consideration
Social
The Council is committed to eliminating discrimination in its procurement process, service delivery and employment on the grounds of race, gender, disability, age, sexuality, religion, belief or any other grounds. Procurement officers will remain committed to the role procurement plays in delivering the Councils objectives and its contribution to the community strategy, workforce issues & the reduction of worklessness, diversity, equality and sustainability.
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Procurement officers have a duty under the Race Relations Acts to eliminate unlawful discrimination and promote equality of opportunity and good race relations between persons of different racial groups when carrying out any procurement activity. The Council has a duty under Section 17 of the Crime and Disorder Act 1988 which requires local authorities to consider the community safety implications of all their activities. The Council has a duty under the Disability Discrimination Act 1995 to ensure that disabled people are not discriminated against in relation to access to information on the provision of the Council's services and the services themselves, whether supplied by the Council or through contractors. The Council and its suppliers and partners will consult with and actively listen to customers and stakeholders when making decisions that will affect them. The Council will require all its suppliers, contractors and partners to adopt a customer care approach at least equal to and compatible with the Councils own policy in this area. Best Practice achievement at Lambeth will be shared with other organisations and publicised and used to attract procurement professionals. The Lambeth Chief Executive and all Lambeth leaders will engage with suppliers and help promote the aims and goals of the Lambeth Procurement Strategy. Procurement officers will remain committed to how we will encourage and do business with a diverse and competitive supply market, including working with small firms, social enterprises, ethnic minority businesses, voluntary and community sector suppliers and apprenticeship schemes. Procurement officers will encourage local business in tendering for Council work and will seek to remove obstacles and inhibitors to doing business with the Council. In the delivering of elements of larger contracts and framework agreements, the roles of SMEs and Third Sector organisations will be considered. We will foster relationships with the Third Sector and Social Enterprises to build capacity and remove barriers that may exist to doing business with the Council. Wherever practicable the Council will seek to work with any relevant consortia, frameworks or collaborative opportunities to procure its requirements, in order to widen the scope of its experience, maximise purchasing power and harness any economies of scale which may be achievable.
The Future for Lambeth Procurement

In the future, Lambeth procurement will strive towards embedding new procurement processes to ensure that procurement at Lambeth is fit for purpose. The Contract Register will be used to improve planning, collaboration and visibility of decisions. The London Borough of Lambeth has 6 key priorities for the future:
A Safer Lambeth With Strong Communities
More Opportunities For Children & Young People
Better Housing & Flourishing Local Communities
Respect For The Environment
Developing Personalised Care Services
Serving Our Customers Well
Lambeth procurement will remain committed to these high level objectives. Within these 6 key priority areas, we have several goals for the future; our activities will include: 1. Processes, Procedures and Management Information Continued development of the Lambeth Gateway process within the procurement lifecycle process
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Support processes with training (back to the floor, coaching, mentoring)
2. Development of Procurement Specific KPIs & Business Unit Dashboards 3. Promote the Lambeth Procurement Strategy 4. Contract Management Develop a corporate approach to the strategic contract management of Lambeths key contracts Release resources for front line services Conduct strategic contract reviews
5. Achieve Council Wide Savings Achieve council wide procurement savings through tendering and/or improved contract management of existing or potential corporate contract arrangements, via strategic category review Incorporate collaborative and partnership working in order to maximise opportunities Support Finance & Resources provision for the Use of Resources Key lines of Enquiry submission(s)
6. Building Capacity in Procurement Continued development and delivery of the internal procurement training programme, the procurement coaching & mentoring programme, the procurement Lunchtime Surgeries and the CIPS training programmes Conduct training reviews on the internal procurement training programme and consider and develop new courses Create partnerships and continue working with the Third Sector
7. Conduct a Procurement Capability Review for Lambeth Procurement 8. Contract Register Ensure that all contracts valued at 25,000 and greater are recorded on a Corporate Contract Register with scanned contract and procurement documents. Ensure that contract purchase orders valued at 25,000 and greater are attached to all requisitions via a mandatory link to the Contract Register Collect historical data to populate the Contract Register database Development of Contract Register reporting
9. Customer Facing Activity Carry out the annual Corporate Procurement Customer Service Survey and review Implement proposals to improve service provided to internal customers Place adverts for work onto the Supply 2 Gov and Lambeth internet sites Work towards a Shared Services methodology of procurement where Lambeth contracts are made available to other local authorities, public sector organisations, schools and private bodies
10. Support and Deliver Major Corporate Tenders 11. Support the Lambeth Procurement Community Through Enhanced System Reporting 12. Development of the London Procurement Hub 13. Manage the Number of New & Existing Suppliers that Lambeth Uses In endorsing this Procurement Strategy the Council formally acknowledges the importance of effective use of procurement in contributing to the delivery of its strategic objectives. The Council wholeheartedly embraces
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the principles of making savings whilst pursuing Best Value and the principles of sustainable procurement; this Strategy supports these through the wider cost/benefit approach on the social, economic and environmental level in keeping with sustainable market development. This Procurement Strategy will be reviewed regularly and will also be benchmarked against the National Procurement Strategy for Local Government for compliance and the OGC Procurement Capability Review Model & Standards Framework. The Strategy will be available electronically, via the Lambeth intranet and on the Lambeth internet pages at www.lambeth.gov.uk.
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The Lambeth Contract Standing Orders

Contents
An Introduction to Lambeths Contract Standing Orders
Section 1: The Scope of Contract Standing Orders 1.0 2.0 3.0 4.0 Basic Principles Officer Responsibilities Waivers, Collaborative & eProcurement Arrangements Relevant Contracts
Section 2: Common Requirements 5.0 6.0 7.0 Steps Prior to Purchase Records Advertising, Departmental Approved Lists & Framework Agreements
Section 3: Purchasing Rules 8.0 9.0 10.0 11.0 12.0 13.0 14.0 15.0 Competition Requirements for Purchases and Partnership Arrangements Pre-tender Market Research & Consultation Standards & Award Criteria Invitations to tender & Quotations Shortlisting Submission. Receipt & Opening of tenders & Quotations Clarification Procedures & Post Tender Clarification Evaluation, Award of Contract & Debriefing Candidates
Section 4: Contract & Other Formalities 16.0 17.0 18.0 19.0 Contract Documents Bonds & Parent Company Guarantees Prevention of Corruption Declaration of Interests
Section 5: Contract Management 20.0 21.0 22.0 Managing Contracts Risk Assessment & Contingency Planning Contract Monitoring, Evaluation & Review
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An Introduction to the Lambeth Contract Standing Orders

These Contract Standing Orders are supplemental to the Financial Regulations and the Procurement Guide and are made under the delegated powers of the Executive Director of Finance and Resources. These contract procedure rules are intended to promote good purchasing practice, public accountability and deter corruption. Following the rules is the best defence against allegations that a purchase has been made unfairly, incorrectly or fraudulently. Officers responsible for purchasing must comply with these contract procedure rules. They lay down minimum requirements, though a more thorough procedure may be appropriate for a particular contract. For example, if Rule 8.1 would normally require that quotes be obtained, it might be appropriate in particular circumstances to seek additional quotations in writing or tender submissions. Equally, it may not always be appropriate to make use of an exemption under Rule 3 even if one might apply or be granted. For the purpose of these rules, where there is a requirement for communication to be in writing, this shall be deemed to include e-mail and fax transmissions as well as hard copy. The Executive Director of Finance and Resources may make amendments to these contract procedure rules after consultation with the Corporate Procurement team Strategic Procurement Board and the Lambeth Legal team. All costs stated in these contract procedure rules are exclusive of VAT and staff costs. Terms appearing in the definitions appendix are italicised. Further advice can be had by contacting your departmental procurement team in the first instance; they may advise you to contact the Lambeth Legal Team or the Corporate Procurement Team directly:
The Lambeth Legal Team Contact: Andrew Pavlou Phone: 020 7926 2506 Lambeth Town Hall, London SW2 1RW Mail: apavlou@lambeth.gov.uk
The Lambeth Corporate Procurement Team Phone: 020 7926 9358 Mail: CorporateProcurement@lambeth.gov.uk
Access the Corporate Procurement intranet site here: http://intranet.lambeth.gov.uk/StaffServices/FinanceAndProcurement/Procurement/ and confer with your procurement colleagues at: LambethProcurementForum@lambeth.gov.uk.
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Section 1: Scope of Contract Procedure Rules

1.0 1.1 Basic Principles All purchasing procedures must: a. b. c. d. e. f. Achieve value for money for all public money spent Be consistent with the highest standards of integrity Ensure fairness and transparency in allocating public contracts Comply with UK & EU law and all legal requirements Ensure that non-commercial considerations do not influence any contracting decision Support the Councils codes of practice and corporate and departmental aims and policies and the Lambeth Procurement Guide g. Comply with the Councils corporate procurement strategy and competition policy h. Ensure that contracts are likely to be sustainable and, as far as possible, environmentally friendly
2.0 2.1 2.1.1
Officer Responsibilities Officers Officers responsible for purchasing must comply with these contract procedure rules, the guidance set out in the Lambeth Procurement Guide, Financial Regulations, the Lambeth Staff Code of Conduct and Scheme of Delegation and with all UK and European Union binding legal requirements. Officers must ensure that any agents, consultants and contractual partners acting on their behalf also comply. Officers must: a. Follow the rules in the Lambeth Contract Standing Orders and the Lambeth Procurement Guide when purchasing goods, services and building works b. Have proper regard for all necessary legal, financial and professional advice c. Declare any personal financial interest in a contract. Corruption is a criminal offence d. Conduct any value for money review and appraise the purchasing need e. For ANY contract, use the Councils approved supplier database, wherever possible f. Check whether there is an existing corporate contract that can be used before undergoing a competitive process g. Allow sufficient time for the submission of bids h. Keep all supplier bids confidential i. Keep records of all dealings with suppliers j. The project manager should ensure the safe keeping of contract documentation in line with Lambeths document retention policy. Contract documents need to be on controlled premises, though not necessarily on Council premises. k. Obtain all required approvals and complete a written contract (and sealed, as required) before placing an order or raising a purchase order for any supplies, services or works l. Where appropriate, not award a contract until the standstill period is over m. Enter all purchase order information onto the Oracle financial system
2.1.2
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n. Identify a contract manager with responsibility for ensuring the contract delivers as intended. Officers must monitor each contract afterwards to see how well it met the purchasing need and value for money requirements o. Ensure that there is adequate budget provision for the procurement exercise undertaken p. Must not divide up any contract in order to avoid any rules set out in the Contract Standing Orders or Procurement Guide q. Ensure that the procurement is appropriate to the needs of the Council and its declared objectives r. Ensure that contracts are legally, financially and technically capable of delivery to the Council s. Where lawful and appropriate give regard to the local economy 2.1.3 When any employee either of the authority or of a service provider may be affected by any transfer arrangement, Officers must ensure that the Transfer of Undertaking (Protection of Employment - TUPE) issues are considered and obtain legal advice before proceeding with inviting tenders or quotations. Executive Directors Executive Directors must: a. Ensure that their staff comply with Rule 2.1 b. Keep records of all purchases and contracts valued below 25,000 c. Ensure that all signed and sealed contracts valued at 25,000 and greater are scanned and entered onto the Contract Register d. Ensure that all Waivers are recorded under Rule 3.1 and 3.2 3.0 3.1 Waivers, Collaborative & eProcurement Arrangements The Council and its cabinet have power to waive any requirements within these contract procedure rules for specific projects, and any such decision may be a key decision. These rules are delegated for recommendation to the Procurement Boards, the Chief Executive and Lambeth Executive Directors. In exceptional circumstances, an Executive Director also has the power, under the scheme of delegation in the Constitution, to waive any requirements within these contract procedure rules. Waivers must not be made retrospectively. Where a proposed contract is likely to exceed the EU threshold, an Executive Director has no delegated powers and the matter has to be determined by the Strategic Procurement Board under delegated powers - see Rule 3.1. No exemption can be used if the EU procurement procedures apply. Where a waiver is necessary because of an unforeseeable emergency involving immediate risk to persons, property or serious disruption to Council services, an Executive Director may approve the waiver (in the form of a report), observing the Lambeth Scheme of Delegation. The waiver report and form shall be submitted to the relevant Procurement Board, as appropriate.
2.2 2.2.1
3.2
3.3
3.4
22
3.5
All waivers, and the reasons for them, must be recorded using the required forms. Waivers valued from 0.00-25,000 must have their forms signed by the relevant Divisional Director of Resources. Waivers valued at 25,000 and greater must be signed by the chair of the relevant Procurement Board and the relevant Executive Director. Each department must keep a record of all their waivers valued from 0.00-25,000. The Procurement Boards must monitor the use of all waivers. In order to secure value for money, the authority may enter into a procurement arrangement with a Central Purchasing Body or CPB. In these cases the Officer must seek procurement approval from the relevant Procurement Board if the aggregate value is at 25,000 and greater. The terms and conditions of the CPB must be fully complied with, including any requirement to undertake competition between providers. In order to secure value for money, the authority may enter into collaborative procurement arrangements with another local authority, government department, primary care trust, statutory undertaker or other contracting authority. In these cases the Officer must seek procurement approval for award of contract or before entering into the agreement. This must be obtained from the relevant value based Procurement Board. 3.8.1 All purchases made via a public body are deemed to comply with these contract procedure rules and no exemption is required. However, purchases above the EU threshold must be let under the EU procedures, unless the consortium has satisfied this requirement already by letting their contract in accordance with the EU procedures on behalf of the authority and other consortium members. Any contracts entered into through collaboration with other local authorities or other public bodies, where a competitive process has been followed that complies with the contract procedure rules of the leading organisation, will be deemed to comply with these contract procedure rules and no waiver is required. The Officer must seek procurement approval for award of contract or before entering into the agreement and this must be obtained from the relevant value based Procurement Board.
3.6
3.7
3.8
3.8.2
3.9
The use of e-procurement technology does not negate the requirement to comply with all elements of these contract procurement rules and any of the guidance set down in the Lambeth Procurement Guide, particularly those relating to competition and value for money. 3.9.1 In an electronic reverse auction procurement route, the nature of the auction is such that an immediate purchase decision will have to be made by the officer leading the auction on behalf of the Council. As this process does not allow for Lambeths contract award process under Scheme of Delegation to take place in advance of purchase, the procurement officer must obtain permission to award the contract under Scheme of Delegation before the auction takes place. Where a tender is run using the Councils electronic procurement system, there is no requirement for hard copies of the suppliers bid to be returned. All electronic tender documentation will be securely accessed and retained on the Councils e-procurement website.
3.9.2
23
4.0 4.1
Relevant Contracts All relevant contracts must comply with these Contract Standing Orders. A relevant contract is any arrangement made by, or on behalf of, the authority (including schools) for the carrying out of works or for the supply of goods, materials or services. These include arrangements for: a. b. c. d. The supply of products or goods The hire, rental or lease of goods or equipment The provision of consultancy or other professional services The delivery of services, including (but not limited to) those related to: i. ii. iii. The recruitment of staff Land and property transactions Financial and consultancy services
4.2
Relevant contracts do not include: a. Contracts of employment which make an individual a direct employee of the authority b. Agreements regarding the acquisition, disposal, or transfer of land (for which Financial Regulations shall apply) c. Contracts for the provision of any product or service that has been manufactured or delivered by an illegal means
24
Section 2: Common Requirements

5.0 5.1 Steps Prior to Purchase The Officer must appraise the purchase in a manner commensurate with its complexity and value. The Officer must also take into account the guidance in the Lambeth Procurement Guide, by: a. b. c. d. e. Including the requirements from any relevant value for money review Appraising the need for the expenditure and its priority Defining the objectives of the purchase Assessing the risks associated with the purchase and how to manage them Considering what procurement method is most likely to achieve the purchasing objectives, including: i. ii. iii. Internal or external sourcing Shared services Partnering arrangements and collaborative procurement arrangements with another local authority, government department, Primary Care Trust, statutory undertaker other contracting authority Packaging strategy Use of Central Purchasing Bodies such as the LCSG or the OGC
iv. v. f.
Consulting users as appropriate about the proposed procurement method, contract standards and performance and user satisfaction monitoring g. Using relevant terms and conditions that are to apply to the proposed contract 5.2 And by confirming that: a. They have the authority to spend, have obtained the required approval(s) for the expenditure and the purchase accords with the Lambeth Internal Procurement Framework and Scheme of Delegation b. If the purchase is valued at 500,000 and greater, an entry onto the Councils Forward Plan has been made c. If the purchase is valued at 100,000 and greater, their relevant departmental executive Member has been consulted 6.0 6.1 Records Where the Total Value is less than 25,000, the relevant Business Unit Manager or Head of Service must ensure that the following records are kept: a. b. c. d. Invitations to quote and quotations A record of any waivers to the procurement process and the reasons for them A record of the reason if the lowest price is not accepted Written records of communications with the successful contractor or an electronic record if a
25
written record of the transaction would normally not be produced 6.2 Where the total value exceeds 25,000, the relevant Business Unit Manager or Head of Service must ensure that the following records are kept: a. b. c. d. e. f. g. h. i. j. The method for obtaining bids (see Rule 8.1) The calculation of the estimated value Any contracting decision and the reasons for it Any waiver under Rule 3 together with the reasons for it The award criteria in descending order of importance tender documents sent to and received from tenderers Pre-tender research, benchmarking and consultation information Any post-tender clarification information, to include minutes of meetings The contract documents Contract implementation evaluation and ongoing contract monitoring and management information k. Communications with all tenderers throughout the tendering exercise and with the successful supplier(s) throughout the period of the contract l. That all contracts valued at 25,000 and greater are entered onto the Councils contract register m. The project manager should ensure the safe keeping of contract documentation in line with Lambeths document retention policy. Contract documents need to be on controlled premises, though not necessarily on Council premises n. Where an electronic procurement has taken place, all electronic records pertaining to the tender and the tendering process must be retained on the Councils e-procurement system 6.3 Records required by this rule must be kept in accordance with the Lambeth document retention policy. Advertising, Departmental Approved Lists & Framework Agreements Identifying and Assessing Potential Candidates 7.1.1 Officers shall ensure that, where proposed contracts, irrespective of their total aggregate value, might be of interest to potential suppliers located in other member states of the EU, a sufficiently accessible advertisement is published. Generally, the greater the interest of the contract to potential bidders from other member states, the wider the coverage of the advertisement should be. Advertisements for tenders must be placed as below: a. For procurements valued below 25,000 officers are not obliged to formally advertise the purchase but may do so using the Councils public website b. For procurements valued at 25,000 and greater, the Councils public website must be used for tender advertisement, as well as 1 other government supplier portal c. For procurements valued at 100,000 and greater, the same as above but officers may also use advertisements in national official journals or specialist trade papers, if relevant and if affordable d. Where the value exceeds the EU threshold, tender advertisement rules must be followed in accordance with the current EU Public Procurement Directive. See details in the Procurement Guide
7.0 7.1
26
7.1.2
Officers are responsible for ensuring that all candidates for a purchase or relevant contract are suitably pre-qualified. The pre-qualification process shall establish that the suppliers have sound: a. Economic and financial standing b. Technical ability to fulfil the requirements of the authority c. Capacity to fulfil the requirements of the authority
7.1.3
This shall be achieved in respect of proposed purchases and contracts by selecting firms: a. That are on an approved supplier database, maintained by the authority or on its behalf b. That have successfully completed the Authoritys pre-qualification application c. That have been pre-qualified by or within a Central Purchasing Body (CPB), public sector collaborative contract, Shared Services agreement or another public sector purchasing agent whose pre-qualification processes have been approved by the Authority d. For construction work valued below the EU threshold, firms must be selected from the Authoritys approved supplier database
7.1.4
Public advertisements issued in respect of Rule 7.1.3 above shall reflect the potential degree of interest from candidates located within other member states of the EU.
7.2
Departmental Approved Lists 7.2.1 Departmental Approved Lists should: a. Be used where recurrent transactions of a similar type are likely but where such transactions need to be priced individually and cannot easily be aggregated and priced in a single tendering exercise b. Be used where a corporate or other departmental contract or list that covers the requirement is not already in place c. Never be used exclusively where the EU threshold for advertisement has been reached d. Only be set up after approval by an officers Departmental Head of Procurement and the Corporate Head of Procurement, to prevent duplication of lists 7.2.2 Executive Directors may draw up: a. Departmental Approved Lists of suppliers ready to perform contracts to supply goods, services or works of particular types including without limitation on the basis of agreed contract terms b. Criteria for shortlisting from the lists 7.2.3 No supplier may be entered on a Departmental Approved List until there has been an adequate investigation into both their financial and their technical capacity to perform the contract, unless such matters will be investigated each time bids are invited from that list. Departmental Approved Lists must be drawn up after an advertisement inviting applications for inclusion on the list. The advertisement must be placed to secure the widest publicity among relevant suppliers throughout all member states of the EU. Persons may be entered
7.2.4
27
on a list between the initial advertisement and re-advertisement provided the requirements of Rule 7.2.3 are met. 7.2.5 The list and shortlisting criteria must be reviewed at least annually and re-advertised at least every three years. On re-advertisement, a copy of the advertisement must be sent to each supplier on the list, inviting them to reapply. Review means: a. The reassessment of the financial and technical ability and performance of those suppliers on the list, unless such matters will be investigated each time bids are invited from that list b. The deletion of those suppliers no longer qualified, with a written record kept justifying the deletion. 7.2.6 All Departmental Approved Lists shall be maintained in an open, fair and transparent manner and be open to public inspection. A register of pre-qualified contractors and consultants maintained by or on behalf of central or local government (e.g. OGC trading bodies, LCSG, Exor or Constructionline) will be equivalent to a Departmental Approved List for the purpose of these contract procedure rules but shall not be subject to the requirements of Rules 7.2.2 to 7.2.6 inclusive. Constructionline should only be used where a need cannot be met by Exor.
7.2.7
7.3
Framework Agreements 7.3.1 Where commissioned under European rules the term of a framework agreement must not exceed four years, save in exceptional cases duly justified, in particular by the subject of the framework agreement. Contracting authorities may not use framework agreements improperly or in such a way as to hinder, restrict or distort competition. Also, while an agreement may be entered into with one provider, where an agreement is concluded with several organisations, there must be at least three in number. Contracts based on framework agreements may be awarded by either:
7.3.2
a. Applying the terms established in the Lambeth Scheme of Delegation and the framework agreement itself (where such terms are sufficiently precise to cover the particular calloff) without reopening competition, or b. Where the terms laid down in the framework agreement are not precise enough or complete for the particular call-off, by holding a mini -competition in accordance with the following procedure: i. ii. Inviting all the organisations within the framework agreement that are capable of executing the subject of the contract to submit written tenders Fixing a time limit which is sufficiently long enough to allow tenders for each specific contract to be submitted, taking into account factors such as the complexity of the subject of the contract Awarding each contract to the tenderer who has submitted the best tender on the basis of the award criteria set out in the specifications of the framework agreement
iii.
28
Section 3: Purchasing Rules

8.0 Competition Requirements for Purchases and Partnership Arrangements All Officers must calculate the total aggregate value of any contract or purchase. The following procedures apply where there are no other procedures which take precedence. Other procedures may include agency agreements with government. If in doubt, Officers must seek the advice of the Lambeth Legal team. 8.1 Purchasing - Competition Requirements 8.1.1 Where the total value for a purchase is within the values in the first column below, the procedure in the second column must be followed. Approval is received from the persons specified in the third column.
Total Aggregate Value
Procedure
Approval
Other Essential Requirements
Procurement Guide Resource
0.00 to 5,000
One written quotation
Business Unit Manager or Other Manager Business Unit Manager or Other Manager
The quote must represent value for money At least one quotation must be from a local Lambeth supplier, wherever possible Procurement Board compliance check. Details onto Contract Register 100,000 and greater: contract placed under Lambeth seal 100,000 and greater: award decision reported to Officer Decisions
Section 3: Purchasing, tendering & Contract Award Section 3: Purchasing, tendering & Contract Award Section 3: Purchasing, tendering & Contract Award
5,000 and up to 25,000
Three written quotes
25,000 and up to 500,000
Formal tendering (EU rules if over 173,934 for supplies and services, 4,348,350 for works)
25,00050,000: Business Unit Manager or Other Manager. 50,000100,000: Head of Service or Assistant Director 100,000-1 million: Divisional Director and Divisional Director of Resources
29
500,00010 million
100,000-1 million: Divisional Director and Divisional Director of Resources 1 million-10 million: Executive Director and Divisional Director of Resources
Procurement Board compliance check & contract award approval Details onto Contract Register Details onto Forward Plan Contract placed under Lambeth seal Award decision reported to Officer Decisions External advertisement Executive Member informed CPT and Legal team involvement
Section 3: Purchasing, tendering & Contract Award
10 million and greater E
10 million and greater: Executive Director of Finance and Resources
All as above
Section 3: Purchasing, tendering & Contract Award
8.1.2
Where it can be demonstrated that there are insufficient suitably qualified candidates to meet the competition requirement, all suitably qualified candidates must be invited. In procedures A and B, where suitably qualified local Lambeth suppliers are available, a minimum of one of these suppliers must be invited. An Officer must not enter into separate contracts nor select a method of calculating the total value in order to minimise the application of these contract procedure rules. Where the EU procedure is required, the Officer shall consult their departmental or section head of procurement to determine the method of conducting the purchase. If a department or section does not have a head of procurement to consult, the Corporate Procurement or Legal teams must be consulted. Where extensions of time or variations in price (or both together) are made to an existing contract, Officers must compute the amount of the variation and seek approval in
8.1.3
8.1.4
8.1.5
8.1.6
30
accordance with the Scheme of Delegation (see chart 8.1.1 above) and by following guidance set down in the Procurement Guide. Approval must be based on the total value of the extension and/or variation only, not the extension and/or variation plus the original value of the contract. 8.2 Contract Termination 8.2.1 Where a contract is to be terminated before its contracted termination date, this must be approved by the relevant departments Executive Director. The relevant Executive Director must take advice from the Lambeth Legal team in advance of any contract termination.
8.3
Providing Services to External Purchasers 8.3.1 The Lambeth Legal team must be consulted where contracts to work for organisations other than the authority are contemplated.
8.4
Collaborative and Partnership Arrangements 8.4.1 Collaborative and partnership arrangements are subject to all UK and EU procurement legislation and must follow these contract procedure rules.
8.5
The Appointment of Consultants to Provide Services 8.5.1 Consultant architects, engineers, surveyors and other professional consultants shall be selected and commissions awarded in accordance with the procedures detailed within these contract procedure rules and as outlined in the Procurement Guide. The engagement of a consultant shall follow the agreement of a specification that adequately describes the scope of the services to be provided. Records of consultancy appointments shall be maintained in accordance with Rule 6. Consultants shall be required to provide evidence of, and maintain professional indemnity insurance policies to the satisfaction of the Council for the periods specified in the respective agreement.
8.5.2
8.5.3 8.5.4
9.0 9.1
Pre-tender Market Research & Consultation The Officer responsible for the purchase: a. May consult potential suppliers prior to the issue of the invitation to tender in general terms about the nature, level and standard of the supply, contract packaging and other relevant matters, provided this does not prejudice any potential candidate b. Must not seek or accept technical advice on the preparation of an invitation to tender or quotation from anyone who may have a commercial interest in them, if this may prejudice the equal treatment of all potential candidates or distort competition c. Where the aggregate value of the contract or purchase is valued at 100,000 and greater, the officer must consult with their departmental cabinet member before tender approval is given d. Should seek advice from their departmental procurement team
31
10.0 10.1
Standards & Award Criteria The Officer must ascertain the relevant EU, UK, European or international standards which apply to the subject matter of the contract. The Officer must include those standards which are necessary properly to describe the required quality. The Lambeth Legal team must be consulted if it is proposed to use standards other than European standards. The Officer must define award criteria that are appropriate to the purchase and designed to secure an outcome giving Value for Money for the authority. The basic criteria shall be: a. Most economically advantageous, where considerations other than price also apply b. Lowest price where payment is to be made by the authority c. Highest price if payment is to be received If the first criterion is adopted, it must be further defined by reference to sub-criteria which may refer only to relevant considerations. These must include price and quality of the goods and or services in addition to service, quality of goods, whole life costs, technical merit, previous experience, delivery date, cost effectiveness, quality, relevant environmental considerations, aesthetic and functional characteristics (including security and control features), safety, aftersales services, technical assistance and any other relevant matters.
10.2
10.3
Award Criteria must not include: a. Non-commercial considerations b. Matters which discriminate against suppliers from the European Economic Area or signatories to the Government Procurement Agreement
11.0 11.1
Invitations to tender & Quotations The invitation to tender shall state that no tender will be considered unless it is received by the date and time stipulated in the Invitation to tender. No tender delivered in contravention of this clause shall be considered, except in respect of any provision made in accordance with rule 13.8, following. All tenders valued at 25,000 and greater must be completed online. Officers and suppliers will be provided with guidance and support on how the system works and where they can get help. In exceptional circumstances paper tenders may be returned but these must be approved by the Corporate Procurement Team in advance of the tender's return. All Invitations to tender shall include the following: a. Stipulation that all tenders valued at 25,000 and greater must be completed online. b. A specification that describes the authoritys requirements in sufficient detail to enable the submission of competitive offers c. A requirement for tenderers to declare that the tender content, price or any other figure or particulars concerning the tender have not been disclosed by the tenderer to any other party (except where such a disclosure is made in confidence for a necessary purpose)
11.2
11.3
11.4
32
d. A requirement for tenderers to complete fully and sign all tender documents including a form of tender and certificates relating to canvassing and non-collusion e. Notification that tenders are submitted to the Council on the basis that they are compiled at the tenderers expense f. A description of the award procedure and, unless defined in a prior advertisement, a definition of the award criteria in objective terms and if possible in descending order of importance g. The method by which any arithmetical errors discovered in the submitted tenders is to be dealt with; in particular, whether the overall price prevails over the rates in the tender or vice versa 11.5 All Invitations to tender or quotations must specify the goods, service or works that are required, together with the terms and conditions of contract that will apply (see Rule 16). The invitation to tender or quotation must state that the Council is not bound to accept any quotation or tender. tenders that are returned without a signed Form of tender (which also declares the supplier's acceptance of Lambeth's terms and conditions of contract) will be known as non-compliant and will not be considered for further competition. All candidates invited to tender or quote must be issued with the same information at the same time and subject to the same conditions. Any supplementary information must be given on the same basis. Shortlisting Any shortlisting must have regard to the financial standing and technical capacity relevant to the contract and the award criteria. Special rules apply in respect of the EU Procedure; see section 3 of the Procurement Guide. The Officers responsible for shortlisting are specified in Rule 8.1.1. Where Departmental Approved Lists are used, shortlisting may be done by the Officer in accordance with the shortlisting criteria drawn up when the Departmental Approved List was compiled (see Rule 7.2.2). However, where the EU procedure applies, Departmental Approved Lists may not be used. Submission, Receipt & Opening or tenders & Quotations tenders can be returned to Lambeth by one of four routes: a. tenders of 25,000 or greater must be returned directly via the Councils e-procurement system. tenders must be submitted directly to the website and opened by 2 officers one of whom must be independent of the procurement exercise. b. An electronic reverse auction can only be used with the specific permission of the Head of Lambeth Corporate Procurement. The procedure enables suppliers/providers to adjust their tender price in the light of information from the tender prices submitted by competing
11.6
11.7
11.8
12.0 12.1
12.2 12.3
13.0 13.1
33
suppliers/providers, then alterations will be accepted as permitted by the auction process. Any tenders not using the Councils e-procurement or an e-auction system must be returned via one of the two following routes. c. All tenders valued from 0.00 to 100,000 must be returned to the Officer leading the procurement exercise or to the departmental procurement team and will be the responsibility of the relevant department Executive Director for which the tender is received; tenders valued at 25,000 and greater must be returned electronically. Each tender must be: i. ii. iii. If a paper tender it must be recorded on a tender opening form in order to verify the date and time it was received Adequately protected immediately on receipt to guard against amendment of its contents All tenders must be opened in the presence of two or more Officers; one Officer must be the lead Officer for that procurement exercise or his or her representative
d. Paper tenders valued at 100,000 and greater are the responsibility of the Chief Executive and must be returned to the Lambeth Town Hall Post Room, in care of the Chief Executive. All paper tenders must be opened at the same time, on the next working day after the tender submission date. This will allow for any tenders delivered to the incorrect office or location. Each tender must: i. ii. iii. Be recorded immediately on receipt in the Post Room tender Record Log in order to verify the date and time it was received Be adequately protected immediately on receipt to guard against amendment of its contents Be opened in the presence of two or more Officers if valued at 100,000 and greater. One Officer must be the Lambeth Post Room Officer who is authorised to open tenders or a representative from Corporate Procurement Not be received by direct e mail if valued at 100,000 and greater. These tenders will be rejected
iv.
13.2
Candidates must be given an adequate period in which to prepare and submit a proper quotation or tender, consistent with the complexity of the contract requirement. Normally at least four weeks should be allowed for submission of tenders. The EU procedure lays down specific time periods (see guidance in section 3 of the Procurement Guide). Officers must notify all candidates of the correct tender return instructions, including to whom (Officer name) and where (Lambeth address) the tenders must be returned. In relation to paper tenders, tender instructions or notice shall state that no quotation or tender shall be received by the Council except in a plain sealed envelope/package which shall bear the words tender / quotation (as appropriate) followed by the subject matter to which it relates, but shall not bear any name or mark which would identify the sender. Any tender that does not comply with the Councils requirement as set out in the tender invitation e.g. arrives late and /or after other tenders had been opened, should normally be excluded from consideration, with the circumstances recorded on the Council e-procurement system or tender Record Log and any evidence of the relevant events retained (i.e. envelope, packaging, receipt documentation etc.). Officers may, however, seek the agreement of the
13.3
13.4
34
Head of Lambeth Corporate Procurement to relax these requirements in appropriate circumstances. Any such relaxation shall be identified when seeking any necessary authorities required before the acceptance of a tender. 13.5 Upon opening, a summary of the main terms of each tender (i.e. significant issues that are unique to each tender submission and were not stated in the tender invitation documents such as tender sum, construction period, etc) must be recorded in the tender Record Log either in the e-procurement system or on the e-auction or by the Project officer or initialled on behalf of the Chief Executive (when paper tenders are returned to the Town Hall) Pre and Post tender Clarification Procedures Providing clarification of an invitation to tender to potential or actual candidates or seeking clarification of a tender, whether in writing or by way of a meeting, is permitted. Discussions with tenderers after submission of a tender and before the award of a contract (post tender clarification) with a view to clarifying mistakes or errors in the tender submitted, operational provisions or terms and conditions of contract are permitted. Where post tender clarification discussions are to take place with a supplier, all tenderers involved in the respective exercise must be notified and all information must be documented by the Officers conducting the clarification. However, discussions with tenderers after submission of a tender and before the award of a contract with a view to obtaining adjustments in scope, price, delivery or content (i.e. posttender negotiations) must not be conducted this is a distortion of competition. Where post-tender clarification results in a fundamental change to the specification (or contract terms) the contract must not be awarded but re-tendered, following the guidance set out in the Procurement Guide. Evaluation, Award of Contract & Debriefing of Candidates Apart from the debriefing required or permitted by these contract procedure rules, the confidentiality of quotations, tenders and the identity of candidates must be preserved at all times and information about one candidates tender submission must not be given to another candidate. Contracts must be evaluated and awarded in accordance with the award criteria. During this process, Officers shall ensure that submitted tender prices are compared with any pre-tender estimates and that any discrepancies are examined and resolved satisfactorily. The arithmetic in compliant tenders must be checked. If arithmetical errors are found they should be notified to the tenderer, who should be requested to confirm or withdraw their tender. Alternatively, if the rates in the tender, rather than the overall price, were stated within the tender invitation as being dominant, an amended tender price may be requested to accord with the rates given by the tenderer. Officers may accept quotations and tenders received in respect of proposed contracts, provided they have been sought and evaluated fully in accordance with these contract procedure rules and in respect of the Lambeth Scheme of Delegation.
14.0 14.1
14.2
14.3
15.0 15.1
15.2
15.3
15.4
35
15.5
Where the total value is at 25,000 and greater, the Officer must notify all candidates simultaneously and as soon as possible of the intention to award the contract to the successful candidate. Where the standstill period applies Officers must send the following to all persons submitting an expression of interest: a. b. c. d. The award criteria Where appropriate the score the tenderer obtained against the criteria Where appropriate the score the winning tenderer obtained The name of the winning tenderer
In this event the Officer must provide unsuccessful candidates with a period of at least ten working days in which to challenge the decision before the Officer awards the contract. If the decision is challenged by an unsuccessful candidate then the Officer shall not award the contract and shall immediately seek the advice of the Lambeth Legal team. 15.6 The Officer shall debrief all those candidates who submitted a bid about the characteristics and relative advantages and disadvantages of the bid they submitted. No information, other than the following, should be given without taking the advice of the Head of Legal Services: a. How the award criteria were applied b. The prices or range of prices submitted, in either case not correlated to candidates names c. The names of candidates where there were three or more candidates 15.7 If a candidate requests in writing the reasons for a contracting decision, the Officer must give the reasons in writing within 15 days of the request. If requested, the Officer may also give the debriefing information at Rule 15.6 above to candidates who were deselected in a pre-tender shortlisting process.
36
Section 4: Contract & Other Formalities

16.0 16.1 Contract Documents Relevant Contracts 16.1.1 All relevant contracts that exceed 25,000 shall be in writing and must set out the parties obligations, rights and risk allocations. All relevant contracts, irrespective of value, shall clearly specify: a. What is to be supplied (i.e. the works, materials, services, matters or things to be furnished, had or done) b. The provisions for payment (i.e. the price to be paid and when) c. The time, or times, within which the contract is to be performed d. The provisions for the Council to terminate the contract. 16.1.3 The Councils terms and conditions of contract must be used wherever possible rather than the suppliers. If you intend to use the suppliers terms advice must be sought from the Legal team. In addition, every relevant contract of purchase over 25,000 must also state clearly as a minimum: a. That the contractor may not assign or sub-contract without prior written consent b. How the contractor would indemnify the Council against any negligent act or omission c. Any insurance requirements d. How the contract may be ended because of non performance or otherwise e. How intellectual property is dealt with f. How services may be varied g. Important performance indicators h. Health and safety requirements i. Ombudsman requirements, if relevant j. Data protection requirements, if relevant k. That charter standards are to be met if relevant l. Race relations requirements m. Disability Discrimination Act requirements n. Freedom of Information Act requirements o. Where Agents are used to let contracts, that Agents must comply with the Councils contract procedure rules p. A right of access to relevant documentation and records of the contractor for monitoring and audit purposes if relevant
16.1.2
16.1.4
37
16.1.5
The formal advice of the Lambeth Legal team must be sought for the following contracts: a. b. c. d. Where the total value exceeds 100,000 Those involving leasing arrangements Where it is proposed to use a supplier's own terms Those that involve insourcing or outsourcing
16.2
Contract Formalities 16.2.1 Agreements shall be completed as follows: Method of Completion By
Total Value
Up to 25,000
Verbal or signature (standard terms on a Purchase Order)
a. 0 to 500.00: lead Officer and any manager b. 500.00-25,000: lead Officer and Business Unit Manager a. Chair of the Procurement Board and: b. 25,000 - 50,000: Business Unit Manager c. 50,000 - 100,000: Head of Service or Assistant Divisional Directors (see Rule 16.2.3) See Rule 16.3
25,000 to 500,000
Signature (Any contract not sealed must be signed by two officers with the appropriate level of delegated power)
Above 100,000
Sealing
16.2.2
All contracts must be concluded formally in writing before the supply, service or construction work begins, except in exceptional circumstances, and then only with the written consent of the Head of Lambeth Corporate Procurement. An award letter is insufficient. The Officer responsible for securing signature of the contract must ensure that the person signing for the other contracting party has authority to bind it. Where a contract or purchase value is valued at 100,000 and greater, the procurement Officer responsible for that procurement exercise must inform their departmental Executive Director of the procurement exercise. This must be done immediately upon receipt of formal approval for the procurement exercise to commence.
16.2.3
16.2.4
16.3
Sealing 16.3.1 Where contracts are completed by each side adding their formal seal, such contracts shall be attested by officers so authorised under the Councils Constitution.
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16.3.2
Every Council sealing will be consecutively numbered, recorded and signed by the person witnessing the seal. The seal must not be affixed without the authority of the Legal Team, acting under delegated powers.
16.3.3
A contract must be sealed where: a. The Council wishes to enforce the contract more than six years after its end b. The price paid or received under the contract is a nominal price and does not reflect the value of the goods or services c. There is any doubt about the authority of the person signing for the other contracting party d. The total value is at 100,000 and greater
17.0 17.1
Bonds & Parent Company Guarantees The Officer must consult the Lambeth Legal team about whether a Parent Company Guarantee is necessary when a Candidate is a subsidiary of a parent company and: a. The total value exceeds 250,000, or b. Award is based on evaluation of the parent company, or c. There is some concern about the stability of the candidate
17.2
The Officer must consult the Lambeth Legal team about whether a Bond is needed: a. Where the total value exceeds 1,000,000, or b. Where it is proposed to make stage or other payments in advance of receiving the whole of the subject matter of the contract and there is concern about the stability of the candidate
18.0 18.1
Prevention of Corruption The Officer must comply with the Lambeth Code of Conduct and must not invite or accept any gift or reward in respect of the award or performance of any contract. High standards of conduct are obligatory; it will be for the Officer to prove that anything received was not received corruptly. Corrupt behaviour will lead to dismissal and is a crime under the statutes referred to in Rule 18.2 below. The following clause must be put in every written Council contract: The Council may terminate this contract and recover all its loss if the Contractor, its employees or anyone acting on the Contractors behalf do any of the following things: a. Offer, give or agree to give to anyone any inducement or reward in respect of this or any other Council contract (even if the Contractor does not know what has been done), or b. Commit an offence under the Prevention of Corruption Acts 1889 to 1916 or Section 117(2) of the Local Government Act 1972, or c. Commit any fraud in connection with this or any other Council contract whether alone or in conjunction with Council members, contractors or employees. Any clause limiting the Contractors liability shall not apply to this clause.
18.2
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19.0 19.1
Declaration of Interest If it comes to the knowledge of a member or an employee of the authority that a contract in which he or she has a pecuniary interest has been or is proposed to be entered into by the Council, he or she shall immediately give written notice to the chief executive and their departmental executive director. The chief executive shall report such declarations to the appropriate committee. Such written notice is required irrespective of whether the pecuniary (financial) interest is direct or indirect. An indirect pecuniary interest is distinct from a direct pecuniary interest in as much as it is not a contract to which the member or employee is directly a party. A shareholding in a body not exceeding a total nominal value of 1,000 or 1% of the nominal value of the issued share capital (whichever is the less) is not a pecuniary interest for the purposes of this standing order. Executive Directors in all departments shall maintain a record of all declarations of interests notified by Members and Officers. The chief executive shall ensure that the attention of all Members is drawn to the National Code of Local Government Conduct.
19.2
19.3
19.4
19.5
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Section 5: Contract Management

20.0 20.1 Managing Contracts Heads of service in sponsoring departments are to name contract managers for all new contracts. All contracts must have a named Council contract manager for the entirety of the contract. Contract managers must follow the procedures set out in the Councils Contract Standing Orders and in the Lambeth Procurement Guide. Risk Assessment & Contingency Planning Provision for resources for the management of the contract, for its entirety, must be identified in the business case. For all contracts with a value of over 25,000, contract managers must: a. Maintain a risk register during the contract period b. Undertake appropriate risk assessments and for identified risks c. Ensure contingency measures are in place 22.0 22.1 Contract Monitoring, Evaluation & Review All contracts are to be subject to regular formal reviews with the contractor. An initial review must be done at the first 3 months of a contract start date and ongoing reviews will then be conducted on a regular schedule, as determined by the relevant Procurement Board. A formal review process must be applied to all contracts deemed to be High Risk, High Value, or High Profile. This process must be applied at key stages of major procurements. During the life of the contract, the Officer must monitor a contract in respect of: a. Performance and compliance with specification and contract b. Cost and any value for money requirements c. User satisfaction and risk management
20.2
21.0 21.1
21.2
22.2
22.3
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The Lambeth Procurement Gateways

A gateway process in procurement is a mechanism to review procurement projects at critical points in their development, before key decisions are made; the processes within each gateway enable procurement officers to progress through their various stages. The purpose of the process is to introduce a series of health checks into the procurement project timetable, which is designed to ensure that the project is soundly based, well planned, involves all appropriate stakeholders and achieves its objectives. It also helps ensure a consistency of approach across all procurement activity. The gateway process at Lambeth includes all procurement processes from commissioning, purchasing and tendering through to contract management. Each gateway consists of a series of questions and activities designed to test the robustness of the procurement project. Evidence is documented and submitted to the relevant Procurement Boards or managers to demonstrate that the topics covered by the gateway questions have been adequately addressed, before the project is allowed to progress to its next stage. The Lambeth Gateway Process employs 4 gateway or decision points, throughout the procurement process. Each is numbered sequentially and joined with the Plan, Think, Do, Review methodology of project management:
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REQUIREMENT ARISES
The Lambeth Purchasing Cycle
Confirm your authority to spend with your Line Manager. If YES, proceed. If NO...
If you require a consultant, you must check with Lambeth Human Resources first at: namoa-buahin@lambeth.gov.uk
STOP
Can your requirement be met by suppliers on the Contract Register, the OGC or LCSG website? All suppliers must be pre-qualified. If suppliers are not on the Contract Register or Exor, OGC or LCSG, they must complete a BQ. See section 3.0.1 of The Procurement Guide
YES
Obtain the item from these suppliers and place your order via the Oracle system
If NO, assess the aggregate value of the procurement and proceed
VERY LOW VALUE PROCUREMENT 0.00 up to 5,000
LOW VALUE PROCUREMENT 5,000 & up to 25k
MID VALUE PROCUREMENT 25k & up to 500k
HIGH VALUE PROCUREMENT 500k and greater
Get 1 written quote from a supplier on the Contract Register, Exor, OGC, LCSG or a supplier used in the past
Get 3 written quotes from a supplier on the Contract Register, Exor, OGC, LCSG or the Supply Lambeth Portal At least 1 quote must be from a local Lambeth supplier, wherever possible Select the supplier based on lowest price or best value If required, agree Service Level Agreement with supplier & keep all documentation
For procurements at 25,000 - 100,000 complete the Procurement Strategy Report Lite; 100,000 & greater, complete a Procurement Strategy Report. At 500,000 and greater, complete the Procurement Business Case & the Procurement Strategy Report For contracts valued at 100k+, you must complete an Equalities Impact Assessment. Contact your department Equalities lead for advice
The quote must represent Value for Money
Over 25,000 & up to 500k: Submit report(s) to PB
500,000 & Greater: Submit reports to SPB
Retain quotation information
Obtain purchase approval from Business Unit Manager
Is approval to procure given by The Procurement Board? If yes, proceed:
If NO, STOP
FORMAL TENDERING Develop specification, evaluation criteria & Terms and Conditions of Contract Set up supplier on the Oracle system. Raise a P.O. or pay by P-Card. Process order and retain all documentation
100,000 & Greater: Consult with Executive Member 500,000 & Greater: Enter details onto Forward Plan
25,000 and up to 100,000: Formal tendering procedures
100,000 and up to 173,934: Formal tendering procedures
Procurement value at 173,934 (goods & services) or 4,348,350 (works) and greater: Tendering under EU Directives
STOP
Seek advice from departmental procurement team on correct EU Tendering procedure. Advertise to EU as required Shortlist from current Lambeth suppliers, Exor, OGC or LCSG suppliers & advertise externally. Be sure all suppliers are pre-qualified; see Procurement Guide section 3 for information
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Gateway One: Plan
Procurement Planning
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1.0
Introduction to Gateway One

Gateway One in the Lambeth procurement process includes all the basics of a procurement exercise; in this section you will find all the essential rules, policies and guidance you need to know to make a low value purchase or run a tendering exercise.
Local government procurement is a very broad subject and whilst much of the information in Gateway One is fairly straightforward, you will need to know all that is here in order to move to Gateway Two and onward; some of the more advanced topics in Gateways Three and Four can be more complex. Compliance with the Procurement Guide is mandatory. If you are a procurement officer at Lambeth you should familiarise yourself with the contents and format of the entire Guide and make use of the various tools that can assist you to find your way through. Some topics may never be relevant to your procurement activities while others may need to be consulted regularly and some may raise additional questions some will need a more direct involvement by CPT. In any case please do not hesitate in contacting your departmental procurement team in the first instance or the staff in the Corporate Procurement Team on 020 7926 9358, or at corporateprocurement@lambeth.gov.uk
1.0.1
Using This Version of the Procurement Guide
By now you will also have noticed one of the main changes to the Procurement Guide is the actual format; we have left the printed book format behind and have created the Guide as a PDF (portable document file) that is easier to view at your desktop or print off as you require. This will not only save on paper, but it will assist you in getting just the information you are looking for, at any given time. The Guide is best viewed with the current version of Acrobat Reader, which everyone should have if not, ask the IT HelpDesk to have it installed on your work PC or laptop. You can reach the IT HelpDesk on extension 69111. The Procurement Guide can be found on the Corporate Procurement intranet site at http://intranet.lambeth.gov.uk/StaffServices/FinanceAndProcurement/Procurement/.
1.0.2
Overview of the Procurement Process
The purpose of this section is to help you decide how much of this Guide you should use when developing or reviewing plans or a timetable for purchasing or setting up a contract. The purchasing and procurement process can be very short or extended depending on the complexity and value of the product or service. You should consider carefully what constitutes a contract. Regeneration agreements, grants, and arrangements with voluntary organisations can all be classified as contracts and require due formality. Leases are also contracts but need to be referred to Lambeths Head of Assets Strategy. We define and describe the simple purchases of goods and services in Section 3 of this document. As a Guide, most purchases of goods up to 25,000 may be classified as simple purchases and most purchases of services over 25,000 in value may be classified as complex. With a simple purchase, you usually do not need to produce a specification, follow a formal tendering process, evaluate a short list of bids or enter into a formal written contract.
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The Lambeth Procurement Gateway chart provides an overview of the procurement process, including the commissioning process, the procurement process and contract management. The chart diagrams each activity as part of the whole procurement process with the four decision points, or Gateways. You must check the market regularly to see what other suppliers can offer and whether there has been any innovation. You should check with other parts of the Council or use recognised benchmarking clubs to make sure you are getting the best value for money. You will want several suppliers to give you prices based on projected volumes or needs. In other words, you will complete most of the other stages from time to time to make sure you are getting real value. Remember that the cost of formal tendering can be considerable. You should avoid expensive or bureaucratic purchasing and procurement where they are clearly not necessary.
More complex procurement exercises may require you to expand certain stages considerably or repeat them several times as your plan develops. However the essence of the process is the same - you are going through a series of structured steps to ensure that you have considered relevant possibilities and that you can demonstrate that you have achieved value for money
1.0.3
Procurement Advice, Information & Training
Whilst this Guide contains most of the necessary procurement guidance you will need to conduct your procurement exercise, you may not find the information you need or you may have questions about how the guidance applies in your particular circumstances. In these cases, please contact your departmental procurement team first. Lambeth has a largely de-centralised procurement function and there are departmental procurement teams who are best placed to assist you with your specific questions; if your departmental procurement team needs further advice, the Corporate Procurement Team will be happy to advise. More complex contracts often require guidance from the Lambeth Legal Team and you should seek their advice on legal matters either directly or through CPT. In some cases you may need more specialist advice, e.g. in relation to finance, insurance, sustainability or regeneration; CPT can refer you to such specialists when required. Remember to make full use of any procurement unit or staff in your own department as they will have valuable knowledge and, in many cases, they can act as the first port of call for procurement queries. The Corporate Procurement Team is responsible for implementing the Councils procurement strategy. The Head of CPT (Head of Commissioning & Partnership Strategy) is the Councils Head of Profession for the procurement community. CPT is represented on Procurement Boards and will be involved in all major contracts. The extent of involvement will depend on the nature of the activity, but CPT is always available to give advice at all stages of the procurement process. It is important to know that the CPT is not there just to help with complex or major procurement activity the CPT officers are pleased to advise on the routine purchase of any goods and services. Lambeth has 3 Procurement Boards that have been set up to make decisions and provide a peer review or challenge to Lambeths procurement activity: Procurement Board 1: Strategic Procurement Board: Procurement Board 2: Medium Value Procurement: Procurement Board 3: Lower Value Procurement: 500,000 and greater 100,000 up to 500,000 25,000 up to 100,000
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Procurement Board 1 ensures that a strategic overview is taken of all significant contracts and purchases. The SPB will approve all procurement activity over 500,000 in value and take responsibility for the Councils overall strategy and approach relating to procurement. Boards 2 and 3 will review all contracts within their value bands as above. Board 1 is also a programme board, with a responsibility for the programme management of major procurement activity; Board 1 will ensure effective coordination in line with corporate objectives. Its responsibilities will include setting priorities for shared resources, linking similar activities and identifying requirements for training or specialist support. Training on key aspects of purchasing and procurement within Lambeth Council is organised and made available through the CPT, based on advice from Board 1. This training will be based on the contents of Lambeths Procurement Guide. Lead officers with procurement responsibilities must attend the suite of inhouse training courses available and officers who sit on the Procurement Boards must attend the Procurement Essentials for Lambeth Senior Managers training course.
One Click Procurement

One Click procurement is the easiest way to start your procurement project: once you determine the value of your purchase or contract or know what procurement function you need to carry out find it on the table below and click. The buttons on the table include all procurement processes from getting quotes for a low value purchase to running a tender exercise for a million pound contract. When you click on a button, a page describing exactly what you need to do for that function will open, with links to the documents and guidance you need:
Quotes 0.00-5,000
Quotes 5,000-25,000
Tendering 25,000-100,000
Tendering 100,000-500,000
Tendering 500,000 & Greater
Tendering Above EU Threshold
Waivers 0.00 - 25,000
Waivers 25,000 & Greater
Contract Extensions & Variations
Gateway 4
Contract Performance Review
Short Contract Closure Review
You can access the One Click Procurement page here: http://intranet.lambeth.gov.uk/StaffServices/FinanceAndProcurement/Procurement/ProcurementAtLambeth/ OneClickProcurement.htm. All procurement forms, templates and documents are organised according to the Lambeth Procurement Gateway Process: http://sharepoint.lambeth.gov.uk/sites/lts/corporateprocurement/Public%20documents/The%20Lambeth%20 Procurement%20Guide/The%20Lambeth%20Procurement%20Gateways.doc.
The Procurement Lunchtime Surgeries

If you dont have time to attend a full day of training, the Procurement Lunchtime Surgeries can keep you informed of procurement issues at Lambeth as well. Every month the Lambeth Corporate Procurement Team will host an hour long mini procurement training session - or Procurement Surgery. Each months topic will be different and will provide bite-sized training on procurement issues. In addition to training, the
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sessions provide a forum for procurement officers from all departments to network and share ideas, discuss projects they are working on and exchange opinions about procurement practice. The Surgeries will be scheduled each month, for up to an hour and a half (no longer!) around lunchtime. You dont need to book, theres no charge and its only an hour of your time. You can see the current schedule of Surgeries here: http://sharepoint.lambeth.gov.uk/sites/lts/corporateprocurement/Public%20documents/Procurement%20Lunc htime%20Surgeries/Procurement%20Surgery%20Brief%20and%20Schedule.doc. In addition to presenting each session, CPT will also take staff members ideas on what topics you would like to see in future so bring your best ideas along.
The Lambeth Procurement Forum

The Lambeth Procurement Forum at LambethProcurementForum@Lambeth.gov.uk is an e mail group managed by the Corporate Procurement Team. This group e mail address consists of procurement officers, contract managers and members of the Councils procurement community from all departments - and is available as an easy way to communicate procurement news and information with procurement colleagues at Lambeth. CPT sends out regular bits of procurement news and info, but procurement officers are encouraged to use the Forum to share ideas, information, procurement news and advice; the address can be found on the Lambeth global address book in Outlook. If there are colleagues who need to be part of the e mail group, contact Stephen Regalado at sregalado@lambeth.gov.uk so they can be added to the group. Current details of the certificate and training programme are available from CPT, and on the Corporate Procurement intranet site here: http://intranet.lambeth.gov.uk/StaffServices/LearningAndDevel opment/TrainingCourses/ProcurementTraining.htm. Procurement is not an isolated activity. It links directly to the provision of a wide range of services and thus to a range of Council advice and guidance. You should always strive to make yourself aware of the full range of Council guidance materials, training courses, communication routes and the CPT intranet site.
3 Key Points for Officers

1. You must only buy goods or services that are to be used by the Council in achieving its statutory or approved objectives and you must ensure that purchases are within the law and do not infringe any copyright, patent or obvious public sensitivity 2. You must correctly establish the value of a contract. This is always the aggregate value over the life of the contract and not the annual value. Note that all references to contract values in this Guide relate to total values and this is important as the value will determine what rules and procedures apply 3. You also have a duty to report any breaches that come to your attention to a Director, the chief Internal Auditor or the District Auditor. You have the right to confidentiality in making such reports
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1.1
Rules & Responsibilities
You must follow mandatory guidance and normally follow good practice guidance. If you do not follow good practice guidance you must keep a record of your reasons. Rules may be frustrating but they are usually there to ensure that the process is fair and that you and the Council are protected from any claims of bias or irregularity. Where you are spending public money, relationships with suppliers require
formality. For these reasons, failure to follow the rules set out in this Procurement Guide is a disciplinary offence.
1.1.1
Regulatory Framework Overview
Officers with procurement responsibilities must be aware of relevant Standing Orders and Financial Regulations. The Contract Standing Orders are at the front of this Guide and these, along with Financial Regulations, take precedence over the requirements and good practice advice in this Guide. Lambeth Audit has the right and duty to audit all procurement activities and you must be in a position to justify all your procurement decisions; in following this Guide you are far less likely to suffer adverse audit comment or disciplinary action. Any audit is almost certain to check that, if you have departed from good practice advice, your reasons for doing so are recorded in writing and are reasonable. This section of the Guide gives guidance on audit trail requirements. If you are not certain how the rules apply in your case, you must seek advice. The Corporate Procurement Team will be happy to advise you or, if necessary, get an opinion for you. You must note that departmental procedures cannot override any of the mandatory requirements in this Guide; you should not take any action without being certain of the rules.
1.1.2
Key Regulations
The following paragraphs set out relevant legislation and Lambeths internal regulations. Details of EU regulations are given in section 3; TUPE rules and Value for Money issues can also be found in this Guide. Lambeths standing orders are at the beginning of this Guide and financial regulations can be found on the Lambeth intranet at http://intranet.lambeth.gov.uk/OurCouncil/Finance/ and scheme of delegation information can be found at both the Finance intranet site and on the CPT site at http://intranet.lambeth.gov.uk/StaffServices/Procurement/ProcurementAtLambeth The rules in this Guide apply to all contracts entered into by the Council except: Contracts of employment Contracts relating to any interest in land Where a waiver has been granted
Like all activities in local government, procurement is governed by statutes, regulations and standing orders. These fall into three main groups: a. The Public Contract Regulations 2006 giving effect to the EU Consolidated Directive accepted by the UK government, including: o Regulations giving effect to the EU Consolidated Directive o Transfer of Undertakings (Protection of Employment) Regulations 1981 & 2006. b. UK statutes, including those designed to give direction to local authorities in relation to compulsory competition, notably: o The Local Government Act 1988 and subsequent regulations o The Local Government (Contracts) Act 1997; Part I of the Local Government Act 1999 o Part II of the Housing Grants Construction & Regeneration Act 1996 o Parts IV and V of the Local Government and Housing Act 1989
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o c.
Competition Act 1998.
Procedures approved by Lambeth Council, notably: o Standing Orders o Financial Regulations o Scheme of Delegation
1.1.3
The Lambeth Scheme of Delegation
The Chief Executive, all Executive Directors, Directors within the Department of Corporate Services, Assistant Directors, Heads of Service and Business Unit Managers are authorised to commission contracts for goods and services as part of their responsibilities set out in the Councils Scheme of Delegation. They are also able to delegate some procurement responsibilities to other members of staff within the framework set out by the Councils Scheme of Delegation. The following table is based on the Councils Scheme of Delegation and shows who must approve contracts, purchases or contract variations above specified threshold values. You must ensure that you are aware of the key points within the scheme: Value of Contract, Contract Variation or Extension Over 10 million More than 1 million up to and including 10 million More than 100,000 up to and including 1 million More than 50,000 up to and including 100,000 Up to and including 50,000 Authorising Officers Executive Director Resources of Finance and
Executive Director and Divisional Director of Resources Divisional Director and Divisional Director of Resources Head of Service or Assistant Director Business Unit Manager or other Manager
Each Executive Director, normally through the Departments Head of Procurement, must maintain a list of officers authorised to procure contracts for works, goods and services. A copy of the current list must be lodged with CPT whenever it is updated. The officers responsible for procurement matters at business unit level will act as the point of contact for all procurement information. These officers will receive updates of this Guide and occasional CPT bulletins. The actual division of duties between the Executive Director and officers with responsibility for procurement will depend on the nature of the goods, works or arrangements in the particular department. You must not construe anything in this Guide as removing or diminishing the responsibility of all involved to meet individual and collective accountabilities. Each department or business unit has differing requirements for delegation of Executive Director responsibilities and this Guide does not prescribe the details of schemes of delegation below corporate level.
Approval of a budget does not automatically infer any authority to proceed with a new contract. You must check whether your procurement activities will result in a budget being exceeded. If any decision proposed under delegated powers might involve the relevant budget being exceeded, you must consult the Executive Director
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However the Executive Director must ensure that any local Scheme of Delegation: Sets out clearly the nature and extent of delegation Is approved by the Executive Director of Finance Requires changes to be approved by the Executive Director of Finance Identifies officers with procurement responsibility Is formally communicated to everyone within the department or business unit
Special Rules for Adults & Community Services

Procurement of care placements (i.e. individual placements that fall outside of any block contracting arrangements) are excluded from the requirement to go through the commissioning procedure detailed in the Procurement Guide i.e. they do not have to be approved through the Departmental and Strategic Procurement Boards A general waiver is granted for the need to tender such requirements acknowledging at all times that the Council has a duty to achieve "best value" in making such placements. ACS operates an internal mechanism that requires the approval of no less than a Divisional Director for all new placements where the aggregated value exceeds 250,000 over 48 months and that a periodic review procedure for all placements (existing and new) is in place in order to continue to demonstrate value for money and best value. Approval of the Building Partnership in Health and Social Care plan. Voluntary Sector Grant Approval and withdrawals.
Special Rules for Children & Young Peoples Service

Due to the higher rates for the care placements for children, special dispensation is required to minimise potential disruption to care provision in a sensitive service area. The following revisions for officers in Children and Young Peoples Service have been approved: Position Head of Service / Assistant Director BU Manager Practice Manager Deputy Practice Manager Limit for Purchase Orders 156,000 100,000 62,400 26,000
Children and Young Peoples' Service operate an internal mechanism that requires the approval of no less than a Divisional Director for all new placements where the aggregate value exceeds 250,000 over 48 months and that a periodic review procedure for all placements (existing and new) is in place in order to continue to demonstrate Value for Money and Best Value.
1.1.4
The Internal Procurement Framework The Boards
Lambeth has 3 Procurement Boards that have been set up to make decisions and provide a peer review or challenge to Lambeths procurement activity:
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Procurement Board 1: Strategic Procurement Board: Procurement Board 2: Medium Value Procurement: Procurement Board 3: Lower Value Procurement:
500,000 and greater 100,000 up to 500,000 25,000 up to 100,000
Procurement Board 1 ensures that a strategic overview is taken of all significant contracts and purchases. Procurement Board 1 will approve all procurement activity over 500,000 in value and take responsibility for the Councils overall strategy and approach relating to procurement. Boards 2 and 3 will review all contracts within their value bands as above. The boards can be reached directly by e mail, as below: Procurement Board 1: Procurement Board 2: Procurement Board 3: ProcurementBoard1@lambeth.gov.uk ProcurementBoard2@lambeth.gov.uk ProcurementBoard3@lambeth.gov.uk
CPT is led by the Councils Head of Profession for procurement. It leads on procurement training, quality assurance, compliance, major contracts, cost savings plans and performance indicators for procurement. CPT also provides a knowledge bank relating to procurement. Additionally, CPT will advise Procurement Board 1 on approving contracts over 500,000 in value. Procurement Board 1 considers all significant procurement activities (including contracts valued at 500,000 and greater) and takes a strategic overview of procurement at Lambeth. It reviews all PPP/PFI applications and all significant partnership arrangements. Procurement Board 1 reviews and advises on resource implications for major procurement exercises. It liaises with Members and the Executive in relation to the overall procurement work plan. The full Terms of Reference for the Procurement Boards can be found here: http://sharepoint.lambeth.gov.uk/sites/lts/corporateprocurement/Public%20documents/Forms/AllItems.aspx? RootFolder=%2fsites%2flts%2fcorporateprocurement%2fPublic%20documents%2fProcurement%20Boards &View=%7bC3656A64%2dBEB8%2d42F3%2dB08A%2d6864DD6C0C6C%7d.
1.1.5
Applying Procurement Rules
The Lambeth Procurement Gateway Process summarises procurement rules in relation to various financial limits as used by current schemes of delegation, financial regulations and the requirements of this Guide. For contracts or purchases up to 25,000, there is no requirement for formal tendering or approval from a Procurement Board. For all purchases you must enter a purchase order onto the Oracle system. Above 25,000 (and up to 500,000), the Procurement Boards will make a compliance check before tendering begins and the initial Contract Register entry will be made. All procurement forms can be found on the Corporate Procurement intranet site at: http://intranet.lambeth.gov.uk/StaffServices/FinanceAndProcurement/Procurement/. Contracts or purchases above 500,000 will require a compliance check by Board 1, probable CPT involvement, and approval by Board 1 before award of contract. For contracts over 100,000 the Executive Member must be informed and consulted. The initial Contract Register entry will be made once approval is obtained and if the contract value is above 500,000, details must also be lodged for possible publication within the Councils Forward Plan - a bulletin published monthly that lists forthcoming Key Decisions. For contracts over 100,000, there will additional reporting to the public via Officer Decisions. Sign off (award of contract) will be in accordance with the Scheme of Delegation and additional Contract Register entries will be made following award. There is a requirement to produce regular reports relating to contract performance
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to the Boards and you must observe these formalities and controls for activities within the value thresholds specified. The compliance check by the Procurement Boards will be based on standard report templates that contain: The type of service/goods/works The outcome required Targets set out in the specification/terms The form of the contract (i.e. use of forms from the contract bank held by the Lambeth Legal Team) Options for contracting Links to other departments and partners/contracts Finance cost/budget/value for money Legal observations, including EU implications Environmental/regeneration issues.
Once the Procurement Board has carried out the compliance check, initial entries must be made onto the Contract Register. This will include a contract reference number, brief description, estimated value; lead officer and date of board approval (see Section 4 for details of the overall contract management system).
1.1.6
Applying EU Procurement Rules
European procurement legislation is likely to apply to contracts above certain threshold values. Current thresholds are 173,934 for services and supplies and 4,348,350 for works. The values relate to the aggregate value of a contract, not the annual value and these thresholds are reviewed regularly - currently every two years. EU regulations allow for four types of procedure: open, restricted, negotiated and competitive dialogue. Key requirements relate to advertising, minimum periods for stages of the Tender process and publication of award details. You must adhere to EU rules where they apply. Full details are given at Section 6.1. The Lambeth Legal Team, which is involved for all contracts over 100,000, will provide the necessary advice and guidance.
Involving Our Elected Members

When the aggregate value of a procurement exercise is at 100,000 and greater, procurement officers are obliged to involve their department cabinet member. Each department will have an appointed councillor who is responsible for liaising with the officers on their principle activities; procurement is no exception. If your procurement exercise is valued at this higher level, you should contact your elected member at the outset and let them know what your procurement exercise involves, and keep them informed throughout the procurement process. More information on the Constitutional Process in Procurement can be found in section 3.
1.1.7
The Contract Register
The Lambeth Contract Register is a web-based on-line database that enables procurement officers to search for Lambeth contracts valued at 25,000 and greater; all contracts valued at an aggregate value of 25,000 and greater must be entered onto the Contract Register. The Contract Register will: Track and manage the ownership, terms and lifecycle of key contracts in line with the Lambeth Procurement Gateway processes Store all waivers, contracts and procurement forms and documents valued at 25,000 and greater Deliver accurate and up-to-date information on current and future contract information
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Provide on-line management information Support the planning and coordination of future contract activity Search and report on current and future contracts by category, supplier, value, date etc. Allow for storage of and reporting on Contract Performance Review information
The Contract Register can be accessed directly from here: https://lambethcrs.saas.nipltd.com/crs; you will need a login and password to access it. If you need access, please contact Corporate Procurement to request this: Corporate Procurement Team Phone: 020 7926 9358 Mail: CorporateProcurement@lambeth.gov.uk Contract documents and approval forms must be scanned and saved to the Document Library here: http://sharepoint.lambeth.gov.uk/sites/lts/contractdoclib/default.aspx. Links to the relevant documents are then attached to the contract records in the Contract Register. CPT has written a Contract Register User Guide for Procurement Board Administrators. The User Guide can be found here: http://sharepoint.lambeth.gov.uk/sites/lts/corporateprocurement/Public%20documents/Forms%20and%20te mplates/The%20Lambeth%20Contract%20Register%20User%20Guide.pdf. If you are using the Register and experience any IT difficulties, contact the Lambeth IT HelpDesk on 020 792 6111 and at lithelpdesk@lambeth.gov.uk. For procurement queries, consult the Procurement Guide and your departmental procurement team in the first instance, or contact the Corporate Procurement team directly at the number above.
Document Scanning
The Contract Register requires that contract documents are scanned and stored on SharePoint - see the link above. Documents can be scanned direct to email using a Sharp Multi Functional Device has a file size restriction of 4mb which is set by Lambeth IT. This will equate to approximately 15 - 20 black and white pages and less for colour pages. Therefore documents containing photos and large amounts of solid colour will increase the file sizes and reduce the number of pages scanned. To scan a larger volume of documents there are two options: 1. Use a memory stick in the USB port on the side of the MX2700 Sharp MFD (Colour device only). This way you will only be limited by the size of the memory stick. 2. Or preferably please use Pitney Bowes. Pitney Bowes will provide pricing for each scanning job upon request: Pitney Bowes Print Room Phone: 020 7926 2206 Fax: 020 7926 3043 Email: lambeth.print@pb.com
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Note that the completeness and accuracy of the Contract Register will be subject to periodic audit review.
1.1.8
Waivers & Urgency
Circumstances may arise where you need permission to waive one or more of Lambeths procurement rules. These waivers are reserved for exceptional circumstances; a waiver will only be considered where there are good and sufficient reasons. A waiver will not be granted simply on the grounds of convenience or inadequate planning. The Council can only waive the rules established by the Council - the Council cannot waive UK and EU legislation. Waivers to any of Lambeths procurement rules must be sought in advance of any contractual agreement, order placement, use of service or purchase of a product. The approval of waivers and the recording of unapproved purchases must follow specific rules and each department must maintain a register for these transactions, valued from 0.00-25,000. This register must identify: Name of waiver or unapproved purchase Date of approval or signing Value Responsible officer name(s) - who wrote the report Responsible officer contact details Approving officer - who signed off the waiver or recorded the unapproved purchase Type of waiver Reason for seeking the waiver Comments Wherever a waiver to the procurement rules is sought, good and sufficient reasons must exist. Good and sufficient reasons for a waiver may fall into one or more of the following seven categories: 1. Sole Supplier: it can be proven that there is only one provider who can deliver the products or services 2. Demonstrable Best Interest: it can be demonstrated that it is in the Council's best interest and this is clearly demonstrated in the comments section in the waiver report 3. Emergency: There is a clear need to provide a service or product immediately in the instance of a sudden unforeseen crisis; the immediate risk is to health, life, property or environment. Normal competitive processes are not feasible 4. Changing an Existing Contract: making significant improvements and/or changes to an existing contract. This will usually be captured in a contract variation waiver 5. Urgency: there exists an urgent situation calling for prompt action in order to provide a product or service that fulfils a specific statutory obligation, e.g. health and safety requirements. Competitive processes may not be feasible 6. Exigencies of a Service: there are demonstrable circumstances that are genuinely exceptional 7. Extension as Waiver: where a contract extension is being sought but it is not possible in the current contract's terms and conditions Where a waiver is being sought, officers are expected to show how this requirement meets one or more of the above criteria. Include this information in the waiver report.
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When considering a waiver, you will need to think about options if the waiver is not approved. Collect the information and evidence you need to prove your case and present this in a clear and understandable way being sure to think about how long it will take to get a decision. Ensure that the Procurement Board has sufficient time to make a decision based on the facts and build sufficient time into your overall procurement plan.
Waiver Approval
Where an officer is seeking a waiver to the procurement rules, they must complete a Delegated Decision Report that justifies the reason for the waiver. When the report is complete it must first be approved at departmental level by the officers Business Unit Manager or Head of Service and their Departmental Director of Resources. Depending on the aggregate value of the waiver, it may need to go to a Procurement Board as well; see the table below: Waiver Value Decision 25,000 up to 100,000 Procurement Board 3 100,000 up to 500,000 Non- Key Decision Procurement Board 2 500,000 & Greater Key Decision Procurement Board 1
Below 25,000 Departmental Decision
The Procurement Board schedules can be found here: http://sharepoint.lambeth.gov.uk/sites/lts/corporateprocurement/Public%20documents/Procurement%20Boar ds/Procurement%20Board%20Meeting%20Dates%202011.xls. The Chair of the Board may recommend the waiver for approval by the departmental Executive Director. Waivers valued at 25,000 and greater must also be uploaded to the Contract Register and waivers valued at 100,000 and greater must be loaded onto Officer Decisions. The final approval for waivers is different from the Lambeth Scheme of Delegation with the power to grant waivers for contracts of up to 25,000 in value being delegated to the Business Unit Manager and the Departmental Director of Resources. The power to grant waivers for contracts of more than 25,000 in value is delegated to Executive Directors, normally based on advice from the Procurement Board: Value of Waiver 25,000 and greater Authorising Officers Business Unit Manager/Head of Service Procurement Board Approval Departmental Executive Director Business Unit Manager/Head of Service Divisional Director of Resources
Up to 25,000
Please note that in order to expedite decisions as efficiently and transparently as possible, reports and recommendations can be considered by the relevant Procurement Board chair and a number of nominated colleagues outside of the normal cycle of Procurement Board meetings. The decision as to whether to consider these items outside of the cycle will be made by the relevant Procurement Board chair. An Executive Director may directly grant a waiver outside of the circumstances referred to above. The Executive Director must ensure that a record of this urgent action is created, including the same information as for the register of waivers.
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In all cases where an Executive Director approves a waiver without Procurement Board recommendation, the officer requesting the approval must send the approved waiver report to the Corporate Procurement Team. Where an order placement, contractual agreement, use of service or purchase of a product has taken place outside of the above arrangements i.e. where a formal has not been agreed in advance, the officer must write an ODDR report (dependant on the value of the transaction) and present it to their Executive Director to ensure that they note the decision. The officer sends the signed ODDR report to the Corporate Procurement Team and to the relevant Procurement Board for recording on the Contract Register and on Officer Decisions, if valued at 100,000 and greater. If it is below 25,000 in value the decision must be recorded locally by the department. Please note that the Executive Director retains accountability for all purchases made by their department. The reporting process above must still be carried out in order to acknowledge that the purchase has taken place.
Waiver Forms
When requesting a waiver to any of Lambeths procurement rules, the following forms must be used: Value of Waiver 100,000 and greater Forms Officer Delegated Decision Report - Procurement Officer Delegated Decision Report Part 2: Not for Publication Contract Register Form Officer Delegated Decision Report - Procurement Contract Register Form Officer Delegated Decision Report Lite - Procurement
25,000 - 100,000 0.00 - 25,000
Referrals
Waivers may be referred by the Procurement Board chair to the departmental Executive Director for additional information. For waivers or purchases valued from 0.00 - 25,000 the Business Unit Manager/Head of Service and/or the Departmental Director of Resources can refer the waiver for Executive Director approval. For waivers or purchases valued at 25,000 and greater, the Chair of the Procurement Board can refer the waiver or purchase to the Executive Director.
The Seven Principles of Public Life

Conduct in public life is rigorously scrutinised. Procurement officers and contract managers in the Council must be vigilant in observing the Councils procurement rules as set out in the Contract Standing Orders and the Procurement Guide. This is particularly important when seeking approval for waivers to the procurement process. The Committee on Standards in Public Life commissioned the Nolan Report in 1994, in response to concerns that conduct by some politicians was unethical. A key aspect of the report was the Seven Principles of Public Life: 1. Selflessness: holders of public office should take decisions solely in terms of the public interest. They should not do so in order to gain financial or other material benefits for themselves, their family, or their friends
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2. Integrity: holders of public office should not place themselves under any financial or other obligation to outside individuals or organisations that might influence them in the performance of their official duties 3. Objectivity: in carrying out public business, including making public appointments, awarding contracts, or recommending individuals for rewards and benefits, holders of public office should make choices on merit 4. Accountability: holders of public office are accountable for their decisions and actions to the public and must submit themselves to whatever scrutiny is appropriate to their office 5. Openness: holders of public office should be as open as possible about all the decisions and actions that they take. They should give reasons for their decisions and restrict information only when the wider public interest clearly demands 6. Honesty: holders of public office have a duty to declare any private interests relating to their public duties and to take steps to resolve any conflicts arising in a way that protects the public interest 7. Leadership: holders of public office should promote and support these principles by leadership and example More information on the Nolan Report can be found on the Committee on Standards in Public Life website here: http://www.public-standards.gov.uk/.
1.1.9
Fairness & Transparency
The Lambeth Procurement Guide and Lambeths Regulatory Framework in Procurement (both supported by the Corporate Procurement Team) clearly states that goods and services should be acquired by competition, unless there are convincing reasons to the contrary. The Framework also requires that officers (depending on the aggregated value of the contract or purchase) obtain competitive quotations or carry out competitive tendering exercises to obtain services or supplies for the Council. Advertising, tender evaluations and posttender debriefing all ensure that the process is fair and that officers and the Council are protected from any claims of bias or irregularity. Additional guidance includes: Any arrangement which might, in the long term, prevent the effective operation of fair competition, should be avoided Employees in contractor or client units must exercise fairness and impartiality when dealing with all customers, suppliers and other contractors and subcontractors
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1.2 1.2.1
Getting Started Getting Ready For Procurement
This Guide contains all the information you need to take you through the Lambeth Procurement Gateway process from procurement planning through to contract management. However, when you are just starting out it is good to be as prepared as you can. Consider the 10 points on the chart below when getting started on a procurement exercise:
1. 2. 3. 4. 5. 6. 7. 8. 9. 10.
Read the Procurement Guide Attend one of Lambeths internal procurement training courses Attend Corporate Procurements Lunchtime Surgeries Attend an accredited external procurement training course Talk to your business unit manager & your departmental head of procurement Talk to your procurement colleagues on the Lambeth Procurement Forum at LambethProcurementForum@lambeth.gov.uk Talk To An Officer In The Corporate Procurement Team Do Some Web Research On The Office Of Government Commerce Website Ask Questions! Leave Time for Planning!
Central government frequently develops new procurement-related initiatives and it can be difficult to keep up to date. The Government Procurement Service is the commercial advisory arm of the Treasury and is a good source of more advanced and up to date guidance; their website is at http://www.civilservice.gov.uk/networks/gps and is definitely worth a look.
1.2.2
Procurement Documentation
All procurement forms, templates and documents can be found on the CPT intranet site here: http://intranet.lambeth.gov.uk/StaffServices/FinanceAndProcurement/Procurement/. You may need to tailor these to suit your requirements; if you have any queries at all please contact the corporate procurement team for procurement advice on 020 7926 9358 and corporateprocurement@lambeth.gov.uk or Legal Services (for legal advice) on 020 7926 2387. Some tips for using procurement forms, templates and documents: Be sure you are using the correct procurement form! Some of our procurement forms are prone to change as rules, guidance and policies change
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When using a procurement form or template, procurement officers should always resist cutting and pasting text into a form completed previously as that particular form may have changed Officers should always check the intranet pages for forms, templates and documents in the first instance: most can be found on the CPT intranet site Please check the Procurement Forms Version Control Key to make sure you are using the correct and most recent forms. The version and date on the form you are using should match the version and date on the key. The key can be found here: http://sharepoint.lambeth.gov.uk/sites/lts/corporateprocurement/Public%20documents/Forms%20an d%20templates/Procurement%20Forms%20Version%20Key.doc
All our procurement forms relate to the Gateway process at Lambeth the four decision points that are taken throughout the procurement process. However, at each Gateway, certain reports need to be written in order to justify our decisions in the procurement process. These are shown in the diagram below:
Gateway One
The Procurement Business Case
For contracts and purchases valued at 500,000 and greater, the Procurement Business Case needs to be presented to the Procurement Board upon seeking approval to tender. Take time to prepare your business case as this will support your decision to go out to competitive tender.
Gateway Two
The Procurement Strategy Reports
For contracts and purchases valued from 25,000 up to 100,000, the Procurement Strategy Report Lite needs to be presented to the Procurement Board upon seeking approval to tender; for purchases valued at 100,000 and greater use the Procurement Strategy Report. Take time to prepare the Strategy Report as this will support your decision to go out to competitive tender.
Gateway Three
The Officer Delegated Decision Reports
Upon completing the competitive tendering process and tender evaluation, the decision report needs to be prepared to seek contract award. For contracts and purchases valued from 25,000 up to 100,000, the Officer Delegated Decision Report - Procurement Lite needs to be presented to the Procurement Board upon seeking approval to award; for purchases valued at 100,000 and greater use the Officer Delegated Decision Report - Procurement. This report is important in that it outlines your procurement exercise and justifies your decision to award a contract to a specific supplier. If the Board approves your report, your decision to award the contract is then referred upwards to the relevant Lambeth executive, as per the Scheme of Delegation.
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Gateway Four
The Gateway 4 Form & Contract Performance Review
After a contract has been implemented, you need to conduct a 3 month health check on the service or supply provision, in order to guarantee that everything is going to plan. After you have a 90 day meeting with your supplier, simply complete a short form to confirm this - this form is called the Gateway 4 form. Contracts valued from 100,000 and greater must complete a Gateway 4 form after the first 90 days of contract service. Every contract at Lambeth valued at 100,000 and greater can be called in for performance review, so be sure you are conducting the 3 month review and regular contract reviews after that more information on how to conduct your performance reviews can be found in section 4 of this Guide. A useful template for procurement planning is the Procurement Project Plan. Designed for procurement projects valued at 100,000 and greater, this Excel spreadsheet is a handy planner designed to take you through all the important steps in your procurement project. This and all forms, templates and documents specific to the tendering process can be found in section three of this Guide and all of these can be found at http://intranet.lambeth.gov.uk/StaffServices/FinanceAndProcurement/Procurement/ProcurementAtLambeth/ ProcurementFormsTemplatesAndDocuments.htm.
1.2.3
Corporate Contracts & The Approved Supplier List
Corporate Contracts
The Council maintains several corporate contracts that are both supported by (and managed by other contract managers in the Council) or actually managed by the Corporate Procurement Team. These are for goods or services that are commonly used throughout the Council, e.g. office supplies. Details can be found on the CPT intranet site and you can find the complete list of corporate contracts here: http://sharepoint.lambeth.gov.uk/sites/lts/corporateprocurement/Public%20documents/Corporate%20Contrac ts/Lambeth%20Corporate%20Contracts.doc You must use these suppliers for the relevant goods and services as the pricing and conditions of the contract are on the basis of them being sole provider.
The Approved Supplier List

CPT has a fully vetted and approved Council-wide supplier database. This supplier database should be used for all normal procurement activity, except where EU procurement rules, corporate contracts or consortia arrangements apply. The introduction of the database is part of the Councils strategy to improve procurement activity. The benefits of the database are as follows: It can improve efficiency and compliance It encourages supplier rationalisation in each category It enables closer control and can assist the Council to ensure that local suppliers are properly represented It ensures pre-qualification Pre-qualification information is regularly updated The selection of suppliers can be tailored to meet Council needs
The approved supplier database will assist with selecting suppliers and shortlisting. You should also be advised that with major contracts over 100,000, you should use advertisement to supplement the Councils
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approved supplier database unless you are sure that the database provides adequate and up to date coverage of the relevant market. The Council has appointed Exor Management Services Ltd. to maintain the approved supplier database: Exor (Services) Ltd Santia House Parc Nantgarw Cardiff CF15 7QX Phone: 029 20 029 667 Web: http://www.exorms.co.uk/ Login access to the Exor site can be obtained at the https://accreditation.santia.net//login/login.cfm. Log in with the email address lguest@lambeth.gov.uk and then use the password xguestx to enter. All suppliers included on the database are required to pre-qualify by completing a business questionnaire. The standard vetting includes checks on the following: Finances Equal Opportunities Health & Safety Insurances Permits & Licenses Customer References Professional Associations VAT Registration Tax Exemption Certificates Quality Management Systems Criminal Offences
The above list is not exhaustive and the vetting criteria depend on factors such as category, company size and trading history. Vetting procedures can be adjusted to accommodate additional requirements. If you are unable to find a relevant work category on Lambeths approved supplier database, or are not satisfied that there is a sufficient choice of suitable suppliers, you can make use of the Exor Central Database. CPT can assist you as required.
Assembling a Tender or Quotation List in Exor

There are specific steps that procurement officers need to follow when putting together a tender list or list of suppliers for quotations officers cannot just go to the Exor website and pick the suppliers that they like or who they have worked with in the past. All suppliers need to be given fair opportunities to work for us and the following steps will ensure: The selection of tenderers is carried out independently of the project manager and this protects the project manager from allegations of manipulating the tender list Each firm on the list is given an opportunity to bid for work, with good contractors getting more opportunities through the nomination process For transparency a record is kept of the tender list on the Exor database and website Every Lambeth department will be able to structure the production of Exor tender lists in this way
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There are 3 roles that need to take action in putting together a tender or quotation list:
1. The Project Manager

The project manager shall request that the departmental procurement team produce a tender list by completing a prescribed form. For works tenders the project manager can nominate up to two companies and the term contractor for building work contracts; the project manager will be required to document the reasons for their nominations. For other contracts the project manager may nominate up to three companies. The Definitive Tender List will be made up of a minimum of six companies from different company groups and the operational business unit manager will countersign the request. The same form may be used to request a list for quotations, with the project manager able to nominate up to two firms Information relating to prices submitted by the tenderers will be sent by the project manager to the procurement officer to be entered on Exor.
2. The Procurement Officer

The procurement officer responsible for the generation of the tender list shall produce the list using the rotation function last used on Exor. The procurement officer shall also phone the companies on the proposed list to see if they are interested in bidding for the work. Once the procurement officer has a full list of tenderers or quotees willing to bid they will create the list on Exor.
3. The Procurement Manager

The procurement manager shall check the tender list for errors and countersign the list before sending the definitive tender list to the Project Manager.
1.3
Central Purchasing Bodies
A Central Purchasing Body, or CPB, is defined in the Public Contracts Regulations as a contracting authority which: Acquires goods or services intended for one or more contracting authorities Awards public contracts intended for one or more contracting authorities Concludes framework agreements for work, works, goods or services intended for one or more contracting authorities
Where a contracting authority acquires works, goods or services from or through a CPB, it will be deemed to have complied with the EU Regulations in so far as the CPB complied with them in the original acquisition or award. The effect of this is that (providing the CPB has complied with the Regulations) the contracting authority procuring from or through it does not itself have to go through the procedures required by those Regulations. However, if the CPB has failed to comply with the Regulations, the contracting authority procuring from or through it will not be in compliance either. Similar provisions apply to utilities under the Utility Contracts Regulations. Two principal CPBs that Lambeth procurement officers can use straight away are the Government Procurement Service's Buying Solutions and ESPO, or the Eastern Shires Purchasing Organisation.
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1.3.1
Government Procurement Service & Buying Solutions
Government Procurement Service is an executive agency of the Cabinet Office. Our overall priority is to provide procurement savings for the UK Public Sector as a whole and specifically to deliver centralised procurement for Central Government Departments. The centralisation, standardisation and aggregation of spend on common goods and services is a key mechanism to deliver significant, sustainable cost reductions to Government. Operating at the heart of Government Procurement, GPS play a key role delivering expert sourcing, category and centralised data management. Government Procurement Service is a Trading Fund, using a supplier commission model to fund operations and support continuous improvement in Governments procurement capability. GPS Buying Solutions is the largest CPB in the public sector and the only one with a legal remit to trade across the whole of UK public sector. You can view the GPS website at http://www.civilservice.gov.uk/networks/gps and as a public sector employee, you can set up a login and password to access all the information on the site and receive e mail updates as policy and practices are updated.
Buying Solutions
Another advantage of using Buying Solutions is their procurement advice service. GPS and Buying Solutions have a proven track record in working alongside their customers to produce innovative procurement solutions. Sound commercial acumen and keen market awareness underpin their purchasing practices, enabling them to identify the best procurement route for each individual customer on every occasion
Buying Solutions is the marketplace for GPS. They provide easy access to more than 500,000 products and services, through a range of frameworks as well as a number of managed services, including telecommunications, email and web services, energy and eCommerce. Buying Solutions offers a wide range of framework agreements that provide access to more than 500,000 products and services. They also provide professional assistance in purchasing, fully managed telecoms services, energy and secure e-mail, Intranet, data transfer & publishing services. Buying Solutions maintains a website and online catalogue that, as a public sector staff member, you can browse and search for contracts to meet your service and supply needs. You can view their website at http://www.buyingsolutions.gov.uk and register for a free login and password. Registration is free, but your e mail extension will need to be verified by return as the website posts all contract prices and specifications online which are only available to public sector staff members. If you have any questions contact them at info@buyingsolutions.gsi.gov.uk. A major benefit of ordering from Buying Solutions is their Total Quality Assurance Guarantee. Their stringent tendering procedures are designed to ensure that products and services are of the highest quality, fit for purpose and EU compliant. Plus, as THEY are doing all the tendering work, they save YOU the time, trouble and cost of managing a tendering process that can take upwards of 90 days when full compliance with EU directives is required.
1.3.2
Eastern Shires Purchasing Organisation (ESPO)
Another CPB in use at Lambeth is the Eastern Shires Purchasing Organisation, or ESPO. ESPO is one of the UK's largest public sector professional buying organisations. The provide a comprehensive procurement
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service to enable customers to acquire a wide range of products and services at the best possible price in compliance with current UK and EU procurement rules and regulations. ESPO is a Local Government Joint Committee owned by 7 Local Authorities and operates on a not for profit cost recovery basis. They are also a member of the Pro5 collaborative procurement group and are the lead authority on a number of national procurement projects. With over 30 years experience within the public sector, ESPO is always on hand to help buyer save time and money in the procurement of best value products and services. You can see the website here: http://www.espo.org/ and register for free. If you are interested in joining and ESPO contract, contact CPT who can provide you with the account manager's details.
1.3.3
Other Central Purchasing Bodies
Buying Solutions and ESPO are by no means the only CPBs currently in use. Another is the London Contracts & Supplies Group, or LCSG. They are a collective of contracts placed for use by public bodies in London. LCSG provides a greater degree of co-ordination and joint action in purchasing and supply matters in Greater London; the co-ordinated contracting activities provided by the LCSG can achieve considerable advantages in terms of price and costs. Staff members at the London Borough of Lambeth can contact the LCSG via their website, at http://www.lcsg.org/site/index.htm. Staff members can also register with the LCSG for updates and further information and enquire about LCSG suppliers and service providers and contract details. The Yorkshire Purchasing Organisation http://www.ypo.co.uk/ and Eastern Shires Purchasing Organisation http://www.espo.org/. If you want to access a contract available from any of these CPBs, you must first contact your department procurement lead for instructions as certain competition rules must be followed. The process map below outlines how you adopt a pre-tendered contract once you have done the initial procurement planning and you have found a contract that meets your requirements.
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1.4
Audit Trails
Lambeth embraces Value for Money principles in all aspects of its procurement activity, with goals towards developing more sophisticated approaches to procurement related work. Key principles include: Increasing delegation of decision making responsibility to managers throughout the Council Promoting and supporting managers in seeking innovative approaches to procurement The establishment of a better management framework within which managers can fulfil their duty to secure Value for Money in service delivery The shift to a more outcome based procurement process
Essential requirements of these procurement arrangements include effective management controls to ensure high standards of probity and transparency. In order to provide managers and members with the means to monitor and review procurement activity it will be necessary to maintain an effective audit trail and the effectiveness of these management controls will be subject to periodic review by internal and external audit. This is not an additional requirement but it reflects the requirements set out elsewhere in this Guide.
The Audit Trail Pro-forma

To complement the Procurement Guide and provide an efficient means of providing an audit trail, a proforma has been developed which covers the mandatory elements of the Guide. This form is provided as an aid to mandatory record keeping and completion of the pro forma is not, in itself, a mandatory requirement but whether or not you use it, you must ensure that you maintain all necessary records of your procurement activities. Completion of the pro-forma will: Provide an audit trail through the procurement activity Record on one document all key procurement decisions Provide an index or cross reference to procurement documentation Provide purchasing officers with prompts as to what action is needed for specific circumstances Facilitate the review of any tendering process by management or Auditors.
You should also think ahead to audit trail requirements once the contract commences, i.e. as part of contract management. The design and management arrangements for the contract (including joint monitoring with the contractor) are relevant considerations. The form can be found on the CPT intranet site.
1.5
The Requirement for Records
The effectiveness of the audit trail depends upon the maintenance of correct records of procurement activities. These should be used in the construction of filing and record keeping systems and standards relating to procurement. The main requirements are summarised below: Internal Audit has the right to audit all purchasing and procurement activities; any audit is almost certain to check that, if you have departed from guidance, your reasons for doing so are recorded in writing Audit trails for all procurement activity must be established and maintained The completeness and accuracy of the Contract Register will be subject to periodic audit review All requests for a waiver must be in writing with sufficient evidence and information to allow a decision to be made by the chief officer Any personal interest that may influence or might reasonably be deemed by others to influence on an employees impartiality in any matter relevant to her/his duties should be declared
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You should obtain and record in writing a pre-tender estimate of anticipated costs for all procurements You must ensure that you clearly set out your requirements in a specification so that you can unambiguously relate any prices you obtain to those requirements Even for simple purchases you should recognise the need for records that are auditable; a good Guide for record keeping is to assume that such records might be used in a court of law. Retain all written quotations: fax, post, e mail. Record keeping is particularly important if you do not accept the lowest quote; for large and complex purchases you may want an independent witness of the process If for any reason you do not obtain competitive quotes, you must keep a record of the reasons, e.g. an existing contract from another department. For provision from a new supplier, waiver guidance must be adhered to: o o o o o If the supplier is highly specialist and/or unique If the supplier has extensive relevant local knowledge Lack of competition Extreme urgency due to external forces Emergency situations, etc.
It is essential that you keep detailed records including the procedures used, companies involved, reasons for rejection or award, value of contract When procuring under EU Directives, there is specific information you must maintain in writing. These requirements are sensible and you should maintain them for all procurement activity, even if they fall outside the EU thresholds. This information includes: o o o o o o Name and address of contracting authority Subject and value of contract Names of contractors/tenderers admitted and reasons for selection Names of contractors/tenderers not admitted and reasons Names of successful tenderer with reasons why that tender was chosen Any share of the contract that may be subcontracted to a third party, if known
The Executive Director is responsible for ensuring that all tender documents are adequate and that all tender documentation received is secured, accurate, and reliable.
Tendering & Contract Documentation

Lambeth has a Document Retention & Disposal Standard Guide which can be found on the intranet. The section on Legal & Contracts is short and helpful and covers procurement documents; you can find the document on the Lambeth intranet here: http://sharepoint.lambeth.gov.uk/sites/lts/corporateprocurement/Public%20documents/Legal/Document%20R etention%20and%20Disposal%20Standard.pdf
1.6 1.6.1
Responsible Procurement & The Public Services (Social Value) Act 2012 Introduction to Responsible Procurement at Lambeth
Sustainable development for Lambeth is about creating a better quality of life for all areas of the Borough for both now and in the future.
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It is underpinned by three key principles: 1. Strong and diverse economic growth 2. Social inclusivity to allow all Lambeth residents to share the Boroughs future success 3. Fundamental improvements in environmental management and use of resources Though procurement at Lambeth has always worked towards the adoption of sustainable development practices, the term sustainable procurement has now moved on. Once known as green procurement, ethical procurement and finally sustainable procurement, Lambeth has joined with the Greater London Authority and the Scottish Parliament in adopting the term responsible procurement. The difference between the terms responsible procurement and sustainable procurement is not great but responsible procurement is more inclusive of the social and economic aspects of sustainable development, alongside the well known green or environmental issues; the primary aspects of responsible procurement at Lambeth are in the are represented in the following three broad categories: 1. Social 2. Economic 3. Environmental All three principles together make up responsible procurement at Lambeth and they all carry equal weight and consideration.
Corporate Policies
Lambeth has a number of policies that reflect our commitment to responsible procurement and corporate social responsibility. These can be found at www.lambeth.gov.uk but links to relevant individual policies are below:
Lambeth's Sustainability Charter

http://www.lambeth.gov.uk/Services/CouncilDemocracy/MakingADifference/LambethSustainabilityCharter20 07.htm
Sustainable Development & Construction Policy

http://www.lambeth.gov.uk/Services/HousingPlanning/Planning/SustainableDevelopmentConstruction.htm
Sustainable Timber Purchasing Procedure

http://www.lambeth.gov.uk/Services/HousingPlanning/Planning/SustainableTimberPurchasing.htm
Equal Opportunities Statement

http://www.lambeth.gov.uk/NR/exeres/A837D1E5-5641-4DCD-9D90-BCB572CD87A0.htm#equal
Corporate Health and Safety Policy

http://www.lambeth.gov.uk/Services/Business/HealthSafety/HealthandSafetyEnforcementPolicy.htm
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Privacy Policy
http://www.lambeth.gov.uk/Privacy.htm
Corporate Complaints Policy

http://www.lambeth.gov.uk/Services/CouncilDemocracy/CommentsComplaints/CorporateComplaintsPolicy.ht m
Freedom of Information Policy

http://www.lambeth.gov.uk/Services/CouncilDemocracy/DataProtectionFOI/index_EXTRA.htm
Whistleblowing charter
http://www.lambeth.gov.uk/Services/Business/TendersContracts/WhistleBlowingCharter.htm
Lambeth Hate Crime Strategy

http://www.lambeth.gov.uk/SaferLambeth/HateCrime
Crime & Disorder Act 1998, Section 17

http://www.crimereduction.gov.uk/legislation26.htm If the above links do not work, go to the Lambeth website at www.lambeth.gov.uk and enter the above policy names into the search engine to find the policy you are looking for.
The Public Services (Social Value) Act 2012

The Public Services (Social Value) Act 2012 (the Act) received Royal Assent on 8 March 2012. It was brought into force by commencement order on 31 January 2013. From that date the operative provisions of the Act will apply and Lambeth procurement and commissioning officers must follow the Act and take it into account when undertaking procurement or commissioning projects.
Introduction to the Act

The Act places a requirement on procurement and commissioning officers to consider the environmental and social benefits of their approaches to procurement before the process starts. Officers also have to consider whether they should consult on these issues.
The Act specifically applies to the Gateway One and Two stages of the Lambeth procurement process. The planning and strategy development of the procurement of services stages is where social value can be considered to greatest effect. Officers should consider social value before the procurement starts because that can inform the whole shape of the procurement approach and the design of the services required; they can also use the Act to rethink outcomes and the types of services to commission before starting the procurement process.
In tight economic times it is particularly important that maximum value in public spending is achieved. Demand for core public services will increase significantly over the next few years in a time of reduced funding. Procurement and commissioning officers will need to identify better targeted, more innovative and radical service delivery solutions to meet this demand. We all have to work hard to not only achieve the best price but to also meet the wider social, economic and environmental needs of the Lambeth community
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Lambeth procurement and commissioning officers need to continue taking a value for money approach - not lowest cost - when specifying and evaluating contracts, where relevant, and the Act complements this approach. You can read the full text of the Public Services (Social Value) Act online here: http://www.legislation.gov.uk/ukpga/2012/3/enacted.
The Social Value Act & Responsible Procurement

At Lambeth the principles of the Social Value Act are included within the wider Responsible Procurement initiative already observed in the Lambeth procurement process. The Social Value Act is concerned only with social benefits that can be attained through delivery of services; Responsible Procurement supports this as well as considering benefits that can be achieved in the purchase of products. Some of these social benefits will be benefits to the local community and the tool supported by Lambeth procurement to discover these is the Community Benefits Checklist. The Checklist is used together by procurement officers and their department's Cabinet Member. Both use the form to agree the benefits opportunities in a contract, at the procurement planning stage.
What Do We Have To Do Under The Act?

The Act requires commissioners and procurers at the pre-procurement stage to consider how what is to be procured may improve social, environmental and economic well being of the relevant area. We need to consider how we might secure any such improvement and to consider the need to consult. The Act will only apply to public services contracts and framework agreements to which the Public Contracts Regulations 2006 apply. When considering how a procurement process might improve the social, economic or environmental well being of a relevant area, officers must only consider matters which are relevant to what is proposed to be procured. We must also only consider those matters to the extent to which it is proportionate, in all the circumstances, to take those matters into account. At Lambeth the Social Value Act must be considered for all purchases and contracts but no formal specification or reporting action is required where the aggregate value is below 25,000. For purchases and contracts valued at 25,000 and greater (the Lambeth tendering threshold) details of how social value will be obtained must be included: In the Gateways One and Two reports when officers seek approval to go to tender In the Community Benefits Checklist that is completed at Gateway Two when the value of the contract is at 100,000 and greater In the Gateway Three report that recommends contract award. Details of the benefits the winning supplier has offered to the Council must be included in the report In the Gateway Four forms and ongoing contract performance reviews, where contract managers monitor the supplier's delivery of their proposed social benefits
Where a purchase is made or a contract put in place under an urgent or emergency waiver, the Act makes provision to discard the need to consider consultation and the impact on social, environmental and economic well being of service users - if it is impractical to consider them. However, urgency caused by undue delay will not be a valid reason not to comply with the Acts requirements.
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Under law the Act only applies to those public services contracts and framework agreements to which the Public Contracts Regulations apply and only for contracts valued at the OJEU thresholds and greater. However, Lambeth has extended this responsibility to the tendering threshold of 25,000. At this value of contract procurement and commissioning officers and managers must, as a matter of good practice, consider how what it is proposed to be procured might improve economic, social and environmental well being in order to obtain maximum value for money and for local authorities to comply with the best value duty.
Technical Questions & Answers

Below are a set of Technical Questions and Answers designed to provide more information about the Social Value Act and what procurement and commissioning officers need to do to consider the environmental and social benefits of their procurement and commissioning activities: a. Does the Act apply to Part B Services
Contracts and below threshold contracts?

The Act will apply to services that fall under Part B of Schedule 3 of the Public Contracts Regulations 2006 as well as those that fall under Part A. b. How does the Act apply to Framework
Agreements?
The Act will apply to framework agreements. When procuring framework agreement for public services that is at or greater than the OJEU threshold, procurers and commissioners must consider the provision of the Act. The Act does not apply to services contracts awarded by calling off from a framework. c. What contracts are not covered by the Act? The following contracts are not covered by the Act:
The Act does not define how the results of the consideration of these impacts and feedback from any accompanying consultation should shape any procurement which is undertaken. However, it does enable officers and end users a perspective on potential services to be taken into account in the development of outcomes and specifications for the services to be procured. Cooperative commissioning is underpinned by the principle of procuring for outcomes and officers need to get better results for less money: specifications that are developed with the consideration of the Act's principles can lead to more innovative and cost effective solutions
Contracts for goods and works Contracts where there is a mixture of services, goods or works are not covered where the value of the goods exceeds the value of the services or where the works are more than incidental to the main purpose of the contract. Call-offs from framework agreements Contracts that fall outside the scope of the Public Contracts Regulations 2006 (such as those for certain defence and security services) are not covered
Although these contracts are not covered under the Act commissioners, as a matter of good practice, should consider economic, social and environmental well being in order to obtain maximum value for money.
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d. What is the planning stage of a procurement or commissioning project? This is the Gateways One and Two milestones in Lambeth's procurement process. At this stage of the procurement or commissioning process services are conceived, designed and specifications are developed. Engagement with partners, stakeholders and current and potential providers takes place; at the Gateway Two stage officers are required to consult with their departmental Cabinet Member and complete the Community Benefits Checklist to identify social value and community opportunities in the proposed tender. This period ends when the Gateways One and/or Two reports are submitted to the relevant Procurement Board and after peer review of the report(s) content, approval is given to advertise the tender or to approve the waiver. e. What has to be considered in the planning stage of a procurement or commissioning
project?
The Act requires authorities to make the following considerations at the planning stages: how what is proposed to be procured might improve the economic, social and environmental well-being of the relevant area how in conducting a procurement process it might act with a view to securing that improvement whether to undertake a consultation on these matters. f.
What is the definition of public services contract?
The definition of public services contract in the Act is the same as the definition in the Public Contracts Regulations 2006. The tests for mixed contracts are therefore the same as in the Public Contracts Regulations 2006. Mixed contracts for goods and service will only be covered if the value attributable to the services exceeds the value of the goods covered by the contract. Mixed contracts for works and services will only be covered if the works are only incidental to the main purpose of the contract. g. What is the relevant area? The Act defines relevant area as being the area in which the authority (or authorities) primarily exercise their functions within the United Kingdom. For example, a local authority thinking of letting a contract for its own use would have to make considerations for its own geographical area, even if the contract is only directly relevant to part of the local authoritys area. A local authority procuring a framework agreement for use by itself and neighbouring authorities would have to consider that wider area, even if the framework agreement is only likely to be directly relevant to part of that wider area. Authorities whose functions extend throughout the UK would have to consider the area of the UK, even if the contract or framework agreement is only directly relevant to a part of the UK. Areas outside the UK do not have to be considered even if an authority has functions outside the UK. Although the Act requires considerations to be made in respect of the relevant area contracting authorities should be careful to ensure that suppliers from across the EU and beyond are able to compete on an equal footing for any contracts advertised. In line with the EU Procurement Directives, EU Treaty principles and the UKs international obligations contracting authorities should not do anything to discriminate against suppliers from other member states or countries who are party to the World Trade Organisations Government Procurement Agreement.
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h. Who should be consulted and how should it be done? The Act does not set out who should be consulted in the pre-procurement period. Cabinet Office procurement advice on lean sourcing already emphasises the importance of consulting with supply markets before formal procurements begin so the requirements of the Act At the Gateway Two stage officers are required to consult with their are complimentary to the principle of consulting before departmental Cabinet Member procurements start to develop robust and intelligent and complete the Community specifications. Potential service users and organisations Benefits Checklist to identify social that represent them in the community should be consulted value and community as well as other agencies that provide or commission opportunities in the proposed services.
tender
Consultation will be particularly relevant when considering procurements for services which are delivered directly to citizens. The voluntary and community sector, along with other providers and interested groups, should be engaged from the earliest stage to help shape policies, programmes and services. Consultation may be less relevant in procurements for back office services such as those for information technology or human resources where services are supplied directly to the contracting authority. The Act does not set out how consultation should take place so commissioners should consider the most appropriate form of consultation bearing in mind the needs and requirements of people and organisations being consulted, the size of the procurement and the likely social, environmental and economic impact of the procurement. i.
How should contracting authorities apply the results of considerations and consultations to the procurement process?
The Act does not apply to any formal stages of the procurement process but it does require commissioners to consider social value issues and how they can be applied to the outcomes required. This in turn will inform the development of the specification and the assessment of bids. Officers must engage with supply markets before procurement processes commence and the requirements of the Act complement this approach. This type of engagement has two benefits: 1. It enables the views of potential service users, potential suppliers and other stakeholders to be taken into account when designing the specification for the service to be procured. This can lead to more innovative solutions which take into account wider economic, environmental and social concerns 2. It alerts the potential supply base to forthcoming procurements. If this is done early in the process it enables the supply base to prepare to meet demand and can enable smaller organisations or those from the charitable or voluntary sectors to form a consortium or enter into other commercial arrangements to bid for contracts j.
What bodies does the Act apply to?
The Act applies to those bodies that are defined as contracting authorities under the Public Contracts Regulations 2006, except that it does not apply to Welsh Ministers, the First Minister of Wales, the Counsel General to the Welsh Assembly Government, the National Assembly for Wales Commission or any other authority whose functions are wholly or mainly Welsh devolved functions.
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k. How can contracting authorities demonstrate that the Act has been considered? Although the Act does not prescribe that considerations made under it should be recorded by way of a specific report or form, at Lambeth records of social value will be included in the Gateway documents, advertisements (if relevant) and all relevant tender documents. These will show that we have made the considerations required under the Act, as well as the rationale for any subsequent decisions. Contract managers have the responsibility to report on the delivery of the social value elements of all contracts, once they have been awarded and implemented. Records for delivery will be recorded in the Contract Performance Review Reports. l.
How does the Act relate to Local Authorities Best Value duty?
The Local Government Act of 1999 sets out a general Duty of Best Value for specified local government organisations to make arrangements to secure continuous improvement in the way in which its functions are exercised, having regard to a combination of economy, efficiency and effectiveness. Under the Duty of Best Value local authorities should consider overall value, including economic, environmental and social value, when reviewing service provision. Communities and Local Government publish statutory guidance on the duty at Best Value Duty. Local authority commissioners should note that the Best Value Duty complements the approach in the Act but there are some differences which are summarised in the table below: Responsible Procurement & Best Value Duty The Responsibility Consider value, including social value Local Authorities Services, goods and works Throughout the process Any value Consultation Yes, with service users Public Service (Social Value) Act Consider how to improve social, economic and environmental wellbeing All UK Public Sector Authorities Services only The planning stages of procurement The Act states only above relevant EU procurement thresholds but at Lambeth the threshold is any value Yes, on the service being provided
Procuring or Commissioning Body Contract Procurement Stage Value of Contract
Example
This example illustrates how social value can be considered at various stages of the commissioning and procurement process. A local authority is considering the provision of a meals on wheels service for elderly people. During the pre procurement stage the contracting authority decides that as this is a service which will be provided directly to citizens it will consult potential users and potential suppliers along with other interested stakeholders. The results of the consultation suggest that many potential service users suffer from loneliness and social isolation. Feedback from a community group suggests that a service where people are collected and taken to a local community centre for their meals would help combat problems of loneliness and isolation.
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Feedback from the local NHS trust suggests that many potential users would benefit from contact with health professionals for routine medical services who could spot other medical and mental health issues at an earlier stage. In addition feedback from local people suggests the development of a new community centre would provide a valuable new community resource. The council takes this feedback into account when designing the outcomes it wishes to see from this new service as wider economic and social benefit would derive from improving community cohesion for users of the service, in addition to improving users health and improving access to care facilities. As well as informing the specification of a service, considerations under the Act may inform selection of economic operators. When considering a potential suppliers technical or professional ability a suppliers experience in delivering similar services may be relevant. The local authority decides to procure a meals on wheels service which is based on bringing people to a local community centre. When considering suppliers technical ability to deliver this service experience in providing specialist transport services as well as catering is considered as well as experience of providing services to elderly people. The selection criteria that are established make it clear that suppliers can demonstrate their technical ability through sub-contractors taking on specialist roles in the delivery of the service, as part of a consortium as well as by a single supplier. Social
1.6.2
Equalities & Human Rights
The Equality Act 2010 contains a specific measure on procurement, making provision: to enable duties to be imposed in relation to the exercise of public procurement functions. The guidance document Framework for a Fairer Future: The Equality Bill, states the Act: makes it clear public bodies can use procurement to drive equality. It also: enables ministers to set out how public bodies should go about doing so. The complete document can be found on SharePoint here: http://sharepoint.lambeth.gov.uk/sites/lts/corporateprocurement/Public%20documents/Equalities%20and%20 Procurement/GEO%20-%20Framework%20for%20a%20Fairer%20Future.pdf. Public procurement is already inherently linked to existing public equality duties. However, the new legislation creates a more explicit connection between procurement and the new Single Equality Duty.
Rationale
The Acts impact assessment explains the decision to include procurement was based on evidence. This showed that government intervention is necessary to encourage and enable public authorities to use their procurement activities to further equality objectives. The Act seeks to invoke a cultural shift in how public authorities pursue equality objectives through their procurement activities. It also notes that a common approach to equality in public procurement could reduce burdens on business applying for public sector contracts and make it easier for small and medium-sized businesses to compete.
Amendment to the Local Government Act 1988

Local authorities are explicitly permitted to take non-commercial matters into account during the procurement process, when they consider it is necessary or expedient to do so. This is in order to comply with the Single Equality Duty.
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The Single Equality Duty

The Act establishes a new Single Equality Duty for public authorities. This consolidates the three existing public duties on race, disability and gender. Additionally, it covers age, sexual orientation, religion or belief, pregnancy and maternity and gender reassignment. The new duty, like the three duties before it, requires public authorities to have due regard to: Eliminate unlawful discrimination Advance equality of opportunity Foster good relations when exercising their functions
Specific Duties & Procurement

Clause 147 gives ministers the power to make regulations imposing specific duties on certain public authorities to enable them to carry out the new Equality Duty more effectively. The Equality and Human Rights Commission (EHRC) must be consulted before these are imposed. Clause 149 gives ministers a regulation making power to impose specific duties in relation to public procurement functions. These are defined as those activities that fall within the European law public procurement regime. Ministers do not have to consult with the Equalities & Human Rights Commission before imposing these procurement-specific duties. The explanatory notes give an example of how the power may be used. A minister could, for example, impose a specific duty requiring certain public authorities to take into account national priorities set out in a public service agreement (PSA) when setting their equality objectives. Crucially, the act also gives ministers the power to modify or remove any duties on procurement that have been imposed, including those by other ministers. There is no equivalent power under the general specific duties.
Procurement Guidance
This section summarises the key legislation and principal concepts which you are most likely to encounter and find useful on a day to day basis. You should clarify your equality objectives and consult (including external providers and members of staff) to establish whether any issues exist and whether any race equality monitoring is done. You should consider whether equality objectives might be better met through different packaging or timescales. You must consider whether the duty to promote equality should be built into the contract. This might be on the basis of an EIA. You must also include equality of opportunity when evaluating a contractors workforce capability. You should use the contract specification to set out what you expect from the contractor in terms of promoting equality. Consider issues concerning sex, disability, religion or belief, sexual orientation or age. Any requirements should be clear so that they can be verified and monitored. Use contract conditions to set out your requirements for the contractors equality obligations. If there are equalities issues linked to the area of procurement, these should be mentioned in any advertisement. Part of the pre-qualification questionnaire relates to equality issues.
The points relating to pre-qualification questionnaires apply. The invitation to Tender should include information about the Councils:
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Equality policies How relevant these are to the procurement activity in question Facts about the Councils population distribution And any other relevant data from equalities monitoring activities
Where equality is a core requirement, you must ensure that evaluation criteria directly cover this requirement; you should evaluate all statements made and evidence presented by the overall contract objectives.
Procurement & The Human Rights Act 1998

In the last few years there has been some confusion as to which bodies are subject to the Human Rights Act 1998. Bodies such as local authorities, health authorities and central government departments are obviously covered, but the Act also refers to other bodies (which could be privately-owned), carrying out functions of a public nature that are also subject to the Act. An example would be the secure transport company G4S. G4S is a private company but its transporting of prisoners is classed as a public function - this part of their business is therefore covered by the Human Rights Act. However, other parts of their business are not - for example delivering money to banks. These functions are not subject to the Act. Unfortunately, a number of legal judgements in recent years have led to uncertainty as to what constitutes a function of a public nature, and therefore over which bodies are subject to the Human Rights Act (your Legal Department will be well aware of the issues). Of particular interest to many local authorities is the status of care homes with local authority-funded residents. The Government is attempting to clarify the position on public functions but this may take some time, and even then it may not address all the issues. For example, even if it is found that local authority-funded residents of a care home do have the protection of the Human Rights Act, then privately funded residents in the same home still would not. If care homes are found to be outside the remit of the Act, then the local authority might be held responsible for any breaches. One way to resolve these problems is to use contract specifications to ensure that service providers' levels of service are at a level that would satisfy the requirements of the Human Rights Act. Guidance on doing this was originally issued by the former Office of the Deputy Prime Minister in 2005 and the Department for Communities and Local Government has re-issued this; details can be found in this Guide.
Important Points In Planning & Tendering

You should clarify your equalities objectives and consult (including external providers and members of staff) to establish whether any issues exist and whether any race equality monitoring is done. You should also consider whether equality objectives might be better met through different packaging or timescales. You must consider whether the duty to promote equalities issues should be built into the contract; this might be on the basis of an Equalities Impact Assessment (refer to the corporate template for details). You must also include equality of opportunity when evaluating a contractors workforce capability. You should use the specification to set out what you expect from the contractor in terms of promoting race equality. You should also consider issues concerning sex, disability, religion or belief, sexual orientation or age. Any requirements should be clear so that they can be verified and monitored. The CRE publication mentioned above gives details and examples of how this can work in practice.
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You should use contract conditions to set out your requirements for the contractors race (and other) equality obligations.
If there are equalities issues linked to the area of procurement, these should be mentioned in any advertisement. Part of the pre-qualification questionnaire should relate to race (and other) equality issues. As well as asking questions linked to RRA legislation, the Local Government Best Value (Exclusion of Noncommercial Considerations) Order 2001 (see Section 3.6) allows authorities to ask about a range of workforce management issues. The points relating to pre-qualification questionnaires apply. The invitation to tender should include information about the Councils equality policies, how relevant these are to the procurement activity in question, facts about the Councils population distribution and any other relevant data from equalities monitoring activities. Where equalities is a core requirement, you must ensure that evaluation criteria directly cover this requirement; you should evaluate all statements made and evidence presented by the overall contract objectives.
1.6.3 Issue
Guidance on Contracting for Services in Light of the Human Rights Act 1998
Where a provider that is not a public authority provides a service to the public under contract to a public authority, that service needs to be provided in a way that takes account of the content of the Human Rights Act 1998 ("the HRA") relevant to that contract. Providing a service in the manner indicated above will assist in the provision of an optimized service. Not to do so may expose the public authority to legal liability and, furthermore, may infringe the legal rights of service users.
Purpose
This guidance note is designed to apply to all contracts where the HRA may be engaged. It is intended, in particular, to assist mainstream ("core" or "pure") public authorities in dealing with the issue identified above. This issue is at the heart of the Seventh Report of the Parliamentary Joint Committee on Human Rights ("the Joint Committee's Report") and is also addressed in the Audit Commission's report, "Human Rights Improving Public Service Delivery" ("the Audit Commission's Report"). Specifically, this note attempts to deal with the Joint Committee's Report's recommendation for guidance on the protection of human rights through contract. This note suggests that a specification-based approach is the most appropriate way to deliver this. When acting on this note, public authorities should take their own professional legal and procurement advice to ensure compliance with the HRA and public procurement law. This note generally is directed towards services contracts, although brief consideration is given at the end of this note to mixed services and works contracts. Where reference is made in this document to suppliers it means suppliers of services or mixed services and works as appropriate.
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Use of Contractual Conditions

Section 6 of the Joint Committee's Report discusses two options for attempting to protect human rights through contractual mechanisms. The first is through contract between the public authority and the supplier; the second is through contract between the supplier and end user, for example, care home resident.
Consistency, Enforceability & Enforcement Issues

Some very practical problems around consistency of approach, enforceability and enforcement arise under both options identified above. Whilst creative use of the Contracts (Rights of Third Parties) Act 1999 ("the 1999 Act") might enable end users of services to have enforceable rights against suppliers, the practical issue would remain of whether end users were in a suitable position - for example, through having the knowledge and financial resources to pursue legal action - to enforce those rights; this point is recognised in the Joint Committee's Report. Further the supplier market will often be resistant to use of the 1999 Act to confer rights on third parties. It can result in the creation of a very large and practically, if not theoretically, uncertain class of beneficiary; this may well be perceived to increase supplier risk to an unacceptable extent, particularly if it causes difficulties for suppliers in laying off risk via insurance arrangements. In relation to consistency, contractual terms will, inevitably, be affected by the nature of the service to be delivered and by the process by which that contract is put in place. For much public sector contracting, this will mean contracts that are put in place following EU-wide competitive tendering. The procurement process must ensure that artificial barriers to participation are not raised. In this respect the particular needs of small and medium-sized enterprises ("SME"), wherever in the EU they may be based, need to be borne in mind. SMEs may include local businesses, ethnic and minority businesses, social enterprises and voluntary and community organisations. (Whilst public authorities should not ignore the benefits offered by SMEs they must at the same time ensure that their policies comply with public procurement law, which means, in this context, not discriminating against larger organisations). In practical terms, recognising the particular needs of SMEs means keeping the process as simple and understandable as possible. This point, and its relationship to consistency, is expanded below.
Contracting For Concepts

Public authorities need to consider the commercial effects of contract conditions. An obligation simply, for example, to comply with the HRA as though the supplier were a public authority is likely to be resisted. In particular, since the HRA deals with a number of concepts whose application in particular circumstances could be a matter of legitimately differing views, suppliers may object that they cannot fully ascertain the nature of the obligations that they are being asked to undertake. This is likely to be the case, in particular, for SMEs with their more limited resources. Uncertainty as to the nature of contractual obligations would be likely to result in higher bid costs, as suppliers sought to price perceived risk; it might also mean an increased unwillingness to bid since suppliers might feel unable to price risk. Even if suppliers felt able to accept the commercial consequences of contractual provisions of the type identified above, this would not necessarily mean that service provision in a particular area would be uniform as between private sector and public sector delivery. This would be because the private sector supplier might legitimately determine that the HRA obligation should be discharged in one way, with the public authority taking a different view. The public authority could seek a contractual power to determine the nature of the HRA obligation with which the supplier would have to discharge, but it is likely that a bare right of direction such as this would be unacceptable to a large number of suppliers since it would create a
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secondary area of contractual uncertainty. Even if a public authority were able to secure such a provision, it would be likely to be linked to contractual change procedures, and thus introduce cost uncertainties for the public authority. The Audit Commission's Report suggests that ensuring the human rights protection of service users should lead to improved services. In connection with this, it is noted that preserving a wide and active supplier base, and thus a competitive marketplace for the delivery of those services, is a driver towards improved delivery; the contractual approach taken needs to reflect both of these points.
An Approach Based on Contract Specifications

For the reasons set out above, it is suggested that the most fruitful way for public authorities to proceed when attempting to contract to secure the protection of human rights for service users is via the specification of services. The specification provides potential suppliers with a statement of the public authority's requirements and will form a key part of any contract with the supplier. It is critical to get the specification right. It is suggested that the public authority should detail in the specification the activities which it considers will be required to be performed by the supplier, including output specifications relating to processes where these help to define the performance characteristics of the service.
Advantages
There are several advantages to such an approach: 1. It provides all potential suppliers with a very high degree of certainty as to what will be required from them. This should find itself reflected in competitive bids from suitably qualified suppliers. A competitive supplier base can provide opportunities for greater innovation, efficiencies and higher quality services 2. It enables the public authority to ensure that there is a mutual understanding as between itself and the supplier that the services will be delivered in a particular, HRA compliant way 3. It enables the public authority to fully reflect the needs of relevant stakeholders in the service delivered. Where appropriate, users of the service could be invited to feed into the process of drawing up the specification, thus making the service delivered more responsive to their needs and aspirations, including end user expectation that human rights issues have been satisfactorily addressed 4. It provides transparency as to the way in which the public authority has sought to secure the discharge of the HRA obligations it has. Flowing from this, it assists the public authority in monitoring and enforcement of those obligations (and auditing bodies similarly) 5. It may be possible to adopt greater commonality on key service delivery issues via this route, than via contract terms. For example, a public authority consensus view as to the way in which certain issues should be dealt with could be fed into all relevant contracts. In this way, the culture of respect for human rights can be fostered, particularly if the views of end users are sought as part of that consensus building process, for example through the input of representative groups. It has to be recognized, however, that even with commonality between specifications, some differences may emerge in terms of the practical effect given to them during service delivery 6. Finally, such an approach is consistent with the need to view the HRA as part of a package of legislation designed to secure rights and freedoms. This picks up a point made in the Audit Commission's Report that few links between equalities and human rights legislation are made by
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public authorities. It may well be appropriate to deal with aspects of equalities legislation as they impact service delivery by means of a specification-based approach. It is suggested that a specification-based approach enables public authorities to properly integrate the requirements of all relevant legislation in a way which delivers a service that meets the needs of end users, provides certainty of obligation for suppliers and maximum value for the public purse Public authorities should also consider the broader legal framework applicable to support them in meeting requirements under the HRA. For example, under the Local Government Act 2000, local authorities are required to prepare a 'community strategy' and have powers to promote the economic, social and environmental well-being of their communities. They must, of course, comply with Best Value and, when relevant, public procurement law in so doing.
Contract Terms to Support a Specification-Based Approach

Where a significant degree of certainty is provided to suppliers as to the scope of their obligations, they may be more willing to accept some residual contractual powers of direction from public authorities in 'grey' areas at the margins. If public authorities are able to include these in their contracts their ability to ensure that service delivery reflects the public authority's view as to what is necessary to secure compliance with the HRA will be enhanced. Further, public authorities may wish to seek to promote the human rights culture and the equalities legislation by adopting an approach which requires the supplier to use all the care, skill and diligence to be expected of a suitable, skilled and experienced supplier providing services of the type to be performed under the contract. This is wording used in many professional appointments, and would provide the public authority with additional tools to ensure performance of the specified services to a generally accepted industry standards. This may, in turn, support a virtuous circle of raised standards.
Procurement Processes to Support a Specification-Based Approach Sign-off Procedures

First, it is suggested that a public authority's contractual sign-off procedures should indicate that the provisions of the HRA and equalities legislation have been considered. Whilst it is impossible to provide hard guidance on the stage at which this should be done, because of differences in public authorities' procurement models, it is suggested that this sign-off should be achieved pre-tender.
Checklists
Secondly, it may well be helpful for public authorities to develop checklists of issues to be considered before any form of sign-off can be given. These checklists should not be exhaustive, in the sense of precluding consideration of issues relevant to a particular procurement. Issues that public authorities may wish to consider include: Whether the delivery of the particular service is likely to engage the HRA (and/or equalities legislation), and if so which rights (parts) in particular. A good example of a service that might engage the HRA (and equalities legislation) would be the provision of care services to vulnerable members of society. Another would be the delivery of an administrative service; the latter would need to recognise the physical or linguistic accessibility needs of particular service users
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Identifying the steps that have been taken to define those needs to ensure that the relevant rights are respected (and other legal duties fulfilled), for example consultation with professional advisers and/or representative end users. The results of this process would be reflected in the specification Identifying any decisions taken which may lead to those rights not being respected and/or needs not being met, in whole or in part (for example because of competing requirements of other services or other service users), justifying those decisions by reference to the HRA (and/or equalities legislation, as appropriate) and setting out any alternative strategies for respecting those rights and meeting the relevant needs Specifically identifying contract monitoring arrangements for any areas of particular sensitivity and Identifying the consideration that has been given to enforcement mechanisms in the event of supplier underperformance, so as to avoid situations where the public authority is left without an effective remedy (and thus cannot meaningfully act in relation to the contract to secure the rights and meet the needs of end users) and to create a situation where the supplier always has an incentive to deliver
Whether or not a checklist approach is adopted, public authorities should ensure that appropriate weighting is given to the relevant parts of the specification at evaluation.
Reference Back to the Public Authority

Thirdly, linked to the point made above about suppliers potentially being willing to accept some residual contractual powers of direction from public authorities in 'grey' areas when the basic scope of supplier obligations is clear, public authorities may wish to consider specifying that identified decisions, which the public authority regards as being likely particularly to engage the HRA (and/or equalities legislation), need to be referred back to the public authority for determination.
Detailed Content of Specifications

Specifications could require suppliers to perform certain tasks as part of the delivery of relevant parts of service to ensure that relevant human rights considerations have been taken into consideration. For example, a public authority might choose to require the supplier to consider and record certain matters as part of the preparation of a care plan. This might take the approach of requiring the supplier to work through certain checklist items; the approach might be much the same as for the internal processes of the public authority. It is worth repeating that there is a need here for the public authority to ensure that the specification remains within permissible bounds, from a public procurement law point of view, so far as specifying the method of delivery is concerned. In short, this means that processes must be specified in output terms, and limiting the specification of processes to those matters that help to define the performance characteristics of the service. Other fruitful areas for detailed specification could include, for example, output specifications in relation to ensuring that those engaged in service delivery are aware of the implications of the HRA and equalities legislation relevant to the performance of the contract. This would help to ensure that where a supplier is to determine certain operational policies relating to service delivery it does so in a way that is compliant with the legislation, for example by recognising that that policy many need to be applied flexibly to accommodate particular circumstances. In preparing specifications for a mixture of services and works, public authorities should extend their consideration of HRA (and equalities legislation) issues to practical matters relevant to the design of the works, as well as to process output specifications. For example, physical characteristics of, for example, a
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prison, might combine with process to result in infringements of the HRA. The standard of what was required would depend upon the circumstances. This lends support, however, to a tailored, specification-based approach, rather than an attempt at blanket coverage of issues via uniform contractual terms and conditions.
1.6.4
The Equalities Impact Assessment & Procurement
Equalities Impact Assessments (EIAs) are a powerful tool, which can identify and address any potential for discrimination before new policies and services are introduced - this includes all procurement activity. For procurements valued at 100,000 and greater, the lead procurement officer must conduct an EIA for their procurement exercise. However, a monetary limit is not the only factor that needs to be considered when equalities issues The EIA guidance, self-certification guidance and the report template can be found on the Lambeth internet site at: http://www.lambeth.gov.uk/Services/CommunityLiving/EqualityDiversity/EqualitiesImpactAssessments.htm
1.6.5
Community Safety
The Community Safety division at Lambeth works to: Combat the impact of drugs and alcohol Reduce violent crime including domestic violence Invest in young people, to reduce crime Support victims and witnesses, and challenge hate crime Tackle burglary, robbery and prostitution Tackle anti-social behaviour Improve the quality of your neighbourhood Keep you better informed and involved
The Team works in partnership with the police, probation service, health agencies and other organisations as part of the Safer Lambeth partnership, aiming to reduce crime, improve quality of life and make Lambeth a safer place to live, work and visit. How do community safety issues have an impact upon procurement and responsible procurement at Lambeth? Section 17 of the Crime and Disorder Act 1998 for those Commissioning Services and Contracts states: Without prejudice to any obligations imposed upon it, it shall be the duty of each authority to which this section applies (i.e. local authorities, police authorities and national parks) to exercise its various functions with due regard to the likely effect of the exercise of those functions on, and the need to do all that it reasonably can to prevent, crime and disorder in its area. A plainer English version was provided by the Home Office in their Crime and Disorder Guidance in 1998. It states: The Act creates a general duty on each local authority to take account of the dimension in all of its work. All policies, strategies, plans and budgets will need to be considered from the standpoint of their potential contribution to the reduction of crime and disorder
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The Home Office has stated that Section 17 emphasises the vital work of preventing crime and a new focus across a range of local servicesIt is a matter of putting crime and disorder considerations at the heart of decision-making. All council services have a valuable contribution to make to ensure that our strategic goals on community safety are achieved whatever service we come from at whatever level. The effective implementation of Section 17 needs to ensure that all Council departments have community safety embedded within their planning, policy and operational day-to-day activities this includes commissioning and procurement. Procurement officers at Lambeth must consider and report on community safety implications in their procurement exercises at three stages when seeking approval, when seeking contract award and when regularly monitoring their contracts. For more information and assistance in identifying what the community safety implications for a procurement exercise might be, officers are advised to contact Community Safety team directly. More information (along with the Lambeth Community Safety Strategy) can be found on the Lambeth website at http://www.lambeth.gov.uk/Services/CommunityLiving/CrimePrevention/CommunitySafety.htm
1.6.6
Purchasing Food In Lambeth
Whilst the Council purchases very little food directly, it is a large part of the 2 catering contracts we currently hold and for services that purchase food on our behalf for events. In these situations officers need to consider the sustainable factors involved with the food that a supplier will purchase for us to use. For example, Lambeth is a Fairtrade Borough and where we or our supplier is purchasing tea, coffee, sugar and bananas our specifications need to request Fairtrade products, wherever possible. There will be different standards or quality marks for different food categories so it can be difficult to know which is which; have a look at the DEFRA website for more information about quality marks and food purchasing in the public sector: http://www.defra.gov.uk/food-farm/. When purchasing meat and dairy food products suppliers need to provide information about their quality standards and accreditations. For example, Lambeth is aiming to achieve the RSPCA Gold Standard as part of our Animal Welfare Strategy and suppliers are encouraged to meet the RSPCA Freedom Food standard, or Compassion in World Farming Good Pig, Good Chicken and/or Good Dairy standards. Read more here: http://www.ciwf.org.uk/your_food/food_business_impact/default.aspx and see the Lambeth Animal Welfare Charter here: http://www.lambeth.gov.uk/Services/Environment/AnimalWelfare/AnimalWelfareCharter.htm. For eggs Lambeth requires all eggs to be sourced from free range hens. Suppliers will need to provide proof of meeting this standard; an option is certification with the Good Egg Standard from Compassion in World Farming: http://www.ciwf.org.uk/your_food/food_business_impact/default.aspx. Fish should also be quality marked and Lambeth suggests Marine Stewardship Chain of Custody Certification http://www.msc.org/. Lambeth has also recognised the value of the Food for Life Catering Mark http://www.sacert.org/catering and suggest that caterers for children aim to achieve the Silver Mark qualification from them.
Economic 1.6.7 Business Ethics & Lambeth Procurement
This section covers a code of ethical behaviour for all officers engaged in purchasing and procurement of goods or services. It includes conflicts of interests, gifts and hospitality. As stated earlier in this Guide, you
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should be fully aware and understand the contents and implications of Standing Orders and Financial Regulations in relation to procurement activity. The Contract Standing Orders cover the conduct of individual employees in relation to tenders and contracts. They cover conflicts of interests, pecuniary interests and the acceptance of gifts and hospitality. Essentially you should not give the impression to any member of the public, organisation or to your colleagues that you have been influenced by any offer of a gift or hospitality. In addition, you should be aware An employee, at any level, must not use their authority or of the Code of Conduct within office for personal gain (which extends to the gain of their Lambeths corporate HR family and friends). All employees have a responsibility to standards. The key point is that maintain unimpeachable standards of integrity in all their you must report immediately to business relationships that includes rejecting any business your manager/supervisor, or other practice that might reasonably be deemed improper. Key more senior officer, any attempts points to remember: to bribe you or any evidence of
corrupt or improper conduct by

You should make known to a relevant senior others. manager all relationships of a business or private nature with contractors or potential contractors. You must not show special favours in the tendering process, or in respect of the supply of services or permissions from the Council, to businesses run by friends or relatives. Employees involved in the tendering process and dealing with contractors should be clear on the separation of client and contractor roles within the authority. Senior employees who have both a client and contractor responsibility must be aware of the need for accountability and openness. Employees in contractor or client units must exercise fairness and impartiality when dealing with all customers, suppliers and other contractors and sub-contractors. Confidential information on tenders or costs for internal or external contractors must not be disclosed to any unauthorised party.
The Ethical Code of the Chartered Institute of Purchasing and Supply supports the following checklist for general ethical guidance in procurement: Declaration of Interest: Any personal interest that may impinge or might reasonably be deemed by others to impinge on an employees impartiality in any matter relevant to his or her duties should be declared Confidentiality and accuracy of information: The confidentiality of information received in the course of duty should be respected and should never be used for personal gain; information given in the course of duty should be true and fair and never designed to mislead Competition: While bearing in mind the advantages to the Council of maintaining a continuous relationship with a supplier, any arrangement which might, in the long term, prevent the effective operation of fair competition, should be avoided Hospitality: Modest hospitality is an accepted courtesy of a business relationship. However, the recipient should not allow him or herself to reach a position whereby he or she might be, or might be deemed by others to have been, influenced in making a business decision as a consequence of accepting such hospitality. The frequency and scale of hospitality accepted should not be significantly greater than the Council would be likely to provide in return When it is not easy to decide between what is and is not acceptable in terms of gifts or hospitality, the offer should be declined or advice sought from the employees manager
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You should not accept any hospitality once the tendering process has begun. The Public Interest Disclosure Act 1998 protects employees who blow the whistle about wrongdoing. It applies where an employee has a reasonable belief that their disclosure tends to show one or more of certain specified breaches. In relation to procurement, these can include a criminal offence, a breach of a legal obligation or the deliberate covering up of information tending to show any of these breaches. You must report any breaches that come to your attention to the Monitoring Officer (Lambeth Legal Team), Head of Procurement and Partnership Strategy, the Chief Internal Auditor, or you can use the Councils Whistleblowing Charter (a leaflet is available from the Information Desk in the Town Hall). The Council will give you every support to ensure that you suffer no adverse effects as a result of reporting any legitimate concern.
1.6.8
The Bribery Act
The Bribery Act 2010 will came into force on 1 July 2011. It amends and reforms the UK criminal law and provides a modern legal framework to combat bribery in the UK and internationally. The law encompasses 4 key areas of crime: Bribing Receiving a bribe Bribing a foreign public official Failing to prevent bribery
Are of these are offences under Bribery Act. All procurement officers and managers must familiarise themselves with Lambeths Anti Bribery Policy - it can be found here: http://sharepoint.lambeth.gov.uk/sites/lts/InternalAudit/Public%20documents/Internal%20Audit%20and%20A nti-Fraud%20-%20KEY%20DOCUMENTS/Anti-Bribery%20Policy%20and%20Practice%20Note.pdf and the Anti Bribery Procedures document can be found here: http://sharepoint.lambeth.gov.uk/sites/lts/InternalAudit/Public%20documents/Internal%20Audit%20and%20A nti-Fraud%20-%20KEY%20DOCUMENTS/Anti-Bribery%20Procedure.pdf. Both have been approved by the Councils Corporate (Audit) Committee. The policy and procedure apply to all councilors, staff, agency workers and others who act on the Councils behalf; we all have responsibilities under the Bribery Act 2010 which we need to be aware of and we must demonstrate our compliance. To help raise awareness about the requirements of the Act and our responsibilities Audit has produced a short e learning course: http://www.learningpool.com/lambeth/login/index.php on the Act and it only takes 15 to 20 minutes to complete. The course will help you to understand the legislation and will answer many of your questions. If you believe that you have been offered a bribe or that someone else has may have been offered or accepted a bribe, please report this to the Internal Audit and Anti Fraud Team who investigate all allegations of fraud and corruption. Allegations can be reported through the following channels: Whistleblowing Hotline raiseconcern@lambeth.gov.uk; phone 07984 405201 Fraud Hotline briberyreferral@lambeth.gov.uk; extension 61111 National Fraud Hotline (an anonymous line): phone 0800 328 9270 If youd like general information about the new legislation or further information about policy and procedure and how they apply to you, e-mail your queries to briberyadvice@lambeth.gov.uk.
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1.6.9
Social Enterprises and the Voluntary & Community Sectors
Social Enterprises
Social enterprises are businesses with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders and owners. Their social (and often environmental) objectives, combined with their entrepreneurial flair, can provide an excellent basis for the delivery of public services to their local community. Most social enterprises are small and medium-sized enterprises (SMEs) that can offer the same advantages. In addition, social enterprises may offer other benefits because of their closeness to local stakeholders and their focus on achieving their social objectives, which may contribute to a councils sustainable development and community plan objectives. The options for service delivery include: Contracting with existing social enterprises Establishing a new, not for profit social enterprise, which could take on employment of council staff and deliver a service previously managed by the authority Supporting and developing the capacity in local social enterprises to take on a proportion of a service tailored to local needs
Enabling social enterprises to compete effectively for public sector contracts is now within the remit of the Office of the Third Sector.
The Voluntary & Community Sector

There are around 500,000 voluntary and community organisations in the UK (of which, 188,000 are registered charities) and these are growing in number every day. These range from small, local community groups to large, established, national and international organizations. Some have no income at all and rely on the efforts of volunteers; others are, in effect, medium-sized businesses run by paid professional staff. Lambeth regards the voluntary and community sector as a key partner in the search for excellence in the delivery of public services. Whether national or locally based, driven by the power of faith, of imagination or specific goals, our voluntary and community organisations demonstrate the skills, passion, and commitment to get things done. They have special talents in reaching and gaining the trust of disadvantaged groups in our society and their contribution undoubtedly makes our communities safer and more rewarding places to live. The value for money and innovation which voluntary organisations can bring to the delivery of public services is considerable, but often times many voluntary sector organisations striving to secure contracts in support of the Council meet up with several hurdles. The necessary process of embedding good guidance in working with third sector organisations requires, above all, a change of attitude by both procurement officers and key decision makers; the assumption in procuring public services that the choice is just between public and private sector providers must be challenged. Greater awareness is needed of the valuable contribution which the voluntary sector can make if we are to place it firmly on the agenda as a potential provider, whether directly or through sub-contracting. Procurement officers at Lambeth need to understand and address the barriers which the voluntary and community sector can face in bidding for our contracts. Difficulty in finding out about opportunities, too little notice of forthcoming procurements, disproportionate paperwork and expense in tendering, lack of
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recognition of the capabilities of voluntary organisations are just a few of the problems that occur all too frequently. The public sector must embrace the voluntary and community sector as a partner, not just in the procurement and delivery of services, but in the planning of required service outcomes and the development of effective procurement strategies. Continuing dialogue with the market and early involvement and consultation with suppliers, especially where new services are being planned, is crucial to the shaping of effective procurement strategies and the acquisition of innovative, responsive and value for money services. The Office of Government Commerce (OGC) has produced an excellent good practice Guide for procuring services from the voluntary sector, Think Smart - Think Voluntary Sector. You can find the complete document here: http://commercial.homeoffice.gov.uk/documents/thinksmart.pdf?view=Binary Another helpful resources is the Lambeth Business Support Network (LBSN) Directory. This is an easy to use register of business support services available in the borough: http://www.lambeth.gov.uk/Services/Business/BusinessSupportAdvice/LambethBusinessSupportNetworkDir ectory.htm. For additional resources and some helpful publications you should also visit www.socialenterprise.org.uk/procurement.
1.6.10
Local Businesses
Lambeth Council recognises its responsibility to the local economy and actively supports equal opportunities. The Council has a policy to support the local community and this includes offering local businesses the opportunity to work for the Council wherever possible - without infringing competition rules or value for money principles. While the scale of Lambeths activities means that most procurement is with large national organisations there are various ways in which small local and ethnic minority businesses (EMBs) may be supported. This section offers some ideas and principles. We emphasise that the term local business in Lambeth refers predominantly to a small business and often an EMB. The policy of supporting local businesses is linked to Lambeths policies on equal opportunities and race equality; it is also linked to Lambeths regeneration initiatives. Advice on possible links to regeneration initiatives is available from the Enterprise team. You should also be aware that the Council, through its Community Renewal section, is continuously reviewing how it can support local business. This section may also be able to advise you on the following relevant matters: Promoting codes of practice in employment in various sectors (where contractors are asked, although not compelled, to support the codes) Providing subsidies to employers to recruit locally Brokering agreements with local employers and local regeneration programmes (which may utilise equalities legislation) Supporting contractor associations and joint ventures
In addition, the Councils rationalisation exercise relating to its suppliers is relevant. While the Council is seeking to reduce the number of first tier suppliers (i.e. suppliers with whom the Council deals directly), there will be opportunities
In some areas of procurement activity it is most unlikely that local businesses can be considered, but you should take steps to determine whether or not this is the case. If potentially suitable local businesses exist, you should consider how you communicate with them to ensure they are aware of opportunities and tendering requirements
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for local businesses to act as second tier suppliers, i.e. subcontractors to first tier suppliers. The Council will be developing these areas over the coming months and additional guidance may emerge. The Council relies heavily on large contracts; many services (e.g. street cleansing) are most effectively provided through Borough-wide contracts. In addition, the Council obtains significant benefits of scale through procuring goods through corporate contracts. Indeed some common items are provided through the London Contracts & Supplies Group and the unbundling of many existing contracts, while not necessarily anti-competitive, could adversely impact on efficiency and value for money. However, there are areas where local businesses could usefully complement larger contracts. Examples might include specialist printing, specialist catering for events, community-based grounds maintenance projects, taxi services, staffing agencies and top-up services for major Borough events. The following are examples of practical steps that you should consider to support the Councils policy in relation to local businesses:
1. Adopt a Proactive Approach to Local Businesses

Most importantly, the most likely instance in which local businesses can secure more work with the Council is when a positive attitude is adopted and encouraged by Council buyers, with mutual efforts to inform local business about opportunities and capabilities.
2. Encourage general expressions of interest and advertise opportunities

Small businesses that believe they can offer goods, works or services to the Council will make their interests known directly to the relevant department or section. As a buyer, you should give consideration to such interests and advise the businesses about what opportunities, if any, could arise in the future. This is not a time-consuming activity, it improves the Councils image among local businesses and, from time to time, it could yield a useful new supplier.
3. Encourage Consortia Bids Wherever Practicable

Because so many Council contracts are large, with fairly demanding qualification criteria, small businesses could be encouraged to consider working with others when seeking Council business. One approach is for them to form a consortium in response to a particular opportunity. This can be worth considering for businesses that have some of the specialist skills that are required but lack others, or they cannot fulfil some of the general qualifications (e.g. financial records or quality procedures). Although opportunities for consortia are quite rare, Council buyers should encourage such bids where they comply with procurement rules and they do not require significant extra resources.
4. Facilitate Subcontracting Arrangements

Another more common approach is for small businesses to work with others on a subcontracting basis. This subcontracting can operate in different ways, e.g. supplementing a larger firms resources, offering a specialist facility to a larger firm, or working alongside another small company that is better qualified to take contractual responsibility. A local company with local staff or local premises may prove attractive to a large company that has just won a Council contract.
5. Tailor Some of the Pre-qualification Requirements

Most shortlisting criteria present clear requirements for companies wishing to work for the Council. The Council can make no compromise on legal obligations such as health & safety and equal opportunities / race relations. Many contracts require a business to be of a certain size, with a certain minimum turnover and established for a certain minimum period. CPT can
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offer guidance on such criteria and this guidance will include particular consideration of small or new companies. For example, new companies might not be automatically excluded simply because they lack audited accounts. The Council may consider alternative evidence of turnover and financial stability (e.g. bank and accountants references or technical and trade references). Insurance requirements relate to employers, public liability and professional indemnity insurance. The levels for small firms require care as you need to assess risk and avoid demanding excessive amounts. Evidence of quality and environmental management would normally be required, but this need not require ISO9001 or ISO 14000 and CPT can give guidance on what should be expected from small firms. It should be noted that any adjustments to pre-qualification criteria would only apply because a firm is of small size or newly established. They cannot apply simply because a firm is local as this would breach competition law.
6. Use Legislation to Undertake More Quality-related Evaluation

For some larger contracts you should be aware of the impact of the Local Government Best Value (Exclusion of Non-commercial Considerations) Order which came into effect in 2001. The Order, made under Section 19 of the Local Government Act 1999 relaxes the prohibition on best value authorities consideration of workforce matters when letting contracts, imposed by Section 17 of the Local Government Act 1988. It is now permissible during evaluation to take account of terms and conditions of employment, approach to promotion, transfer, training and industrial relations, to the extent that they are relevant to the delivery of best value, or for the purposes of a TUPE transfer. While it is not possible to take account of whether a business is local or an EMB, these additional considerations may enhance the Councils ability to choose on merit rather than price. This, in turn, might allow more opportunities for well-run small companies. There are various external initiatives and organisations that give support to local businesses and EMBs. The Council will take account of these as part of its community support programme; these include the Lambeth Small Business Growth Initiative, Business Link for London, Fit To Supply, London Equal Opportunities Forum, the Ethnic Minority Business Forum and Lambeth Voluntary Action Council. The Community Benefit Clauses document can be found on the Corporate Procurement intranet site. These local labour clauses are examples of those included in a recent contract but you should seek advice from Legal Services as to whether or not these types of clauses are appropriate for your particular contract.
Community Benefits
Lambeth is able to use procurement to help deliver some of our core policy objectives. This means our procurement activities should contribute to the economic, social and environmental well being of the borough. Community benefits are "goodwill contributions that are voluntarily donated by a supplier for the benefit of communities affected by the contract they are delivering. For example, in a construction contract we could include a community benefit clause in our specification which requires the put in place an apprenticeship programme or use local employment agencies to recruit local unemployed people. Some other examples of community benefits are reducing carbon emissions, providing training to develop the supplier's staff members, etc. If a community benefit clause is relevant to the product or service being procured and helps the Council deliver its key policy objectives, it can be included in the contract specification; they can be included in the contract specification can be scored as part of the evaluation of a tender. The requirement would be written into the specification as a quality element to be evaluated, but you must take care and seek advice first:
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community benefit clauses that limit or hinder competition for any supplier are not allowed under the EU Public Procurement Directive. For example, you cannot include a clause that asks all tenderers to only use local suppliers in their supply chain; this contravenes fair competition. However, you can ask a supplier how they can reduce carbon emissions in Lambeth, should they be awarded the contract - this is because all suppliers have the capacity to reduce carbon emissions and this does not have an affect on competition. However, in public procurement there is no legal requirement for a supplier to provide community benefits; a local authority therefore has no powers of enforcement if a supplier is unwilling to provide them in the delivery of their contract. But where they are legal and do not affect competition we should pursue community benefits in our contracts wherever possible. Corporate Procurement has created a Community Benefit Clause guidance document that can be found here: http://sharepoint.lambeth.gov.uk/sites/lts/corporateprocurement/Public%20documents/Community%20Benefi ts/Community%20Benefit%20Clauses%20Guidance.doc. If your tender is valued at 100,000 and greater, officers must consult with their departmental councillor. At that time they must discuss the possible community benefits in their project with their councillor, using the Community Benefits Checklist: http://sharepoint.lambeth.gov.uk/sites/lts/corporateprocurement/Public%20documents/Community%20Benefi ts/Community%20Benefits%20Procurement%20Checklist.docx. The officer and councillor must each sign off the checklist once they have discussed community benefits. If you need help, speak to your departmental head of procurement in the first instance. Remember that some community benefits can be considered unfair in competition so be sure to get advice whilst writing your specification.
The Lambeth Procurement Strategy & Creating Business Partnerships

The Lambeth Procurement Strategy states Lambeth procurements commitment to lowering barriers of entry for smaller firms, the provision of equality of opportunity in competition and the promotion of collaboration, partnerships and consortia. This portal supports these key aims and goals. Where Lambeth contracts and framework agreements have grown in scope and value, the ability for smaller businesses and third sector organisations to work in partnership has become more important. As service and supply contracts are packaged together there will be a need for smaller firms to work together to deliver a contract; this portal will help to facilitate this.
Lambeth Contract Standing Orders

In July 2008 Corporate Procurement updated the Lambeth Contract Standing Orders to include a requirement for officers to use local suppliers as in 8.1.3 below: 8.1.3 In procedures A and B, where suitably qualified local Lambeth suppliers are available, a minimum of one of these suppliers must be invited to quote. Procedures A & B are for purchases with a total aggregate value of between 0.00 and up to 25,000 or purchases requiring quotations. Whilst Lambeth has used Exor and Supply2gov to source local Lambeth suppliers, we have not had a supplier database exclusively for Lambeth suppliers and third sector organisations; this portal will make it easier for officers to find local firms to request quotations.
Promotion
Access to the portal can be found on the Lambeth internet site, on the Business pages and the Tenders and Contracts pages. Information and links to the portal will be included in the new Supply Lambeth programme
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marketing and communications material. Links to and information about the portal will also be included in CPTs supplier engagement materials for capacity building events. The portal can be accessed by the direct web link here: http://suppliersportal.lambeth.gov.uk/ and the Supply Lambeth pages are here: www.lambeth.gov.uk/supplylambeth.
Additional Assistance
Additional assistance can also be found at the websites below: South Bank Employers Group GLE One London Business Link London South London Business The Princes Trust Cross River Partnership http://www.sbeg.co.uk/ http://www.gle.co.uk/onelondon/ http://www.businesslink.gov.uk http://www.southlondonbusiness.co.uk/ http://www.princes-trust.org.uk/ http://www.crossriverpartnership.org
1.6.11
Contracts Finder: The Supplier Route to Government
Contracts Finder is a service aimed at removing unnecessary obstacles that make government procurement difficult for small businesses. It aims to make it easier for small businesses to gain access to, and ultimately win, Government contracts; suppliers can advertise their business fro free and Lambeth officers can advertise their tenders for free. Contracts Finder allows public sector buyers to promote their lower-value opportunities online to thousands of firms keen to work with government. Essential to achieving the objectives set by Government for Contracts Finder is the support of Local Government. With more supplier choice available in one place, the new portal will make public sector buyers seriously question whether they are getting value for money from their current range of providers. The portal will save buyers time and effort in sourcing new suppliers and help them provide public services more cost-effectively. Contracts Finder opens up this market worth billions of pounds to all types of businesses including small firms, start-ups and social enterprises, and at the same time, gives public sector buyers more choice. It also gives the public sector access to small businesses that often have innovative products and services and can offer better value for money. As well as stimulating the public sector supplier base, Contracts Finder also helps the public sector stay compliant with EU law. This requires the appropriate advertising of all public sector contract opportunities, no matter what value or type - not just those over the OJEU thresholds. This requirement has been dictated by the European Court of Justice, and their judgment emanates from the principles of the Treaty of Rome. There is no charge to buyers for using the service.
Whats In It For Buyers?

Using Contracts Finder, public sector buyers can post contract opportunities online and publicise their lowervalue contracts for free. Posting an opportunity couldnt be easier all you have to do is register online and follow the instructions. Buyers can: Publicise all lower-value contracts and attract a broader range of potential bidders Use Contracts Finder as an extra channel to supplement existing procurement activity
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Potentially save development costs by using the opportunities portal instead of setting up a new online service Benefit from: o o o Access to more innovative products and services from a wider range of suppliers. In particular, small businesses are known to be early adopters of new technology The flexibility offered by small businesses, whose overheads are often lower The potential to gain better value suppliers by contracting with leading entrepreneurs in your local area
Guidance on The Publishing of Lower Value Contracts

The European Commission has published guidance on how public authorities should award contracts of low monetary value fairly. These contracts account for the vast majority of public contracts in the EU over 90% in some Member States. Although lower-value contracts are not covered by the EU Directives on public procurement, it is well established that their award should nevertheless comply with the internal market principles of transparency and non-discrimination. The Commissions guidance also advises on the means of advertising these requirements and makes reference to the use of portal websites such as Contracts Finder. You can find Contracts Finder here: http://www.contractsfinder.businesslink.gov.uk/ and instructions on registering here: http://sharepoint.lambeth.gov.uk/sites/lts/corporateprocurement/Public%20documents/Contracts%20Finder/ Contracts%20Finder%20Instructions.doc. See also the "How To Advertise An Opportunity" presentation here: http://sharepoint.lambeth.gov.uk/sites/lts/corporateprocurement/Public%20documents/Contracts%20Finder/ How%20To%20Advertise%20A%20Contract%20Opportunity%20On%20Contracts%20Finder.ppt.
1.6.12
Supply 4 London
Supply 4 London is a web based procurement portal (or hub) for London local authority procurement officers and suppliers; it pulls together in one place all procurement related resources that buyers and sellers will need to do business with local government in London. The portal includes: A restricted buyer access facility for procurement systems, information repositories, databases, discussion groups, opportunity creation and the issue of an on-line prequalification questionnaire A public facing facility with contract and contract opportunity search and access capability a restricted supplier access facility to express an interest in opportunities, complete and store on-line qualification questionnaires, market services and products and advertise for sub-contractors An optional e-tendering solution Links to an authoritys preferred e-solution package Links to other regional supplier notice boards and databases such as the OJEU, Compete For, Contracts Finder, etc. Links to other systems such as eCatalogues, Sharepoint, Oracle, SAP, etc. Links to the London Councils Contract Register Service and the Online Expenditure Analysis tool A collaboration section that will bring together local authorities with similar contract needs, encouraging them to tender in partnership
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Lambeth and 27 other London local authorities have signed up to the portal and Lambeth is part of the project delivery group. Corporate Procurement are in the process of reviewing the portals offer and Lambeths procurement processes and how the 2 will fit together. When we have decided upon a plan, the departmental heads of procurement will be notified in the first instance. In the meantime, be sure to recommend your suppliers to register on the website for free; you can see the site at https://www.supply4london.gov.uk/.
Environmental 1.6.13 Procurement & the Environment
Sustainable procurement is the application of sustainable development principles to procurement and is a key activity in helping to ensure that the world remains habitable and that people have a decent quality of life. The fundamental aim of sustainable development is to secure the future; developing sustainably means ensuring that our actions today do not limit our quality of life in the future. Lambeth Council has an Environmental Charter and is committed to the concept of sustainable development. One of the Councils main aims is to minimise the environmental impacts of its actions and to maximise opportunities for delivering environmental improvements. In respect of the purchasing of goods and services, the Council will promote the efficient use of natural resources in the Council, among businesses and within the wider community; the Council will ensure that all its procurement activity reflects sustainability and whole-life costs. In order to put the above policy into effect, officers must adhere to the Councils guidance on environmental procurement: Only buy supplies when necessary and minimise the amount of materials consumed Develop and use systems whereby products can be re-used/re-allocated within the organisation or donated, instead of discarded Buy products that are made from recycled material and/or are recyclable, and have minimal packaging; furthermore, specify that the supplier of the product should operate or subscribe to a take-back scheme for packaging and equipment that can be re-used or recycled Select the more durable, environmentally-friendly alternative when purchasing Maintain and repair furniture, equipment and other products wherever possible in order to extend its life Select the more environmentally-friendly option for cleaning, pest control and horticulture use Buy energy efficient appliances and equipment Use vehicles that are more energy efficient and less polluting Specify wood and wood products from Forest Stewardship Council (or equivalent) certified suppliers
Officers must consider the above list and identify which points may apply to their procurement activity. Additionally, officers should consider the below points: The Council has a Sustainable Construction Policy to ensure that all new-build or refurbishment projects consider the environmental implications of building materials, construction activities and building operations. If your procurement activity is related to construction, you must ensure that this policy is adhered to
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The Council has also adopted a Sustainable Timber Policy under which the Council will give preference to timber and timber products that carry the Forest Stewardship Council or equivalent trademark. Again, if your procurement activity is relevant, you must ensure that this policy is adhered to Officers should consider whole-life costs to the Council. This takes into account the initial purchase or contract cost and the longer-term financial benefits that environmentally friendly products or services will deliver The following factors should also considered in relation to the environmental impact of procurement: o o o o o o Sourcing and use of natural resources, and whether those resources are renewable Type and quantity of raw materials and energy used in the manufacture Energy used and pollution caused from transport in both delivery and operation Product and equipment durability, adaptability, possibilities for re-use, recyclability, packaging and resulting waste disposal issues Environmental implications of operation and maintenance, including resource consumed, pollution caused and waste generated Officers should also consider including environmental performance criteria in their specification, tender evaluation and monitoring processes. This is allowed wherever environmental criteria are a part of the technical requirement
Sustainable Timber
Lambeth is committed to using legal and sustainable timber in all construction projects. Illegally logged timber causes deforestation, reduces biodiversity, damages the lives of indigenous peoples and contributes to climate change; forests have a vital role to play in the fight against global warming. Carbon is absorbed by forests and stored in the trees and soil. This carbon is released as carbon dioxide and other greenhouse gases when forests are disturbed or cleared. Deforestation is responsible for around 15% of greenhouse gas emissions. Procurement guidance requires officers to work with their consultants, contract administrators and contractors to ensure that their projects use only legal and sustainable timber. The most effective way of doing this is by using timber with a 'chain of custody' (CoC) certification allowing the timber to be traced to its forest of origin. The scheme used by Lambeth is that of the Forestry Stewardship Council (FSC), but other certification schemes such as PEFC meet governmental timber policy The key issue for officers is to make sure our contracts use the standard clause (see link below) and remind contract managers, consultants and contractors that Lambeth requires evidence - i.e. chain of custody certificates showing that the timber supplied is FSC or PEFC accredited. Certified timber is widely available, with no cost differential bar on some hardwoods.
Sustainable Timber Purchasing Procedure

http://www.lambeth.gov.uk/Services/HousingPlanning/Planning/SustainableTimberPurchasing.htm
Guidance on how to check a chain of custody certificate

http://www.cpet.org.uk/evidence-of-compliance/category-a-evidence/verifying-evidence
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1.7
Markets & Market Development
It is important that procurement officers have an awareness of markets and market development because most of the supplies and service that they are purchasing are from a commercial or business sector. For example, if an officer is responsible for purchasing widgets, the more the know about how widgets are made, where they are made and new developments in the widget market the better placed they are to make the most cost efficient purchase. Market development and marketing is a huge discipline and it is impossible to address every aspect here, but this Guide can point out the important aspects of market development and how they relate to the procurement function. Most products and many services have what is known as a product life cycle a cycle of their life from the time of invention or inception to the point of obsolescence. A product's life cycle or PLC can be divided into several stages characterized by the revenue generated by the product. The life cycle concept may apply to a brand or to a category of product. Its duration may be as short as a few months for a fad item or a century or more for product categories such as the gasoline-powered automobile.
Product development is the incubation stage of the product life cycle. There are no sales and the firm prepares to introduce the product. As the product progresses through its life cycle, changes in the marketing mix usually are required in order to adjust to the evolving challenges and opportunities
The Introduction Stage

When the product is introduced, sales will be low until customers become aware of the product and its benefits. Some firms may announce their product before it is introduced, but such announcements also alert competitors and remove the element of surprise. Advertising costs typically are high during this stage in order to rapidly increase customer awareness of the product and to target the early adopters. During the introductory stage the firm is likely to incur additional costs associated with the initial distribution of the product. These higher costs coupled with a low sales volume usually make the introduction stage a period of negative profits. During the introduction stage, the primary goal is to establish a market and build primary demand for the product class. The following are some of the marketing mix implications of the introduction stage: Product - one or few products, relatively undifferentiated Price - Generally high, assuming a skim pricing strategy for a high profit margin as the early adopters buy the product and the firm seeks to recoup development costs quickly In some cases a penetration pricing strategy is used and introductory prices are set low to gain market share rapidly Distribution - Distribution is selective and scattered as the firm commences implementation of the distribution plan Promotion - Promotion is aimed at building brand awareness. Samples or trial incentives may be directed toward early adopters. The introductory promotion also is intended to convince potential resellers to carry the product
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The Growth Stage

The growth stage is a period of rapid revenue growth. Sales increase as more customers become aware of the product and its benefits and additional market segments are targeted. Once the product has been proven a success and customers begin asking for it, sales will increase further as more retailers become interested in carrying it. The marketing team may expand the distribution at this point. When competitors enter the market, often during the later part of the growth stage, there may be price competition and/or increased promotional costs in order to convince consumers that the firm's product is better than that of the competition. During the growth stage, the goal is to gain consumer preference and increase sales. The marketing mix may be modified as follows: Product - New product features and packaging options; improvement of product quality Price - Maintained at a high level if demand is high, or reduced to capture additional customers Distribution - Distribution becomes more intensive. Trade discounts are minimal if resellers show a strong interest in the product Promotion - Increased advertising to build brand preference
The Maturity Stage

The maturity stage is the most profitable. While sales continue to increase into this stage, they do so at a slower pace. Because brand awareness is strong, advertising expenditures will be reduced. Competition may result in decreased market share and/or prices. The competing products may be very similar at this point, increasing the difficulty of differentiating the product. The firm places effort into encouraging competitors' customers to switch, increasing usage per customer, and converting non-users into customers. Sales promotions may be offered to encourage retailers to give the product more shelf space over competing products. During the maturity stage, the primary goal is to maintain market share and extend the product life cycle. Marketing mix decisions may include: Product - Modifications are made and features are added in order to differentiate the product from competing products that may have been introduced Price - Possible price reductions in response to competition while avoiding a price war Distribution - New distribution channels and incentives to resellers in order to avoid losing shelf space Promotion - Emphasis on differentiation and building of brand loyalty. Incentives to get competitors' customers to switch
The Decline Stage

Eventually sales begin to decline as the market becomes saturated, the product becomes technologically obsolete, or customer tastes change. If the product has developed brand loyalty, the profitability may be maintained longer. Unit costs may increase with the declining production volumes and eventually no more profit can be made. During the decline phase, the firm generally has three options: 1. Maintain the product in hopes that competitors will exit. Reduce costs and find new uses for the product 2. Harvest it, reducing marketing support and coasting along until no more profit can be made
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3. Discontinue the product when no more profit can be made or there is a successor product The marketing mix may be modified as follows: Product - The number of products in the product line may be reduced. Rejuvenate surviving products to make them look new again Price - Prices may be lowered to liquidate inventory of discontinued products. Prices may be maintained for continued products serving a niche market Distribution - Distribution becomes more selective. Channels that no longer are profitable are phased out Promotion - Expenditures are lower and aimed at reinforcing the brand image for continued products
Limitations of the Product Life Cycle Concept

The term "life cycle" implies a well-defined life cycle as observed in living organisms, but products do not have such a predictable life and the specific life cycle curves followed by different products vary substantially. Consequently, the life cycle concept is not well-suited for the forecasting of product sales. Furthermore, critics have argued that the product life cycle may become self-fulfilling. For example, if sales peak and then decline, managers may conclude that the product is in the decline phase and therefore cut the advertising budget, thus precipitating a further decline. Nonetheless, the product life cycle concept helps marketing managers to plan alternate marketing strategies to address the challenges that their products are likely to face. It also is useful for monitoring sales results over time and comparing them to those of products having a similar life cycle.
1.8
Benchmarking
Benchmarking is a process of searching for, and achieving, improved levels of performance through a systematic comparison of performance, processes and ways of working in different organisations.
Benchmarking is comparing what a service does against other providers. It normally involves looking at the type of service provided, how it is provided, the cost of it, the publics satisfaction with it and how well the same or similar service is provided elsewhere. It requires sharing information with other organisations, seeking out best practice and pinching the ideas of others. If the Council is not one of the most efficient, the natural question is why? If a service does not rate highly with the public, again the Council should be asking why?
When benchmarking, local authorities must seek to compare themselves with other authorities identified as high performing. Efforts should also be made to include at least some authorities which are acknowledged as the best through the possession of some form of quality recognition or award, for example Beacon status and Charter Mark, which is relevant to the subject of the benchmarking exercise
The why question is the most important part of benchmarking. It leads to finding out about the alternatives on offer which in turn point to improvement. Benchmarking is a key component in the continuous improvement of the Council and its services.
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Why Benchmark?
To seek improvement To learn from others best practice To justify acceptable differences between our performance and that of others To challenge or avoid complacency To make efficiencies
Efficiencies could include measures to reduce costs for the same or greater outputs/quality, ideas to improve outputs/quality for the same costs (by, for example, working differently) or initiatives to improve outputs/quality for extra costs - with the extra costs being proportionately less than the increase in outputs/quality.
What to Benchmark?
It may be organisation-wide, a whole service or a specific function. The focus of benchmarking may be on areas where: The most money is made - how more money can be made The most money is spent - how less money can be spent Errors occur - how can errors be eliminated Complaints occur - how complaints can be eliminated Existing performance indicators suggest a poorer performance than comparators where others are demonstrating the best current practice we can aspire to achieve
Types of Benchmarking
There are four basic types of benchmarking. They are not mutually exclusive and any one or combination of types can be used to meet the objectives: 1. 2. 3. 4. Strategic Benchmarking Functional Benchmarking Best Practices Benchmarking Product Benchmarking
Strategic benchmarking should be conducted first to create a context and rationale that will enhance all other benchmarking efforts.
1. Strategic Benchmarking
Strategic Benchmarking is concerned with comparing different organisations, authorities, departments or companies' strategies and assessing the success of those strategies in the marketplace. The primary purpose is to analyse the strategies with particular reference to: Strategic intent Core competencies Process capability Product line
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Strategic alliances Technology portfolio
Strategic Benchmarking should begin with the needs and expectations of the customer. This can be achieved through surveys to measure customer satisfaction and the gaps between a company's performance and its customers' standards. Strategic Benchmarking ensures that a co-ordinated strategic direction regarding benchmarking is taken and reduces the possibility that one improvement project will cancel out the effect of another. Benchmarking candidates are normally direct competition in Lambeths case consider benchmarking Lambeths policies against Southwarks, for example. The main difficulty is persuading the benchmark partner to discuss their strategy. However, there is a great deal of information which can be obtained from customers, common suppliers and public domain information, internet research, etc.
2. Functional Benchmarking
Functional Benchmarking investigates the performance of core business functions. It does not need to focus on direct competition but, depending on the function to be benchmarked, the benchmark partner may need to be in a similarly characterised industry for useful comparisons to be made.
3. Best Practice Benchmarking

Benchmarking Best Practice mainly applies to business processes. It breaks the function down into discrete areas that are the targets for benchmarking and is therefore a more focused study than functional benchmarking. Best Practice Benchmarking attempts to benchmark not only work processes, but also the management practices behind them. Remember that some business processes are the same regardless of the type of industry.
4. Product Benchmarking
Product Benchmarking is also known as Reverse Engineering or CPA - Competitive Product Analysis. Product Benchmarking assesses the following by obtaining, stripping down and analysing competitors' products: Competitor costs Competitor price Product quality Product sustainability Product concepts Strengths and weaknesses of alternative designs Competitor design trade-offs or sales offers
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These four different types of benchmarking are evolutionary beginning with product, followed by functional, process and strategic. As benchmarking is becoming more widespread and organisations are more proficient in its use, Best Practice Benchmarking is becoming increasingly popular. This is also reinforced by public sector services moving more and more away from functionality towards business processes.
When to Benchmark?
Benchmarking should be viewed as a regular activity rather than a one-off exercise, particularly if the aim, as it should be, is continuous improvement. Selecting the best time to undertake a benchmarking exercise will often depend on the purpose behind it. For example, if the outcomes of benchmarking are intended to influence future service delivery, the results would need to be known before the onset of the service planning and budget setting process. Other factors to bear in mind when considering the timing of benchmarking activity include practical ones like the peaks and troughs of service delivery in an effort to avoid busy periods when benchmarking partners are less likely to participate.
Who to Benchmark Against?

Selection of the right partners is essential. Those responsible for benchmarking should be seeking organisations that will improve their performance - not merely justify their existence. When preparing a benchmarking exercise, consideration should be given to which of the following groups could be involved, and which organisations are best placed to become effective benchmarking partners: Other services/departments of your own organisation also called Internal Benchmarking Other local authorities where comparisons against high performing authorities should be more easily made Organisations from the private or voluntary sectors where the same functions are undertaken
Internal Benchmarking
Recognition must be given to the identification of good practice and the benefits of different working methods adopted within the Council. It is therefore important to consider opportunities to benchmark internally within the Council when looking at similar processes or areas of work.
Benchmarking with Other Local Authorities

Other local authorities could include fire and rescue, national park, police and health authorities as well as other councils, many of whom require similar services - particularly support services. The reasons for selecting other councils to compare with should be clearly based upon objective reasons. To a large extent in the past, qualitative benchmarking was undertaken with authorities who are: Other London authorities with contact usually made through London-wide professional or service groups Within our family group - a group of similar, urban, densely populated authorities with whom we have an agreement to exchange ideas and information and undertake benchmarking exercises
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Depending on the subject of the benchmarking exercise, these two groups of authorities may not necessarily have included any high performing authorities. The purpose of benchmarking is to learn from others and facilitate improvement. This means it is essential when selecting comparator authorities to give consideration to their performance in the chosen subject area.
Benchmarking with Other Organisations

For many years the Government has been encouraging local authorities to consult, involve and work in partnership with voluntary organisations and businesses to improve localities. Recently it announced a framework to strengthen the role of the third sector voluntary, community and social enterprises - in the delivery of local public services. Remember that if you have clearly identified the detailed processes, it may also be possible to use organisations outside the public sector that are high performing. Do not limit yourself to just the same, similar organisations. In some instances benchmarking with the private or voluntary sector will be easy, like housing benchmarking with housing associations, but for others it will be more difficult. On these occasions, consideration should be given to what similar processes could be benchmarked, rather than trying to benchmark a whole service. Businesses providing the same or a similar service may be reluctant to share information on performance and costs because of fears over commercial confidentiality. Determining how to approach Benchmarking with companies would depend on the circumstances applicable to a particular service or function. Members of the Policy Team would provide advice on the most appropriate ways of doing so with which organisations. This may call for creativity, for instance engaging an external consultant to calculate a market rate for a service.
Quantitative Benchmarking
Where existing performance data at a national level is available, officers should make comparison with the performance of the average, top 25% and bottom 25% of other councils on the most up-to-date information. This data can be used as a means of identifying which services require focused improvement action and monitoring to improve performance and for use in target setting.
The main threat to invalidating quantitative benchmarking is inaccurate comparative data, particularly the danger of not measuring like with like. For instance, in cost comparisons corporate overheads may be treated differently in different organisations and the same may be the case for employee numbers and the handling of administrative employees. To avoid such inconsistencies, therefore, there is a need to define clearly what is included and excluded in the data. This can be time consuming whether reviewing existing data or gathering new data through questionnaires (see below) which are best developed jointly by the benchmarking partners or a benchmarking club
Much information can be found on the Communities and Local Government website at http://www.communities.gov.uk/. Another resource can be found in governing bodies and trade and professional associations in each relevant department. Also consider using the headline results of the 4 User Satisfaction Surveys that are undertaken throughout England every three years - the General Survey covering a range of services; planning applicants, benefits applicants and one of Tenants are included so satisfaction with some services is also comparable. In the case of some other services, similar data from other sources may be readily available.
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The benefits of comparing existing performance data are that it is quick, easy and cheap. The deficiencies of comparing existing performance data are doubts over its accuracy, its limited scope and it is not good on quality. Ideally, for the best outcomes, this type of quantitative benchmarking should be combined with the more qualitative methods of benchmarking referred to in the qualitative next section, following.
Qualitative Benchmarking
Reliance on comparing existing performance data alone is unlikely to be sufficient to enable the Council to identify significant gaps in performance and the reasons for them; it is also unlikely to provide details on the improvements needed. Therefore, additional benchmarking would normally need to be undertaken. It is important that the officers responsible for a service know how their service performs in comparison to other providers. If this work is carried out by the service officers themselves, they are more likely to accept the findings and become committed to improving performance. Qualitative benchmarking may involve a range of activities; the main activities, for which additional information is provided on the next pages, are: 1. 2. 3. 4. 5. Questionnaires Process Mapping Literature Sources Best Practice Visits
The benefits of these qualitative benchmarking exercises are that they offer greater scope and accuracy than quantitative benchmarking and can provide more direct, tangible answers. Their deficiencies are that they are time consuming, they need partners and they can be expensive.
1. Questionnaires
Normally, a questionnaire and request for comparative data would be issued to the service areas benchmarking partners or a benchmarking club such as the inner London councils in the Lambeth family group. Ideally, the questionnaire would be agreed by the benchmarking partners or benchmarking club so that all partners sign up to clear definitions to make sure they are measuring and, therefore, comparing like with like. The production of a questionnaire is an activity that requires care and attention. The aim should be to produce a questionnaire which: Produces a general profile of the service to be examined, e.g. number of users, type of facilities provided and a breakdown of costs. Delves more deeply into specific areas and provides sufficient detail for comparability purposes, e.g. standards, recurring problems and recent initiatives.
Questionnaire Advice
The production of a questionnaire for comparison purposes is an activity that requires consideration of a number of issues, including the following: Try to build up the structure of the questionnaire so it has an internal logic and follows in a sequence.
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Try to ensure that questions which are related to each other follow on in that section of the questionnaire. Be quite clear about what the question is seeking to obtain by way of an answer and that this information is what is needed. Avoid ambiguity; ensure that the reader clearly understands the question and all responses required. Consider the use of guidance notes if the question remains unclear or there may be uncertainty about the response to be made. Include clear definitions of what is included and excluded from the data being requested to make sure that like for like is being measured. Identify what the data source for the question might be, for instance, returns to Government or Audit Commission and CIPFA sources, if such a source is available.
2. Process Mapping
Process maps are simple flowcharts of activity in the service chain. A model process map is intended to describe a process that would be recognised by any professional working in that service area. It is not intended to describe the way in which that service should be provided but simply to set out the key elements of the service which would be universally recognised. The purpose of a model process map is to work with others to tease out the variations from the model that may point towards better practice which could be investigated further.
3. Literature Sources
The purpose here is to identify what literature is available on a subject and to make an assessment on how useful this may be for comparison purposes. This is literature of general or specific interest that assists understanding of good practice. This literature could take the form of publications from Government sources like the Audit Commission, local government and business journals and other professional associations. Some professional interest groups also produce comparative information on aspects of councils performance that may prove useful.
4. Best Practice
It is useful to gather examples of good practice within local government and elsewhere. The literature sources referred to in the previous section often report illustrations of innovation and impressive performance. Beacon Councils and other award winning authorities are worth consideration as are Audit Commission inspection reports.
5. Visits
One of the most productive forms of comparison is to visit service providers with a reputation for good practice in a particular aspect of service delivery. The key to this is the identification of those who really are good performers and not simply good at self-promotion. Visits may seem an easy option but to get the best out of them, careful preparation beforehand and considered reflection afterwards is required. Well-planned visits have an agenda and questionnaire agreed in advance by the benchmark partners.
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Visit Actions
Visits should be conducted in line with the protocol shown on the last page which is adapted from the European Benchmarking Code of Conduct. A copy can be found on SharePoint at http://sharepoint.lambeth.gov.uk/sites/lts/corporateprocurement/Public%20documents/Benchma rking%20Information/The%20European%20Benchmarking%20Code%20of%20Conduct.doc.
Analysis
Analysis involves critical comparison of process as well as performance. If the visit has been successful it should be possible to identify and define clear differences between processes which explain the performance gap. The analysis will often indicate opportunities for both partners to improve performance.
Follow-up
Sharing results and reciprocal visits on other issues and processes maximise benefits to both partners.
Useful Tips
The more focused and prepared a visit is, the more successful it will be. Consider: Take full advantage of all available information on the benchmark partner and use this to prepare questionnaires for the visit Questionnaires focus the benchmarking team on the key issues and ensure that valuable time on-site is not wasted collecting information which was freely available in advance Care should be taken to identify who the process owners are - the people who actually do the job, they are the best people to talk to during the visit Be alert for examples of better practice, even if these were not anticipated in the questionnaire Be prepared to compare and contrast processes so that the benchmark partner can learn about your methods As soon as possible after the visit, hold a de-briefing session at your base to establish what has been learned and whether there is a need for clarification. Maintain the momentum gained during the on-site visit through the analysis and follow-up stages Do not immediately discard examples of better practice which do not seem entirely relevant to or compatible with your process ask can they be adapted to suit us? and do we need to change our approach?
Dangers to Avoid
Two common examples of poor practice are known as Wow Visits and The Scared Rabbit Syndrome.
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Wow Visits
These result from poor planning leading to a superficial visit, where key process issues are not identified. The visitors marvel at the hosts performance but leave with no idea of how that performance is being achieved.
The Scared Rabbit Syndrome
The Scared Rabbit Syndrome usually follows the Wow Visit. Failure to identify the real reasons for the performance gap leads to excuses for internal poor performance and paralysis of the improvement programme.
Wow Visits & The Scared Rabbit Syndrome are examples of the dangers of Industrial Tourism - where visits are undertaken with no clear sense of purpose. Good planning and committed follow-up are the best ways to avoid these problems
Protocol for Benchmarking Visits

Provide an agenda in advance Be professional, honest, courteous and prompt Introduce all attendees and explain why they are present Adhere to the agenda Use language that is universal and not jargon Be sure that neither partner is disclosing proprietary information unless prior approval has been obtained by both parties from the proper authority Share information about your own process and consider sharing study results Offer to facilitate a future reciprocal visit Conclude meetings and visits on schedule Thank your benchmarking partner for their time and for sharing their process
Planning the Benchmarking Exercise

Of course the well organised planning of a benchmarking exercise cannot be understated. The following stages are recommended when undertaking your benchmarking projects: Identify what to benchmark Ensure management support and involve all stakeholders Select the benchmarking team Analysis of internal processes Identify companies and/or organisations to benchmark Decide on method(s) of data collection interviews, questionnaires, visits, research, etc. Collect public domain information & create process maps Analyse collected information to establish what other information needs to be collected Establish contacts with benchmark partners Plan the actual visits Conduct the benchmarking visits Establish whether a performance gap exists Predict future performance levels
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Communicate benchmark findings store benchmarking information in written format, e.g. into business case or formal/informal report Establish targets and action plans Gain support and ownership for the plans and goals Implement the action plans, measure performance and communicate progress Re-calibrate benchmarks Adopt benchmarking on a department and organisation-wide scale
Good Practice Planning for Benchmarking Visits

Benchmarking visits are a means to an end, this being improved performance. To be useful, benchmarking visits should follow benchmarking plan for visits included here. Benchmarking must be a continuous process with the extent and scope of the project being dependent on the resources that are available. Effective benchmarking does take time and planning, but if done efficiently, significant benefits can be realised. Organisations that use benchmarking successfully report that the costs of benchmarking are repaid at least ten-fold. Benchmarking can be used to help: Identify which processes or services to improve Set our service targets In achieving real Value for Money
More Information
For more information on benchmarking, see the detailed guidance provided by the OGC on their website: http://www.ogc.gov.uk/delivery_lifecycle_benchmarking_.asp. The following websites also have some good information on benchmarking: The Balanced Scorecard Institute http://www.balancedscorecard.org/basics/bsc1.html The European Foundation of Quality Management http://www.efqm.org/ Quality.org http://www.quality.org/html/benchm.html
1.9
Stakeholders & Stakeholder Management
Stakeholder Management is an important discipline that successful people use to win support from others. It helps them ensure that their projects succeed where others fail. There are two major elements to Stakeholder Management: Stakeholder Analysis and Stakeholder Planning. Stakeholder Analysis is the technique used to identify the key people who have to be won over. You then use Stakeholder Planning to build the support that helps you succeed. The benefits of using a stakeholderbased approach are that:
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You can use the opinions of the most powerful stakeholders to shape your projects at an early stage. Not only does this make it more likely that they will support you, their input can also improve the quality of your project Gaining support from powerful stakeholders can help you to win more resources - this makes it more likely that your projects will be successful By communicating with stakeholders early and often, you can ensure that they know what you are doing and fully understand the benefits of your project - this means they can support you actively when necessary You can anticipate what people's reaction to your project may be, and build into your plan the actions that will win people's support
There has been a great deal written about stakeholder analysis and management and there is a lot of good practice guidance that officers can refer to. See the OGC website for more information here: http://www.ogc.gov.uk/documentation_and_templates_stakeholder_issues_stakeholder_map.asp. Two useful publications that offer more detail on stakeholder management and stakeholder management for complex projects are: Stakeholder Management The Organisation, Stakeholders, Purpose & Responsibility http://sharepoint.lambeth.gov.uk/sites/lts/corporateprocurement/Public%20documents/Stakeholder%20Mana gement/The%20Organisation%20-%20Stakeholders,%20Purpose%20and%20Responsibility.pdf Beyond Conventional Stakeholder Management Developing PRIME Intelligence on Complex Programmes here: http://www.ogc.gov.uk/documents/Moorhouse_Insight__Beyond_conventional_stakeholder_management_secured.pdf
Stakeholder Analysis
The first step in Stakeholder Analysis is to identify who your stakeholders are. The next step is to work out their power, influence and interest, so you know who you should focus on. The final step is to develop a good understanding of the most important stakeholders so that you can work out how to win their support. You record this analysis on a stakeholder map. After you have used this tool and created a stakeholder map, you can use the stakeholder planning tool to plan how you will communicate with each stakeholder. The steps of Stakeholder Analysis are explained below:
1. Identifying Your Stakeholders

The first step in your stakeholder analysis is to brainstorm who your stakeholders are. As part of this, think of all the people who are affected by your work, who have influence or power over it, or have an interest in its successful or unsuccessful conclusion. The table below shows some of the people who might be stakeholders in your job or in your projects: YOUR LINE MANAGER YOUR HEAD OF DEPARTMENT LAMBETH SENIOR EXECUTIVES INTERNAL & EXTERNAL AUDIT MEMBERS OF THE PUBLIC (IN LAMBETH) CENTRAL GOVERNMENT INTERNAL CUSTOMERS STRATEGIC PARTNERS SUPPLIERS MEMBERS OF THE PUBLIC (OUTSIDE OF LAMBETH) YOUR DEPARTMENTAL CABINET MEMBER WARD COUNCILLORS TRADE ASSOCIATIONS THE PRESS INTEREST GROUPS
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Remember that although stakeholders may be both organisations and people, ultimately you can only communicate with individual people. Make sure that you identify the correct individual stakeholders within a stakeholder organisation.
2. Prioritise Your Stakeholders

You may now have a long list of people and organizations that are affected by your work. Some of these may have the power either to block or advance it. Some may be interested in what you are doing, others may not care. Map out your stakeholders on the Mendelow Matrix or a Power/Interest Grid for stakeholder management: L EVEL O F INTE RES T LOW A Minimal Effort LOW P O W ER / P REDI CTABILI TY HIGH B Keep Informed
Low power, less interested people

Few Problems
High power, less interested people

Unpredictable But Manageable
C Keep Satisfied HIGH
D Key Players
Low power, interested people

Powerful But Predictable
High power, interested people

Greatest Danger Or Best Opportunity
For example, your boss is likely to have high power and influence over your projects and high interest. Your family may have high interest, but are unlikely to have power over it. Someone's position on the grid shows you the actions you have to take with them: A. Minimal Effort Low power, less interested people. Again, monitor these people, but do not bore them with excessive communication. B. Keep Informed High power, less interested people. Put enough work in with these people to keep them satisfied, but not so much that they become bored with your message. C. Keep Satisfied Low power, interested people. Keep these people adequately informed, and talk to them to ensure that no major issues are arising. These people can often be very helpful with the detail of your project.
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D. Key Players High power, interested people. These are the people you must fully engage with, and make the greatest efforts to satisfy.
3. Stakeholder Planning
When you have identified and prioritised your stakeholders, you need to plan out how you will engage with them. To carry out a Stakeholder Planning exercise, set up a simple table with the following column headings: Stakeholder Name Communications Approach Key Interests and Issues Current Status - Advocate, supporter, neutral, critic, blocker Desired Support - High, medium or low Desired Project Role (if any) Actions Desired (if any) Messages Needed Actions and Communications
Using this table, work through the planning exercise using the steps below:
a. Add the Mendelow Matrix Information to the Spreadsheet

Based on the Mendelow Matrix that you created in your stakeholder analysis, enter the stakeholders names, their influence and interest in your job or project, and your current assessment of where they stand with respect to it.
b. Plan Your Approach to Stakeholder Management

The amount of time you should allocate to Stakeholder Management depends on the size and difficulty of your projects and goals, the time you have available for communication, and the amount of help you need to achieve the results you want. Think through the help you need, the amount of time that will be taken to manage this and the time you will need for communication. Help with the project could include sponsorship of the project, advice and expert input, reviews of material to increase quality, etc.
c. Think Through What You Want from Each Stakeholder

Next, work through your list of stakeholders thinking through the levels of support you want from them and the roles you would like them to play (if any). Think through the actions you would like them to perform. Write this information down in the Desired Support, Desired Project Role and Actions Desired columns.
d. Identify the Messages You Need to Convey

Next, identify the messages that you need to convey to your stakeholders to persuade them to support you and engage with your projects or goals. Typical messages will show the benefits to the person or organisation of what you are doing, and will focus on key performance drivers like improving service delivery.
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e. Identify Actions & Communications

Finally, work out what you need to do to win and manage the support of your stakeholders. With the time and resource you have available, identify how you will manage the communication to and the input from your stakeholders. Focusing on the high-power/high-interest stakeholders first and the low-interest/lowpower stakeholders last, devise a practical plan that communicates with people as effectively as possible and that communicates the right amount of information in a way that neither under nor overcommunicates. Think through what you need to do to keep your best supporters engaged and on-board. Work out how to win over or neutralize the opposition of sceptics. Where you need the active support of people who are not currently interested in what you are doing, think about how you can engage them and raise their level of interest. For example, for large groups of stakeholders you might set up smaller focus groups or interest groups who can feed in information form the larger group and who can work on separate or more specific pieces of work. For large groups you can also hold larger, informational seminars or run surveys or polls to gather a lot of information at once. Smaller groups or individuals may need individual meetings. You might also consider gathering everyones e mail addresses and setting up an Outlook stakeholder information group, to e mail everyone at once with urgent or even regularly scheduled updates. Also, consider how what you are doing will affect your stakeholders. Where appropriate, let people know as early as possible of any difficult issues that may arise, and discuss with them how you can minimize or manage any impact. It is usually a good idea to manage peoples expectations about likely problems as early as possible. This gives them time to think through how to manage issues, and preserves your reputation for reliability. Once you have prepared your Stakeholder Plan, all you need to do is to implement it. As with all plans, it will be easier to implement if you break it down into a series of small, achievable steps and action these one-byone.
Engaging With Our Elected Members

Keep in mind that Lambeth councillors, whilst not members of staff, are very important internal stakeholders as elected officials they will have interests in their Lambeth constituents. In carrying out your stakeholder exercise, you must include our councillors in the process, primarily at two levels: 1. Tenders Valued at 100,000 and Greater If your contract or purchase is valued at 100,000 and greater or if the contract will have a significant impact upon Lambeth Council, consult with your departmental cabinet member before you get approval to go to tender; you should also sit down together and complete the Community Benefits Checklist and decide if there are opportunities that can be realised in your upcoming tender. Also, consult on where your contract or purchase will have its impact. For example, if you were buying playground equipment for a park in Vauxhall, contact your departmental cabinet member and the ward councillors in Vauxhall when you begin writing your Business Case and/or Procurement Strategy Report. Be sure to enter their comments or advice in these reports and final consultation details in your Officer Delegated Decision Report.
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2. Tenders Valued from 500,000 & Greater or Where 2 or More Wards are Affected by the Procurement Decision For higher value procurement, follow the above stakeholder guidance when composing your Business Case and/or Procurement Strategy Report, entering any details onto your reports. Before getting approval to tender, consult with your cabinet member as above and complete the Community Benefits Checklist. Upon Board approval to tender for your contract, you must enter your procurement exercise onto the Forward Plan. When you reach Gateway 3, be sure to include final consultation details in your Officer Delegated Decision Report Procurement.
Understand Your Key Stakeholders

You should endeavour to learn as much as possible about your key stakeholders. You need to know how they are likely to feel about and react to your project. You also need to know how best to engage them in your project and how best to communicate with them. Key questions that can help you understand your stakeholders are: What financial or emotional interest do they have in the outcome of your work? Is it positive or negative? What motivates them most of all? What information do they want from you? How do they want to receive information from you? What is the best way of communicating your message to them? What is their current opinion of your work? Is it based on good information? Who influences their opinions generally, and who influences their opinion of you? Do some of these influencers therefore become important stakeholders in their own right? If they are not likely to be positive, what will win them around to support your project? If you don't think you will be able to win them around, how will you manage their opposition? Who else might be influenced by their opinions? Do these people become stakeholders in their own right? Importantly you must recognise that your stakeholders on any given projects are likely to change. Elections may change the membership, profile and agenda of the council, members of the public may move to another borough or members of staff may leave. You will need to adjust your stakeholder group(s) as necessary. A very good way of answering these questions is to talk to your stakeholders directly - people are often quite open about their views, and asking people's opinions is often the first step in building a successful relationship with them.
Gateway One: Present Business Case to the Procurement Board In the Gateway One processes, we have covered all the basics you need to know in procurement planning, including how to use the Lambeth Procurement Guide, where to get advice and training, key regulations in procurement, the Lambeth Scheme of Delegation and an introduction to the EU procurement rules. We have also covered waivers, the Contract Register, procurement
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documentation, audit trails and smarter ways of procurement through use of corporate contracts and Central Purchasing Bodies. And along with all those basics we also need to be aware of Responsible Procurement the consideration for the social, economic and environmental aspects of procurement; knowledge of this area will affect how we approach a future procurement project. We have also looked at the more informational, market related and public relations aspects of procurement that will serve us very well indeed: markets & market development, benchmarking and stakeholders & stakeholder management. It is a lot of information to take in, but thus armed we should be ready to write our Procurement Business Case and move forward to Gateway Two.
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Gateway Two: Think
Essential Procurement Knowledge
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2.0
Introduction to Gateway Two

Gateway Two is aptly named Essential Procurement Knowledge all the information in this section is very important to your procurement project, depending on what your project IS. For example, not every contract will involve TUPE issues, but if they do; you will find all the information you need to know in this section.
2.1 Tenders
Information Technology, eProcurement & Electronic
The influence of information technology (IT) has grown enormously in recent years. Few contracts of any significance fail to have an IT component, either directly or indirectly. Many procurement activities will have some sort of connection with actual or potential IT applications within the Council. This section describes some of the main IT considerations that are likely to apply most commonly. For contracts directly related to IT solutions, there may also be a host of technical considerations, but these are outside the scope of this Procurement Guide. In all cases where, within the scope of your procurement activity, you identify IT implications you must seek advice from the IT department. This is because: a. You need to be aware of any IT applications within the Council that may assist or influence your procurement b. The IT department need to be aware of any possible impact that your procurement may have on existing IT facilities (e.g. potential interfaces with corporate systems) and c. The IT department need to assess whether your procurement might influence, or be influenced by, planned IT developments or other current procurement activity. The above covers not only technical interfaces but also potential impact on information flows or processes. Thus, you must check for any potential impact with the IT department. For major procurement activity, where a service is likely to be externalised or delivered in a significantly different manner, the impact on the Councils IT arrangements might be significant. For example, the externalisation of a particular service may affect overhead cost distribution for the mainframe computer, thus impact on other users. In general, you should proactively explore the possible IT implications of any significant procurement activity. You should also be aware of the ever-widening application of IT and the impact this may have on the methods of service delivery, particularly over the course of a lengthy contract. An outcome based contract that is of a fixed price nature may prevent you from securing continuous improvement for the Council, i.e. the contractor may receive the entire benefit of technological advance. eProcurement will assist with issues such as: Security, fraud, audit and authentication Slow speed of transactions and payments Continued use of paper-based invoicing and payment The lack of a unified system within an authority
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Missed opportunities of bulk purchase discounts
Lambeth already provides for electronic ordering for printing; a stationery catalogue is available online; and IT supplies are available from the Easy Shop. Many elements within the tendering process are being carried out online and you can find out more by contacting the CPT directly. You should always ask bidders about their ability to trade electronically and you should seek ideas on developing e-procurement opportunities from potential suppliers whenever you are undertaking significant or innovative procurement activities.
Electronic Tenders
The easiest and most efficient and effective way to receive tenders is electronically. Timed receipts of tenders are done automatically by electronic mail, postage costs are saved and security can be better ensured when tenders are received electronically. Lambeth has put in place an eProcurement system that all procurement officers can use. The direct link to the system can be found on the CPT intranet pages, along with the list of eProcurment Champions: http://intranet.lambeth.gov.uk/StaffServices/FinanceAndProcurement/Procurement/eProcurement/. The Champions are the first person to contact when setting up your electronic tender; contact them after you get approval to tender and they can set everything up. If your project is valued at 25,000 and greater, all tenders must have their Business Questionnaires completed online, on the eProcurment system. Again, your Champions can help you get set up, or contact your departmental procurement team: HRE: HR&Eprocurement@lambeth.gov.uk F&R and OCE: etendering@lambeth.gov.uk CYPS: CYPSPBSubmissions@lambeth.gov.uk ACS: acsprocurement@lambeth.gov.uk
The guidance following is provided in order than you can ensure the secure return of your electronic tender, but if you are unsure of how to approach the electronic receipt of tenders please do not hesitate in contacting your departmental procurement team for help. Once you have decided to receive your tenders electronically, you are, effectively, running an eITT project and electronic invitation to tender project. You must make all tenderers aware of this at the outset, in order that all tenderers are given equal and fair consideration and that they can prepare their processes accordingly. This may involve some cost on their part, as it is not always a good idea to assume that all your tenderers have e mail or indeed that they have the same computer programmes that you do. Some additional points to remember: In the event that any one of your tenderers is not able to return their tender by e mail, provision must be made for their secure receipt of tender, placed on CD ROM, for example. If you are unsure of what the options are, please contact the CPT for advice Electronic tenders can be very large especially if they involve charts or specific diagrams. In this case, large emails may be held up by your Outlook inbox quota, so you should notify the Lambeth IT HelpDesk well before the tender receipt deadline in order to ensure you CAN receive any large e mails Electronic tenders should be returned to one point of contact only within your procurement exercise team, and this e mail address should be indicated in your invitation to tender letter, along with the receipt deadline date. Full instructions should also be included in your letter, in order to avoid any confusion and you should provide all your contact details to assist with this. Tenderers should be advised that if they have any questions either initially or at any point during the tendering process or
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if there are any doubts as to what is required or if they will have difficulty in providing the information requested that they can contact the nominated officer for this exercise for clarification For a template of an eITT letter, please contact the CPT and they will be happy to help Lambeth principally uses the Microsoft Word and Excel programmes, and though these tend to be universally used, you should notify all tenderers that these programmes will be used for your electronic tendering exercise Once prepared, all tenderers should be strongly advised that they distill their tender documents into secure PDF (Portable Document Format) format before emailing to you or your named exercise contact. Secure PDF documents will provide adequate security against revision of all tender documents. Tenderers should be advised to use the Standard Security application (preventing any changes to the document) to all documents, which will provide sufficient security and will allow printing of the documents, which of course, you will need to do Tenderers must also apply a PDF Digital Signature, to all tender documents. Where a digital signature cannot be applied, the signature page must be signed and dated manually and the signature page scanned and distilled into PDF format and included with an/all tender documents All tenderers must be notified of the e-mail address to which tender documents are to be returned, and by what time. Should the tenderer have any concern that their tenders have been received on time, it is strongly recommended that they call the Procurement Officer in charge of the exercise, in order to guarantee receipt Once a pack tender of documents has been received, you should provide each tenderer with a Confirmation of Receipt of Tender email. It is also advised that all parties retain copies of these receipts for future reference
Again, where any tenderers have any concerns or questions about the electronic tendering process, they should contact the officer in charge of the exercise directly.
Reverse Electronic Auctions

A reverse auction is an electronic auction where suppliers bid online against each other for contracts against a published specification.
The Benefits of Reverse Auctions

Elimination of paper and streamlined processes Short negotiation cycle Better value for money procurement Increased transparency of the contract award process
The placement of contracts can be a lengthy process that is costly for both the buyer and the supplier. By conducting the procurement process online, the process is much quicker than conventional procurement and as a result the overall procurement cycle is significantly reduced. Vendors report up to 30% savings in time and therefore cost of process. Reverse auctions create an environment where suppliers bid against each other for a contract. This environment encourages competition with the result that goods and services are offered at their current market value. Vendors report price savings ranging between 5% and 20% on non-reverse auction derived pricing. Reduced paperwork, short procurement cycle and increased transparency of competing bids are clear benefits for suppliers.
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How to Use Reverse Auctions

Reverse auctions tend to be used either as hosted services or in house applications. The main effort involved in carrying out each online reverse auction is usually focused on the set up activities. The key steps involved in using reverse auction technology are as follows: 1. Prepare a detailed electronic product specification. It is important to produce a clear requirements specification as it will help suppliers in bidding and also make the post-auction evaluation more straightforward. 2. Recruit suppliers 3. Train suppliers to use the software/website reverse auction service providers can help with this as well 4. Train purchasing staff in using the software/website 5. Publish product specifications in advance of event and invite suppliers to the reverse auction event 6. Start reverse auction event. Buyer and suppliers access the event via the web. They can log in and out of the event to view and place bids. The event can last from two hours (most common in the UK) to a few days. Suppliers bid anonymously against each other. Suppliers are able to see the bids on their personal screens. There is no limit to the number of individual bids 7. The reverse auction closes. The bids are analysed using preset criteria. Some reverse auction systems provide bid evaluation tools and assessment engines, which automate the evaluation process. 8. Award contract In case of integrated reverse auction systems, the awarded contract automatically becomes a commitment in the accounting system.
Key Considerations
Typical features of available reverse auction solutions include: Buyer Features Secure environment for setting up business rules, approving supplier participation and monitoring events Ability for buyers to upload images, specifications and other documents Re-usable auction facility which permits editing and reposting of saved auctions as new auctions Analysis tools for bid evaluation End of auction management information reporting Audit trail Supplier Features Facility to upload product specifications and images Customised supplier screen Event log showing a minute by minute bidding activity with a graph Automated award notification to the successful bidder
Integration
Some reverse auction systems, offer integration facilities which allow for automatic creation of a commitment in the corporate accounting system for the winning bid. Integration can allow product details taken from the winning bid to be uploaded into the catalogue of the Councils electronic ordering system or e-marketplace.
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Regulatory Issues
There are some issues regarding EU Directives and Public Procurement Regulations. The OGC has prepared guidance on auctions that can be found here: http://www.ogc.gov.uk/documents/OGC_Guidance_on_eAuctions.pdf. Additional information and case studies can be found on the IDeA website here: http://www.idea.gov.uk/idk/core/page.do?pageId=939817.
Preparation
The main effort involved in carrying out each online reverse auction is usually focused on the set up activities: Preparing detailed product specification it is very important to produce a clear product or service specification as it will help suppliers in bidding and also make the post-auction evaluation more straightforward Recruiting suppliers Some suppliers are not experienced in taking part in electronic reverse auctions and therefore may not be immediately willing to join in. Reverse auction service providers may be able to help with supplier recruitment. Training suppliers in using the software/website reverse auction service providers will provide training assistance. This may be included in the price.
There are a number of cost options available: Software license purchase - the auction software is bought and installed on the councils server. The council can then use the software and organise an unlimited number of events at no extra cost. The additional cost involves consulting services required to set up and manage the first auctions and train users to be able to manage auctions independently in future Pay as you go the buyer can purchase individual events from a third party auction provider. The price will depend on the number of suppliers taking part in the auction Multibuy the buying organisation can purchase a number of auctions as a package for a set price. The package usually includes support and training for both users and suppliers Commission on the realised savings, where the vendor takes a percentage of the savings realised by the buyer on the agreed contract supplier pays in some cases, the suppliers of the product or service to be auctioned pay to be able to take part in the auction on a no win, no fee basis
eAuctions at Lambeth
If officers are considering using a reverse auction to deliver their procurement exercise, they must first contact their departmental head procurement. There will then need to be a liaison with Corporate Procurement in order to ensure the auction procedures are carried out properly.
eAuctions & the Constitutional Process

The Lambeth constitution requires that in relation to the award of contracts of a value of greater than 100,000 (all non-key and key decisions) are to be subject to the following consultation:
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Pre Decision consultation: circulated to members specified in the Constitution who are given 5 days to comment prior to the decision being taken under the Scheme of Delegation this process is sometimes called pre-notification Post-Decision Consultation: once the decision has been taken the report is to be published on Officer Decisions where Key Decisions can be requested to be called in under scrutiny procedures
In respect of an eAuction, a decision has to be taken on the day of the auction, upon completion of the auction. Therefore, in order to satisfy the requirements of the Constitutional Process in Procurement, officers must notify their departmental councillor a minimum of 5 working days before an eAuction takes place. Members will then be in the position to comment on the eAuction before it takes place as well as receiving information via Officer Decisions once the eAuction has been completed.
2.2
Customer and Buyer Roles
When you make a personal purchase at a shop, things are fairly simple. You as the customer are likely to be: The end user - and will use the product or service (unless this is a gift or you are helping someone) The agent - in other words the person leading the buying side of the transaction The purchaser - because the payment usually comes from your account The negotiator as you will negotiate your price and terms, if possible
However in large organisations such as the Council these four roles are often split between different groups or individuals. Think for example of a purchasing exercise involving the Councils stationery contract. The staff members involved may include: An end user or end users who actually needs the item in question A sectional or departmental representative who acts as the agent and notifies the requirement to the supplier The purchaser which may be the department itself but which may also involve someone whose job it is periodically to check and monitor the overall level of expenditure A payment officer who settles the bill/invoice when presented
This forms the customer chain. There may well be a supply chain at the other end of the purchase (someone who takes the order, someone manages the order and delivery arrangements and someone who actually meets the order and makes or supplies the goods). For routine or repeat purchases these roles can have become well established. However, even in cases of routines, problems can occur because: People forget to keep checking back with the end user (in the customer chain) or contractor (in the supply chain) The chain breaks down or Chinese whispers occur where needs get garbled
For more complex and/or one off purchases, the customer chain can become even more complicated. For example if you were involved in purchasing a computer system you might well find the following: The end users - the different groups of operatives who will use the system
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The departmental technical expert - who decides whether or not the equipment/software will meet departmental requirements The Council technical expert - who will decide whether the system dovetails with Council requirements The consultant an external adviser who will provide unbiased technical or operational advice The agent - the person co-ordinating the overall purchase The buyer(s) - which might be more than just one department The payment officer - who may need to track expenditure at various stages of the purchase against the overall budget
It is important that you think through the customer and supply chain at the planning stage when you are thinking of buying a new product or services or when you are reviewing current arrangements. Clarity about the various roles will save time and effort later in the process.
2.3
Contract Packaging
While market flexibility is important, it is also important for the Council to be flexible as well. Procurement officers must use the information gathered in market research to package their contracts in the best possible way. For example, in a recent tender for services, a department received no tenders when they packaged all the work for the service together in one large contract. However when they broke it into several smaller geographical parcels and one specialist service parcel, they received dozens of relevant tenders. Packaging is therefore critical in getting the right response and careful consideration should be given to the way a tender is organised. The Corporate Procurement Team is glad to be of assistance should you have any questions about contract packaging: Corporate Procurement Team Phone: 020 7926 9358 Mail: corporateprocurement@lambeth.gov.uk Examples of Service Contract Packaging Some examples of how services contracts can be packaged are below:
Facilities Management
Office cleaning; security guarding; reception and help desk services; post room services; highlevel and specialist cleaning; specialist security services; cash transport services; key cutting and locksmith services; window cleaning and repair/replacement; uniform and laundry services; landscaping design, planting and maintenance services, etc.
Corporate Catering
Staff catering services including canteen service and hospitality services; events planning & catering; bartending services; silver service dining services; vending machine provision and maintenance; office bottled water provision; office tea club services; carpet cleaning services; pest control, etc.
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Network Cabling
Telephone cabling supplies and services; network cabling supplies and services; telephone handset provision and repair; call logging services (software and support); network and telecoms supplies, etc.
Postage Services
UK mainland postage handling services; International postage handling services; franking services; franking machine provision, repair and maintenance; in-house postal delivery service and post room provision; package handling and delivery services (local and international); courier services (local and international), etc.
Office Refurbishment
Office space design and planning services; blueprint creation and printing; minor and major structure decoration and repairs; carpet provision, installation and repair; window blinds, curtains and drapes provision, installation and repair; lighting provision, installation and repair; furniture design, provision, installation and maintenance; stakeholder consultation management, etc. At the packaging stage, decisions also need to be reached about the preferred contract pricing structure. These include: Fixed price (a fixed price contract for the service - this usually involves the contractor estimating the whole job/requirement) Volume based price - where the volumes may not be known but the contractor indicates the price for expected volumes (and normally discounts for larger volumes) Day or unit rate pricing - where the product is defined as a set of unit prices that can be applied to any requirement (this often applies to services or consultancy type contracts) Cost plus pricing - where the supplier is responsible for the costs incurred in delivering the service and then adds an additional charge or percentage to cover their fees
Thinking early about contract type and pricing structures and payment arrangements can help you explore the options during market research or the tendering process.
2.4 2.4.1
Value for Money, Cashable & Non-cashable Savings and Whole Life Costing Value for Money
Value for Money (or VFM) includes a requirement for Councils to demonstrate that they are giving value for money through subjecting services to competitive pressure. The Audit Commission will regard a rigorous examination of each services procurement strategy as a key part of any Value for Money review. Authorities need to be open-minded about who is best suited to deliver the services. These points are intended as background guidance and set out key factors for modern Value for Money procurement. One key (and sometimes controversial) concept of Value for Money procurement is outsourcing.
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There are several reasons why an alternative to in-house provision might provide better value: Economies of scale Application of new technology Increased investment New groupings of services Better utilisation of spare capacity More market focused practices Economy of support services More specialist skills Greater ability to obtain work A better customer focus Better processes
Methods for testing competitiveness can include: Procurement of an independent benchmarking report Providing a core service in-house and buying top-up support from the private sector so that comparison can be made between the two Contracting a service out to the public sector following competition restricted to external bidders Forming a joint venture or partnership following a competition for an external partner; Tendering part of the service, with an in-house team bidding against the private sector and other local authorities and Disposing or selling off competitively a service and its assets to another provider
The Society of Purchasing Officers in Local Government (SOPO) has established guidance on VFM that refers to the importance of having a policy and strategy for procurement and it is their position that each local authority should be able to achieve: Effective financial monitoring systems to capture relevant departmental expenditure on goods and services An officer with specific responsibility for procurement on each departmental management team An Annual Report/Business Plan to the Chief Executive/Members on progress in continuous improvement of procurement activity Benchmarking with other local authorities and private sector procurement organisations A plan to recruit, motivate, retain and develop professional procurement staff Compliance with EU Directives and relevant recording and collating of information on purchasing intentions and activity
The Department for Communities and Local Governments (DCLG) guidance on Value for Money emphasises 39 recommendations for improving procurement practices. The DCLGs position is that better procurement should be an integral part of Value For Money within every authority - as the achievement of Value For Money depends on good procurement. The procurement function should have a much higher profile and be more strongly staffed: The procurement function should be the responsibility of a senior officer and be part of the remit of a member Procurement experts should Guide any delegation of individual procurement to officers in service areas, to ensure that good practices are used and transaction costs properly controlled Robust and clear procedures should be set out for appraising and implementing large and complex contracts, drawing from current best practice
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Their 39 recommendations include the main points, below: Aligning procurement and Value for Money Developing a corporate procurement function Reviewing current practice Engaging members Improving regulations Building capacity Using e-procurement Funding improvement Gathering and sharing information Discussing and resolving market issues Buying consortia Designing and planning a project Managing risk Assessing bids Contract management Applying and improving legislation
Value for Money procurement requires a strategic approach with an assessment of whole life costs. Hence authorities need to consider: Longer contract periods, to encourage investment Flexible contracts, to encourage continuous improvement A balance of risk to encourage potential suppliers Open provision of information to encourage informed bids Outcome based contracts to encourage innovation
The Compulsory Competitive Tendering regime set up by the Local Government Act 1988 enforced competition for certain specified services. It was based on two premises - first that local authorities would only improve their efficiency through the stimulus of competition, second that many authorities would never submit services to competition unless compelled by law. The Value For Money regime is also based on the first premise to some extent. This is coupled with an alternative to the second, namely that authorities will be prepared to use competition voluntarily in the interests of improving the value for money they give to the public.
The government have more recently imposed other requirements on local authorities, taking the focus away from Value For Money. This principally involves the Comprehensive Performance Assessment (CPA) which looks at an authoritys overall performance against a broad set of measures. However, the importance of procurement remains as high as ever under CPA. Indeed procurement is now accepted as a key corporate and strategic concern for all local authorities.
There is a fundamental difference between the two extremes of benchmarking and a consideration of outsourcing. The former is merely an arrangement for collecting evidence, whilst the latter implies a willingness in principle to let a service contract to an outside organisation. Where the function is currently performed in house, this implies transferring to a contractor the responsibility for delivering a service and for employing the relevant staff
2.4.2
Cashable & Non-cashable Savings
When officers make savings through the procurement process, these savings must be reported when they write their Procurement Officer Delegated Decision Report. Savings fall into to main areas, cashable and non-cashable; non-cashable savings are also known as efficiency savings. Government advice sets out 4 categories from where efficiencies might be attained:
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1. 2. 3. 4.
Reducing inputs for the same outputs reported as cashable savings Reducing prices for the same outputs - reported as cashable savings Getting greater outputs or improved quality for the same inputs reported as non-cashable Proportional Efficiencies - getting more outputs/increased quality in return for an increase in resources that is proportionately less than an increase in output or quality. Proportional Efficiencies (or PE) may give rise to both cashable and non-cashable savings
Each of these 4 categories is considered further below:
1. Reducing Inputs for The Same Outputs

This is probably the most straightforward of the categories covering those efficiency savings that are identified year on year. As indicated in the definition there must be evidence of reduced inputs (i.e. less expenditure on staffing, contracts, running costs etc) and no reduction in outputs/quality for an efficiency to arise. Cuts in service or increasing unit charges are not efficiencies, neither is the use of grants to reduce net expenditure.
2. Reducing Prices for the Same Outputs

Efficiencies in this category will typically arise from improved procurement (for example from tendering, changing providers, introduction of corporate contracts etc.) as a result of which the price of purchasing the same level of goods and/or services reduces. It is also allowable to count inflation in calculating the savings from holding down procurement prices. For example if prices are fixed for 3 years a saving can be counted equivalent to the effect of inflation in years 2 and 3 as measured using the GDP deflator. The GDP deflator to be used for each year is quantified by Government; for further advice contact Corporate Finance.
3. Getting Greater Outputs or Improved Quality for the Same Inputs

This category of efficiency does not produce cash savings, as the inputs are the same. However the outputs are increased or quality is improved so the efficiency benefit is getting more for the same cost. An example is a reduction in staff sickness, which increases productive time leading to increases in outputs and possibly quality. In this example the level of non-cashable efficiencies can be quantified by reference to the increase in productive days. Another example is where increases in activities occur but are delivered without an increase in resource inputs.
4. Proportional Efficiencies
In cases where there is a proportionately larger increase in outputs/quality than the increase in inputs then a non-cashable saving arises. The increased input cost needs to be netted off the value of the increased output to arrive at the efficiency saving. For example planning applications increase by 7% and resources to process the applications are increased by 4%. So long as there is no detriment in the speed and quality of processing of these applications then a non-cashable saving is countable. This can be quantified by reference to the 3% reduction in input resource per application. There may also be instances where outputs increase and inputs reduce. For example accepting electronic application forms rather than requiring hardcopies to be sent through the post. Input reductions (e.g. costs saved in stationery/postage) would be cashable savings whereas the increase in outputs/quality (e.g. increased applications, accessibility for the public) would be a non- cashable efficiency.
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2.4.3
Whole Life Costing
General Principles
The principle of whole life costing is essentially aimed at answering the question what is the cost of achieving this objective in this way? rather than the more limited question what is the cost of buying this item? This question is relevant at many stages throughout the procurement process from consideration of the initial business case to evaluation of tenders. The cost of achieving an objective differs from the cost of buying an item in two ways: 1. The purchase of goods may not be necessary to the achievement of the aims identified. For example, they may be available for hire or a different good may do the job just as well. 2. The purchase price is unlikely to be the only cost incurred as a result of the procurement. For example, there may be fuel costs and maintenance costs and there may be a cost incurred on disposal. In deciding on which option to select for meeting a need or providing a service, it is essential that procurement officers consider all the costs involved in each option: Some costs will be incurred at the outset, when equipment is bought or initial payments are made for service contracts. However, many of the costs will only arise over the life of the option. For example, there will be running costs, energy costs, equipment maintenance costs, staff training and disposal costs of both the old equipment and the new equipment at the end of its working life. It is important to think in terms of meeting identified needs rather than in terms of acquiring particular assets (e.g. lease versus buy). When deciding how to meet a need, the options considered should include all the practicable ways of meeting that need. An item which has ordinarily been used to achieve this may not actually be essential for meeting the objective. Cost is not usually the only criterion on which the different options should be evaluated. There will also be considerations of the quality of the product or the service provided. Sometimes there will be minimum quality standards to be met. In other cases, different solutions will offer different advantages. Some of these advantages will relate to quality and others will relate to cost. Costs arising from impacts on the environment (such as clean-up costs) may form part of the cost in the initial business case; this should then be reflected in the specification. Environmental issues must be taken into consideration in the business case and specification. This should be considered independently of costs, in order to meet the UK and Council policies and objectives on environmental issues.
Determining the full cost of a method of meeting a given requirement involves an understanding of how the eventual solution will be implemented. It is always necessary to consider what the procurement is supposed to provide, the cost of the solution and the relative costs of meeting the requirement in other ways. For example, a bus with automatic transmission which has a whole life cost of 270,000 and a life span of 15 years has an annual cost of 18,000. A bus with manual transmission which has a whole life cost of 200,000 but a life span of only
Although whole life costing deals with the cost of the requirement over its total life, it should be remembered that different solutions may have different life spans. The cost of the chosen solution should therefore be annualised to enable the costs of different solutions to be properly compared; such issues can arise either at the initial business case or at the evaluation stage
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10 years has an annual cost of 20,000. The bus with the higher whole life cost has the lower annual cost. The life span of a solution will, of course, depend on the length of time the solution is needed as well as its durability. In the above example, if the bus was only needed for 10 years and the total cost of using the bus with automatic transmission for the first 10 years would be 210,000, the bus with manual transmission would deliver better value for money.
The Full Cost of Using an Item: Actual Total Cost

The cost of using an item can be broadly divided into the three categories of price, value and transaction. The diagram below is taken from the Lambeth Procurement Guide. The revised Guide now includes guidance for officers on Whole Life Costing, Value for Money and reporting of Cashable & Non-cashable Savings. See the diagram below:
Price
Price is perhaps the most apparent and immediately recognisable cost, and it is made up of: Direct Costs Indirect Costs Overheads On-Costs Transportation Profit
Value
This is known as The Cost of Quality; these can be less apparent than price and include: Maintenance Disposal Corporate Social Responsibility Environmental Costs Sustainability Costs Marketing & Communications Costs
Transaction
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These costs usually come before the initial purchase is made (though not always) and will include buying resources, time and re-negotiations; these are all largely dictated by the sellers relationship capabilities: Consultancy Costs Legal Costs Payment Terms Marketing & Communications Costs Transportation
Whole Life Costing and Value for Money

Whole life costing must be used in the context of the need to obtain Value for Money (VFM) in public sector purchasing decisions. Cost alone, even whole life cost, does not capture all of the information relevant to a purchasing decision. VFM does not simply mean selecting the cheapest option which meets the minimum requirements but is defined as the optimum combination of whole life cost and quality (or fitness for purpose) to meet the customers requirement. Price will usually be only one of a number of criteria used to evaluate Tenders and therefore whole life cost and quality should be used to determine the value for money of each option. The detailed criteria should be published in the contract notice and contract documents, to ensure that all potential bidders have equal access to full information about the Tendering procedure, including the evaluation criteria to be applied, and to enable them to improve the quality of their bids by adapting them to the actual requirement. The criteria for deciding which delivers the best VFM is known as MEAT or Most Economically Advantageous Tender.
Environmental Costs
Another aspect of whole life costing at initial business case stage is that not all the costs of using an asset or of receiving a service are borne by the user of the asset or service. There may be damage to the environment the cost of which is borne by neither the provider nor the user of the asset or service. The European Commission has issued guidance on the possibility of taking account of environmental criteria in the procurement of supplies, works and services; see their website at www.europa.eu.int. It is important to understand that the policy of achieving VFM applies particularly to the award stage of the procurement process. It is for the procurement officer to decide what to buy and to set the specification, in the context of their overall operational and policy objectives, including the Councils objectives on environmental matters, and subject to the normal public expenditure tests of need, affordability and costeffectiveness. It is at this early specification stage that there is most scope to consider environmental issues. There is a clear distinction which is often not understood - between what can legitimately be done at the specification stage and what can legitimately be done at the award stage.
The Specification Stage

Public sector procurement is permitted to frame the contract specification in such a way as to ensure that the work will be carried out in an environmentally sound way. For example an officer can choose to specify and purchase low emission vehicles (even where they might be more expensive than standard vehicles). VFM must be achieved, however, in the contract award process, i.e. the contract should be awarded to the bidder offering the best combination of whole-life cost and quality to meet the requirement for low emission vehicles. And the requirement itself, for low emission vehicles, must be tested for need, affordability and cost-effectiveness in the context of the customers overall objectives. However, this is a matter of prudent financial management generally rather than specifically one of procurement policy.
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However, the specification must not be drawn up in a manner which frustrates the purposes of competitive Tendering by unfairly restricting the Tendering process to a single supplier or to a narrow group of suppliers or to suppliers from one country or locality. In other words, materials should not be specified which are not widely available and, in addition, prospective contractors should be allowed to substitute other materials which will still meet the customers environmental objectives in an equivalent manner.
Award Stage
All Tender evaluation criteria used must be justified by the subject of the contract. The purpose of the award stage of the procurement process is to allow the authority to assess which Tender best meets its needs; the evaluation criteria chosen should help the authority to do this. They should relate to the intrinsic qualities of each of the bids when compared to the stated requirements of the contract, and not to secondary issues, such as external costs or benefits. This is what is meant by criteria having a direct link to the subject of the contract. In such cases it is essential, in order to meet the ECs overarching principle of transparency (which applies to all procurements, whether they are above or below the EC thresholds) that it is made clear at the outset that the environmental characteristics of the goods being procured will be part of the evaluation criteria. The award criteria must be mentioned in the contract notice or contract documents. They should be listed in descending order of importance. It is good practice to also include the relative weighting given to each of the criteria; this is a requirement of the consolidated EU Procurement Directive.
Decisions on Environmental Policy and Standards

The diagram below illustrates the process whereby environmental costs could be included in Whole Life Cost. Essentially, this would be achieved by environmental regulators and other central government bodies ensuring that such costs were no longer externalities by means of environmental taxes and regulations which made polluters pay the cost of environmental damage prevention or environmental restoration or an amount reflecting the value placed by the regulator on the environmental loss suffered:
The purchasing body may choose to specify requirements which go beyond those laid down by legislation. In
doing so, it must ensure that it complies with all relevant laws and regulations (e.g. does not unfairly discriminate) and must be prepared to justify any associated costs. Any public or private sector body making purchasing decisions may wish to have its own environmental policy or guidelines but as a minimum, all public and private sector bodies must comply with current
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legislation. However, an environmental policy should go beyond this and detail any additional requirements that senior management deem appropriate and this policy should be broadcasted. When an officer has received approval to go out to Tender for a service or supply and the work is planned and the decision is taken, they are advised to draw up a general specification of the work to be done, ensuring that the nature of this work does not, of itself, breach the Councils own environmental policies or guidelines. The procurement officer will then draw up a detailed specification which ensures that the objectives set out in the outline specification are required to be met while at the same time laying down any specific requirements necessitated by the environmental policy. It is then a matter for prospective suppliers competing for the work to ensure that they comply with all laws and regulations and while meeting the requirements of the purchasing specifications and pay all environmental taxes resulting from their activities. The costs of compliance with regulations and the amount of environmental taxes will have an impact on the price which suppliers will need to charge for the work. The purchasing department will make a decision on the basis of a number of previously notified criteria, including the full cost to the purchasing body of each of the proposals. This cost will include both the price stated by the bidder and any additional costs which the purchasing body will have to bear. These additional costs may include costs of environmental taxes and costs of compliance with environmental regulation which will fall on the purchasing body rather than the supplier. Different proposals may involve different costs.
The Contract Specification

The contract specification is the key document in the procurement process. This is the description of the goods or services, which is drawn up before Tenders are invited for the work. A contract specification must state in all necessary detail the goods, services or works which are required, the dates on which they must be delivered or (in the case of services) the periods during which they must be delivered and the locations at which they must be delivered. A clear and adequate contract specification is essential for any life cycle costing exercise. Both the customer who will actually use the goods or services and, especially if the user department is a support service department, those departments which will rely on the operations of the user department, are advised to be involved in the drafting of the contract specification. The specification needs to focus on the outcomes which must be achieved by the contractor. This will enable invitations to Tender to focus on the provision of the goods, services or works which the Council actually needs. There may, of course be more than one method of meeting Lambeths requirements. In this case, some choice will have to be made about the method of service provision before the invitation to Tender is drawn up. For example, there may be a requirement for office accommodation which could be met by leasing accommodation, buying and refurbishing existing offices or having new offices built. The decision will have to be taken on whether or not paying for the construction of new offices is likely to provide better value for money than buying or leasing existing accommodation before Tenders are invited for construction work.
Conclusion
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Whole Life Costing aims to determine the full cost of a solution to a requirement over the full period that the requirement will exist. Whole Life Costing can be applied to leased assets as well as to owned assets and can be used to compare the cost of leasing and outright purchase. Whole Life Costing should be seen as a means of costing different methods of achieving an objective. This means that a project specification should be drawn up which clearly identifies what objective is to be achieved before a decision is taken on how to achieve it. Whole Life Costing should form only one element in purchasing decisions, which should also reflect quality considerations and may reflect environmental and social consequences which do not give rise to costs to the purchasing organization. However, considerations of quality and of environmental and social consequences must not be allowed to give rise to anti-competitive purchasing procedures. In taking these factors into consideration, the London Borough of Lambeth must also act within a clear policy framework and comply with the law and regulations.
2.5
Feasibility Studies and Assets
In order to take sustainable decisions about the letting of future service contracts, you must go through a formal process of conducting a feasibility study. The implications of service contracts can be extensive, not the least of them being the possible transfer of large numbers of employees to the private sector. The effects of taking bad decisions can be to end up with unworkable contracts. Thus, it is essential to establish and record the objectives of the proposed contracts and the factual basis on which the key decisions were taken. A feasibility study may well flow from a Best Value service review, in that such reviews will seek to answer basic questions about whether to provide services, how to provide services, and what to do about managing the assets which are employed in service delivery. The point is that if there is a serious possibility of outsourcing an existing service, then proper investigation is needed to enable the necessary strategic decisions to be taken with confidence. Ideally the authority will have a long-term strategy for outsourcing, or at least for the use of competition. As far as local authorities are concerned, contracts can be divided into two broad groups - those for public services such as refuse collection and revenue collection, and those for support services such as IT and property management. The former are clearly the more significant, since they involve the contractor in dealing with the public, and require a client function akin to that of a Clear understanding and regulator. They raise questions of public acceptability and evaluation of the material propriety, although the boundaries of what is considered resources are key requirements acceptable vary greatly according to time and place. The for determining the most appropriate form of contract. The contracting-out of support services, to the contrary, is concept of strategic assets is essentially a housekeeping measure, that should have little or valuable; they are the assets no effect on the public. The main issue in such cases is usually buildings such as depots whether to use specialist contractors on very limited ranges and offices as well as schools and of work or to let broader contracts for managing large libraries, together with installed amounts of infrastructure. In the latter case, the issue is plant and operational vehicles whether to go for vertical packaging of all the support which determine not only the services to one establishment, or horizontal packaging of location but also the efficiency of one function across a broader spectrum of establishments. the service
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Essentially, it makes sense to develop the policy towards public services first. After all, to take an extreme example, if all the main public services were outsourced, the need for personnel management and financial administration would be transformed. The authority needs to develop criteria for selecting public services for competition, such as poor comparative performance identified by external audit or benchmarking, or a need for capital finance that simply cannot be satisfied by traditional methods of funding. It should then embark on a methodical process of conducting feasibility studies within each service to verify what should be contracted, where exactly the line should be drawn between client and contractor functions, what the timetable should be, whether or not there should be an in-house bid, and other critical questions. In order to provide the answers, a study team needs to identify the main processes, the resources used and the interactions with other Council operations. It has to plan exactly what tenderers are to be invited to bid for and exactly what are the implications of taking those functions and their resources out of the organisation. In particular, the team needs to define the client role that will remain within the organisation to manage the contract and carry forward a strategy for the service. If the authoritys strategic assets are adequate and in good condition, this may not be a key issue, and in that case any incoming contractor may continue to use them. However, if the assets are in poor condition, or occupy sites for which other profitable uses are planned, then it will be important to use the contracting process to take the functions away to different locations, or to finance their renewal or replacement. Some functions may be carried out most efficiently at external sites already owned by the contractor. In other cases the contractor may be encouraged to develop the Councils site by being then allowed to exploit it to develop other streams of business. The importance of making an innovative appraisal of strategic assets can hardly be over-stated. The clients decisions on what assets the successful contractor may use, and which he is obliged to use, will have a dramatic impact on the scope of the competition. The use made of the concept of asset rents; i.e. actual charges for the use of assets owned by the client may well have a significant impact on the financial evaluation of all the bids. Perhaps most important of all, they will materially affect the feasibility of an inhouse bid, since the choices available to private contractors may not be open to the internal team without an external partner. In reality, the Treasury Guidelines laid down in the early nineties as part of the CCT regime, based on the assumption that the primary concern of most authorities would be to ensure a home win, may be regarded as unsatisfactory for a Best Value authority which genuinely wants to provide the most cost-effective service to the public. It is still of course essential to avoid anything that restricts, distorts or prevents competition. However, the primary objectives now should be to ensure that the competition provides the best opportunity for the provision of a service based on high-quality assets, and that the asset strategy which emerges is sustainable and provides for satisfactory continuity towards the next generation of contracts. It is also a necessary part of the feasibility study for the client to research the market place, in order to understand the types of company which may be capable of delivering the contract, and the types of contract of which they have experience. This helps not only with the packaging of the work but also with the advertising of the proposed contract. Such research is most vital in areas where the Council has no previous experience of employing the private sector, but can be equally valuable in a long-established market that may be changing very quickly. Poor market research can lead to inappropriate packaging, and hence to a failed competition. A few years ago, one government department advertised in its usual journals a contract for a group of four specialised services, evidently unaware that private companies tended to concentrate on just one of them. Nobody who expressed interest was deemed to have sufficient breadth of expertise and
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the competition was called off. More realistic packaging and advertising could have attracted a viable range of expertise and investment. Similar considerations apply to support services, but the contracting of these functions needs to be done within the context of the policy for public service contracts. For example, there is no sense in outsourcing IT on the basis of present systems and workloads if some of the biggest customers are likely to be taken out of the organisation. Those authorities that have outsourced revenues and benefits have found that the power and flexibility of IT systems constitute the major factor that differentiates the most successful private contractors. Thus a competition for revenue collection may not be sensible if the IT systems processing council tax collection are locked into an IT contract for seven years. Any contract for IT ought to be geared to release whole applications in the event that their client functions are outsourced. One of the critical tasks of the feasibility study is to develop the commercial proposition to be offered to tenderers, that is to identify the opportunities to make money which contractors may have. Is it to be a simple labour contract using the Councils equipment, or some more elaborate arrangement with openended possibilities for the development and use of the clients sites? Another critical decision is the extent to which tenderers will be allowed or encouraged to come up with innovative propositions for delivering the basic services or, as already mentioned, developing the strategic assets. The client authority needs to take decisions based on the nature of the service required, the quality of the present assets and an understanding of what the best private operators have done elsewhere. The question of whether to allow or encourage an in-house bid is understandably sensitive. Many councils prefer to allow one, in order to be seen to keep faith with their own staff, so that if those employees in the end have to be transferred to the private sector, it will be because of an inadequate response to market forces. The presence of an in-house bid is reputed to make the private sector more competitive. However, there are many arguments to the contrary. For example, it does little to encourage good companies to bid if they know that one arm of the client body is bidding against them. It might signal that the Council does not really want to let an external contract at all. For another, in-house DSOs tend to be limited by restrictions on trading and employment, which weight the competition against them, and they are less likely than private firms to bring forward innovative ideas that have been tried elsewhere. They cannot raise capital unaided, and may need some form of alliance that represents a take-over in all but name. Finally, although the odds may be stacked against an in-house bid, its very existence makes it difficult for the workforce to view an external contract as a positive outcome. On the other hand, there are precedents for workforces who are not competing to be involved in the appraisal of the merits of the bidders as prospective employers, a process that raises morale and prepares effectively for the transition. In effect, councils that decide to have an in-house bid may limit the effectiveness of the competition as a route to securing a more sustainable service. If they really want to keep a service in house for good operational reasons, it is better not to offer it for competition. If to the contrary they really want to involve the private sector, it is better to bite the bullet and disclose this policy to the staff at the outset. In parts of central government such as the Ministry of Defence, the feasibility study is well developed as a crucial stage in the planning process of what used to be called market testing and then competing for quality. In local government the reverse is true, because most authorities stayed with the minimum agenda prescribed for CCT. The advent of Best Value necessarily opened up a wider choice of services for competition. It is essential to have a formal and disciplined approach to making that choice. The feasibility
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study provides just that, since it delivers an objective report on the feasibility of letting a contract, with detailed recommendations as to the way forward, whatever the answer to the main question. The above paragraphs do not deal with the situation where a previously outsourced service may be brought back in house. The issues surrounding such action are primarily political and managerial and beyond the scope of this Guide.
2.6
The Private Finance Initiative - PFI
The Private Finance Initiative (PFI) offers one form of public-private partnership (PPP) in which local authorities can gain access to new or improved capital assets (broadly buildings, roads, plant, apparatus and vehicles). Such an approach is also referred to as Design Build Finance Operate ('DBFO'). DBFO involves the various responsibilities and risks relating to the procurement and operation of a capital asset being transferred to the private sector. Unlike traditional procurement the public sector does not buy the assets, but rather pays for the use of assets held by the private sector and the services associated with those assets. Generally there will be a long contract period over which the private sector will recover the investment it has made in the asset. There is no set rule on how long this should be but experience indicates that around 25 years is often considered suitable, although that does vary by type of asset. The most extreme example is for ICT systems where the period would be much shorter.
2.6.1
Features of PFI Contracts
PFI projects should be structured to provide incentives for the private sector supplier to perform efficiently and effectively. There are four inter-related principles at the heart of this approach: a. Genuine risk transfer. Risks should be allocated between the public and private sectors to the party best able to manage them to ensure best value for money. Typically, PFI projects transfer to the private sector substantial risks relating to the design, building, financing and operation of an asset DBFO. Operational responsibilities transferred will include maintenance, renewals and replacements, and will frequently also include facilities and energy management. The greater the responsibility transferred, the easier it will be to place on the private sector operator some risk in relation to the level of occupancy or volume or usage of the asset. The degree to which such demand risk can be transferred in this way will vary, depending on the extent to which the public sector directly controls the flow of users and revenue (for example, the difference between schools at one extreme and roads at the other), and the extent to which the quality of the services provided can directly affect demand. b. Output specification. Contracts should specify the service outputs required by the public sector client from the private sector rather than the configuration of the capital asset itself or how the service is to be delivered. For example, in the case of a facility open to the public, the level of service required in terms of capacity (peak and average numbers of users), hours of service, fitness for purpose, warmth and cleanliness. The emphasis is on defining the type of service and performance standards required. No unnecessary constraints should be placed on the private sector's discretion to deliver these outputs through innovation in the design and construction of the physical assets, or on the method of subsequent operation.
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c.
Whole life asset performance. PFI contracts commonly require the contractor to take responsibility and assume risk for the performance of the asset over a long term, at least for a significant part of its useful life, so that efficiencies arising from long term asset management can be realised.
d. Performance-related reward. Payments to the contractor under a PFI contract are characterised as a regular "unitary" fee for services (a periodic payment covering all fees payable under the contract). Payment will be subject to performance in relation to specific and quantified criteria in the contract. These will be derived from the specification of the standard of service required. Typically, payments are made for the availability of the asset to deliver the agreed outputs, and/or for the performance of the private sector in terms of outputs achieved, and/or for the volume of usage of the asset. As already indicated, the extent to which usage risk can be transferred will vary. But neither availability nor usage fees should be guaranteed. Availability fees in particular should be subject to performance standards which, if not met, should result in reduced fees, no payment when facilities are not available and, in extremis, termination of the contract.
2.6.2
PFI & Value for Money
There are three principle ways in which PFI projects can offer better value for money than the traditional option of buying the asset and being responsible for running and maintaining it: The private sector operator bears the major risks involved in the design, building, financing and operation of the asset. This makes both overruns and additional costs less likely and means that the local authority does not bear any costs involved There may be greater efficiencies in both the building and running costs (e.g. in relation to energy management) Thirdly, because the authority will pay on a performance-related basis for the use of the asset and for its continuing management, which provides incentives for the contractor to build the asset to a high standard and maintain it in a good condition
2.6.3
Capital Finance Arrangements
Local authority contracts of this type normally constitute credit arrangements under the Capital Finance System, because they give the authority the benefit of the use over a long period of capital assets and facilities that would otherwise need to be obtained through capital expenditure. The need to provide credit cover up front, for the complete cost of the asset from which the service is to be delivered, would be a major constraint on authorities entering into such contracts. Regulation 16 defines certain contracts, meeting specific criteria, as "Private Finance Transactions" (PFTs). For technical reasons all payments made under such contracts are defined as capital expenditure while the contracts themselves are still classified as credit arrangements. The main benefit of a contract being a PFT - apart from being eligible for additional revenue support from central government - is that if it also meets Regulation 40, the capital investment undertaken by the private sector will not score against public sector capital spending limits. Regulation 40 states that if the contract is structured such that the assets are recognised on the balance sheet of the operator and not the authority - as determined by the accounting test FRS5 - then no credit cover need be provided.
2.6.4
Continuity of Services
Arrangements need to take account of the statutory duty of local authorities to ensure continuity in the provision of key services. Contracts can be structured so that during the contract period the facility can revert (with or without compensation) to the authority in certain specified circumstances, should the
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contractor fail to perform as required, but this should not occur except in extreme circumstances. Contracts awarding concessions to the private sector to operate facilities may also provide for reversion at the end of the concession period - again with or without payment. This is especially important where the facility provides a core service or occupies a strategic site. The prospect of reversion needs to be considered in the context of how the risk of the residual value of the asset at the end of the contract is allocated between the public and private sectors.
2.7
Strategic Partnerships
The term partnership can encompass a wide range of collaborative arrangements. No single definition exists that fits the variety of arrangements that we are involved in. Additionally not all working groups are partnerships. There are many different forms of partnership but partnerships generally fall into one of two distinct types: procurement partnership or mutually supportive partnership. A procurement partnership has a much stronger client: contractor split to the partnership where the gains for each partner differ (money for the contractor; services for the client). A mutually supportive partnership, where two organisations come together in a mutually supportive manner, to work together to improve services. Contractual partnerships, such as those with KMPG, PricewaterhouseCoopers and Capita Business Services Ltd, will be managed through the Contract Register, with relationship management support. There are three types of non-contractual partnership: 1. Statutory partnerships are high level formal relationships established in response to government initiatives or legislation. Lambeth Council has statutory partnerships with the Metropolitan Police and Primary Care Trust. The Finance and Resources department does is piloting two statutory partnerships in the Benefits Service, with the Department of Works and Pensions and Her Majestys Revenues and Customs. 2. Voluntary Formal Partnerships are where partnerships are entered into voluntarily, but have a formal Service Level Agreement (SLA). These not only stipulate what each partner will deliver, but how the partnership will be managed. An example of this is LAMHAG in the Benefits Service. These partnerships can also have their own administration protocols. 3. Voluntary Informal Partnerships are where relationships are established at an operational level and are unsigned". They are mutually beneficial and therefore considered useful to maintain for differing periods. An example of this type of partnership may be with the local tenants and resident association groups for specific locally targeted initiatives. They require careful relationship management, as without a contract or written agreement, they carry a degree of risk. In December 2007, Finance and Resources Departmental Leadership Team (DLT) agreed the definition below for the purpose of this partnership framework: Where the partners: Are otherwise independent bodies and Agree to co-operate to achieve a common goal or
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Create a new organisational structure or process to achieve the goal separate from own organisations or Plan an implement a jointly agreed programme often with joint staff resources and Share relevant information or Might pool resources, risks and rewards And the partnership is not subject to the normal command and control management
Significant Partnerships
The level of importance attributed to a partnership will determine the level and formality required in its governance structure and subsequent operational framework. The significance and risk of any partnership is intrinsically linked. The following criteria for defining significant partnerships have been agreed by the risk management team in consultation with colleagues around the council who have a partnership remit: Partnership Criteria An agreed solution to the overall problem A long term perspective is taken on needs It involves sharing risks among partners It involves sharing cost and rewards Joint governance arrangements are in place Criteria Example Partnership has a clear vision, shared values and agreed service principles A long term agreement is in place (typically 3-5 years) Principal barriers to successful partnership working are known, understood and responsibility assigned Benefits and costs derived from the partnership are distributed among all partners and perhaps not limited to financial payment (e.g. time/resources) There are clear lines of accountability and responsibility for performance and communication. Governance arrangements should be proportionate to the risks involved. Both parties take active responsibility. Are there joint management arrangements in place? Both parties are encouraged to develop innovation and service improvements 500k p.a. revenue contribution from the council or capital project exceeding 1m A joint business continuity plan is developed and well communicated How far the partnership reaches has been agreed and boundaries recognised
Flexibility is built in to allow change and development Monetary value of the partnership may be significant Shared business continuity measures should be agreed The scope of the partnership has been agreed
Rationale for Partnership Working

Partnerships provide opportunities as well as challenges. Decisions to enter into or continue a partnership should be based on sound understanding of the risks and challenges, as well as the anticipated benefits. If a partnership does not deliver better more cost-effective services then it should not continue. This rationale is not intended to be prescriptive but to support good practice. It sets out a consistent approach to be adopted prior to entering into new partnerships.
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Underlying Reasons for Setting up Partnerships

There are numerous reasons for entering into partnerships. According to the Audit Commission these fall broadly into five main categories: To deliver co-ordinated packages of services to individuals To tackle the so called wicked issues such as crime prevention To reduce the impact of organisational fragmentation To bid for, or gain access to, new resources To meet a statutory requirement
In recent years, the government has become increasingly interested in the way that local authorities engage in partnerships. The main areas of interest are through the criteria for the Comprehensive Area Assessments (CAA), Local Area Agreements (LAA) and in Strong and Prosperous Communities, the Local Government White Paper. When considering a new partnership that falls outside the umbrella of the local strategic partnership (LSP) as good practice a business case should be prepared which clearly states the shared objective amongst partners and alignment to council priorities.
The Cost and Benefit of the Partnership Arrangement

We recognise that partnerships support efficiency, economy and effectiveness. As with other public sector authorities we face financial pressures to provide value for money services to our diverse communities. Identifying the numbers, scope and impact of partnerships arrangements, across the department will help us to build a framework of the partnerships that we are involved in, and crucially the cost and benefits. It will also assist to improve the coordination within and between different partnerships, in order to minimise duplication of effort and expenditure.
It is important not to use the term partnership if it is not genuinely applicable. To do so may cause unrealistic expectations and confusion which could lead to the breakdown of such working arrangements. For example partnering is a term used currently to describe longer term contractual working, which is not strictly a partnership
The Risks and Their Impact on the Council and Customers

When entering into partnerships, potential risks to the council and customers must be considered. The Councils Risk Management Guideline should be used to identify the level of risk and control measures.
How Partnership Arrangements will be Managed

Without clear protocols and agreement there is reduced accountability between partners and to service users; and increased risk. It is important to be clear on the definition of a partnership, as well as to be aware of the other types of joint working arrangements, to ensure you have selected the right form for your initiative. We aim to implement good practice into all our partnerships. The Partnership Toolkit has been produced to help us form meaningful partnerships with measurable results, evaluated in terms of governance, performance, alignment to council priorities and value for money.
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Partnership Framework
The Council is committed to developing its engagement in partnership working to achieve its objectives, respond to changes in how we interact with public, private and third sector organisations and improve service delivery. Best practice recommendations from the Audit Commission have been used to produce this Framework and supporting toolkit. See the chart and the table below:
POSITIVE OUTCOME
PRIORITIES
Priority National/Local priorities
Key Characteristic
Good Practice
Sets strategic context/agenda Used to set objectives against which partnership performance can be measured and evidenced Clarifies accountabilities Establishes performance management systems to measure progress towards the partnerships and councils objectives Periodic review of need/performance of partnership Clear exit strategy Risk assessment conducted Partnership risks clearly identified, registered and managed Legal contract High level formal relationship established in response to government initiative or legislation Signed agreement or similar in place No signed agreement
Management/Governance Structure
Risk management
Needs careful monitoring
Contractual Partnership Statutory Partnership Voluntary Formal Partnership Voluntary Informal Partnership Positive outcome
Demonstrates partnership success and effectiveness
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The Partnership Register Template

The Local Strategic Partnerships (LSP) are expected to bring more coherence to local partnership arrangements. The 2000 Local Government Act sets out the coordinating role for the LSP in its key role as a modern area-based partnership and increasingly the umbrella under which other partnerships operate. Lambeth First is Lambeths LSP. However this is not the total picture as some operational partnerships still exist outside the LSP umbrella. We therefore need to be able to map partnerships that fall outside the LSP umbrella. It is proposed that a Partnership Register template be completed for new non-contractual partnerships so that information relating to departments partnerships is held in one place and the Partnerships team can offer support and guidance. See the draft template below: Partnership Name Key Objective/Purpose
Link to strategic priorities/objectives
Partnership sector Public Private Third Sector Other Please specify Partnership Risk High Medium Low
Y/N Y/N Y/N
Y/N Y/N Y/N
Type Statutory Voluntary Formal Voluntary Informal Other (Please specify) Partnership Importance Major Significant Minor
Y/N Y/N Y/N
Y/N Y/N Y/N
Financial Implication Projected spend Annual budget Annual contributions (e.g. staff, accommodation etc) Note: Key Contacts
Completed by Extension Date Once completed please email to DGreenaway@lambeth.gov.uk
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Planning a Partnership
The main things to consider are set out in the table below:
What are the proposed partnership objectives? (be realistic about what you can achieve) Who will be involved in the partnership (external and internal) Who best? Why? Who will be the lead contact? Does the partnership require senior officer approval? Will the proposed partnership require funding? How will the costs and benefits be measured? Could the benefits be achieved in a simpler or more cost effective way? Is the partnership established, set up to meet specific national indicators, if so which one? Identify partnership risks and how they will be monitored Identify and agree performance measures and monitoring Who will be the lead officer? Consideration of equalities issues in everything the partnership does
Note:
You should be clear how and why you are entering into partnership, how it will add value to the council and how it will help to meet strategic and community service objectives. You must also take into action these other factors:
Equalities
All public authorities have legal duties relating to race, gender and disability. The obligations within each area focus on: Promoting equality of opportunity Promoting good relations Promoting positive attitudes Eliminating harassment, and Eliminating unlawful discrimination
These obligations are set out in the: Race equality duty Disability equality duty, and Gender equality duty
As good practice this duty is extended to three other equality strands age, sexual orientation, and faith as well as inequality issues such as financial and social exclusion.
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Although a partnership is not itself bound by the equality duties it is affected by them if it provides relevant goods or services for the authority, either through a contract or a service-level agreement. It is important to embed good equality practices within partnership working that promotes equalities and keeps it at the heart of our engagement with our stakeholders and residents. The equality duties are similar in spirit as they all place the onus on public authorities to actively tackle discrimination and promote equality. However, the duties do have slightly different requirements, which will need to be met in order to satisfy legal obligations. Further details are available on Lambeths Corporate Equality Unit intranet pages.
Financial
The partnership must ensure that it allocates resources in the most efficient and cost-effective way and provides value-for-money. It should have a clear picture both of the costs involved not only direct costs but also opportunity costs such as officer time taken to attend meetings and carry out work in between meetings. A key governance issue in financial management is the establishment of adequate systems for financial control and monitoring within and between partnerships. Some things to consider: Is all full cost of the partnership calculated? Are there any annual estimated costs to the department? Are there clear financial monitoring arrangements Are there clear reporting arrangements Auditing arrangements Have insurance arrangements been clarified
Risk Management
When a partnership is set up and operational, there must be risk assessment in place to assess, review, and mitigate risks identified on a regular basis. All stages of the partnership risks should be openly understood and evaluated, with clear plans in place to mitigate these risks. It is important that the partnership is aware of factors that impact on its ability to achieve its objectives. Risk can arise in two ways: 1. Direct threats which could lead to failure to achieve objectives 2. Failure to capture opportunities which if exploited could offer an improved way of achieving objectives
Things to Consider
Look at risks of and to the partnership Establish clear arrangements for risk sharing Carry out risk assessment to identify impact on the department/council and partnership Identify Manage risks to ensure partnership periodically review risk to facilitate timely response Identify how you will respond to risks through prevention, detection and action and recovery planning Maintain risk register for the partnership/department Promote risk management across the partnership
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Note that all existing partnerships should have some form of risk assessment in place and risks monitored regularly. If not one should be done using the risk ranking matrix. For new partnerships, risk assessment must be completed at the development stage. For further guidance please refer to the Councils Risk Management Toolkit Section 5.
2.8
Outsourcing General Considerations
The guidance on outsourcing in this Guide is applicable mainly to outsourcing of complex contracts and is intended primarily for senior officers. However, reading through these sections should help to give you a deeper insight into the major aspects of procurement. You must consult with CPT whenever you are contemplating an outsourcing exercise.
2.9 2.9.1
TUPE & Guidance to Officers on Workforce Code Issues Overview
The Transfer of Undertakings (Protection of Employment) Regulations 2006 (SI 2006/246)1 (referred to below as TUPE 2006) is the main piece of legislation governing the transfer of an undertaking, or part of one, to another. The regulations are designed to protect the rights of employees in a transfer situation enabling them to enjoy the same terms and conditions, with continuity of employment, as formerly. TUPE 2006 entirely replaces the Transfer of Undertakings (Protection of Employment) Regulations 1981 (SI 1981/1794) which have often been referred to as the TUPE regulations. TUPE regulations were introduced to comply with relevant EC Directives concerning transfers of undertakings. The main Directives are: The Acquired Rights Directive (77/187/EC) The Acquired Rights Directive (98/50/EC) The Acquired Rights Amendment Directive (2001/23/EC)
In incorporating the original Acquired Rights Directive into the law of member states, a number of anomalies arose and there have been various amendments to the UK regulations and a great deal of case law. The most recent overhaul has been subject to an extremely prolonged consultation some changes affecting pensions came into effect on 6 April 2005 and the core changes of TUPE 2006 came into force on 6 April 2006. The regulations now ensure: More comprehensive application of the regulations to service provision situations where services are outsourced, 'insourced' or assigned to a new contractor to achieve greater certainty that TUPE applies to labour-intensive services such as office cleaning, catering, security, and refuse collection The transferee is aware of the employees rights, obligations and liabilities upon transfer clarification of the circumstances when the ETO defence (see below) can be applied to change the terms and conditions of employment and in which employers can lawfully make transfer-related dismissals That transfers of insolvent businesses are more viable by introducing greater flexibility to attract potential buyers The transferor and transferee jointly and severally liable for any failure to inform and consult with the transferring employees
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The territorial application of TUPE is extended so that overseas employees may also be caught by the transfer
The further statutes and regulations which have an effect on TUPE are: The Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 1995 (SI 1995/2587) The Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 1999 (SI 1999/1925) Pensions Act 2004, especially sections 257 and 258 The Transfer of Employment (Pensions Protection) Regulations 2005 (SI 2005/649)
The Department of Trade and Industry (now BERR) published revised guidance in 20072 for employers, employees and their representatives on TUPE 2006.
2.9.2
What Is A Relevant Transfer of an Undertaking?
TUPE will apply to what are known as relevant transfers which may occur in a wide range of situations. The two broad categories are business transfers and service provisions changes. Some transfers will be both a business transfer and a service provision change.
Business Transfers
The question here is whether there is a transfer of an economic entity that retains its identity. This can be broken into two parts: Is there a stable economic entity that is capable of being transferred? Will the economic entity retain its identity after the transfer in question?
To decide if there is a stable economic entity that is capable of being transferred, the factors to consider include: Is the type of business being conducted by the transferee (incoming business) the same as the transferor's (outgoing business)? Has there been a transfer of tangible assets such as building and moveable property (although this is not essential)? What is the value of the intangible assets at the time of the transfer? Have the majority of employees been taken over by the new employer? Have the customers been transferred? What is the degree of similarity of the activities carried on before and after?
If the answer to all (or in some cases several of) the above questions is 'yes', it is safe to assume that there has been a transfer of a stable economic entity. The absence of a profit-motive is not a determinative factor.
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Service Provision Changes

A 'service provision change' occurs when a client who engages a contractor to do work on its behalf is either: Reassigning such a contract (whether by contracting out, outsourcing or re-tendering), or Bringing the work in-house (where a contract ends with the service being performed in-house by the client themselves)
It will not be a service provision change if: The contract is wholly or mainly for the supply of goods for the clients use, or The activities are carried out in connection with a single specific event or a task of short-term duration
2.9.3
In What Situations Does TUPE Apply?
By way of broad guidance TUPE has been found to apply to: Mergers Sales of a businesses by sale of assets A change of licensee or franchisee The gift of a business through the execution of a will Contracting out of services Changing contractors Where all or part of a sole trader's business or partnership is sold or otherwise transferred
However, TUPE does not apply to: Transfers by share take-over Transfers of assets only (for example, the sale of equipment alone would not be covered, but the sale of a going concern including equipment would be covered Transfers of a contract to provide goods or services where this does not involve the transfer of a business or part of a business The supply of goods for the client's use, for example, supplying food to a client to sell in its staff canteen, rather than a situation where the contractor runs the canteen for the client Transfers of undertakings situated outside the United Kingdom (although these may be covered by the regulations of other member states)
The law on relevant transfers in the case of contracting out and changes of contractors for labour intensive activities, such as security, catering, refuse collection and cleaning, has given rise to confusion in the past. Many of these difficulties have been resolved by TUPE 2006. However, it appears that TUPE 2006 will apply if an organisation such as an advertising agency or a law firm takes over a client from another firm following a tender process. The new firm may be under an obligation to also take on the staff who were working on the client account for the previous firm. Case law on this issue is expected in 2008.
2.9.4
Impact of a Breach of the TUPE Regulations
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If a TUPE transfer applies, all terms and conditions of work and continuity of employment should be preserved. This principle applies to all employees who were employed in the entity transferred immediately before the transfer; and those who would have been so employed if they had not been unfairly dismissed for a reason connected with the transfer. Subject to a one year qualifying period, such a dismissal will be automatically unfair for a reason connected with the transfer unless it is for an 'economic, technical or organisational' (ETO) reason (see below). The table below sets out three different categories of dismissal and whether they are fair or unfair. Type of Dismissal Fair or Unfair
Dismissals for which the sole or principal reason is Automatically unfair under the unfair dismissal the transfer itself or a reason connected with the legislation. transfer that is not for an ETO reason. Dismissals for which the sole or principal reason is Potentially fair subject to the normal test of not the transfer itself, but is a reason connected reasonableness under the unfair dismissal legislation. with the transfer that is for an ETO reason. Dismissals for which the sole or principal reason is These fall outside TUPE as they are unrelated to a entirely unconnected with the transfer. relevant transfer; the usual unfair dismissal principles will apply. This is the case even though the dismissals may be made around the time of such a transfer.
2.9.5
TUPE Information
From 6 April 2006, transferors became obliged to give the transferee written information about the employees who are to transfer and all the associated rights and obligations towards them. This information includes, for example, the identity and age of the employees who will transfer, information contained in the employees written particulars of employment under section 1 of the Employment Rights Act 1996 and details of any claims that the transferor reasonably believes might be brought. If the transferor does not provide this information, the transferee may apply to an employment tribunal for such amount as it considers just and equitable. Compensation starts at a minimum of 500 for each employee in respect of whom the information was not provided or was defective.
2.9.6
Consultation & Notification
The transferor has a responsibility to conduct a full and meaningful consultation with employees at the earliest practicable time. Failure to conduct consultation results in liability for the payment of compensation which may be up to 13 weeks' pay. The transferor and transferee are both liable for any award of compensation made by an employment tribunal for failure to inform and consult.
2.9.7
Liability Passing On to the Incoming Contractor
The transferee takes over the liability for all statutory rights, claims and liabilities arising from the contract of employment, for example, liabilities in tort, unfair dismissal and discrimination claims. The exception to this rule applies to criminal liabilities.
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2.9.8
Pensions
Strictly speaking, obligations relating to provisions about benefits for old age, invalidity or survivors in employees' occupational pension schemes do not transfer under TUPE. However, the provisions of the Pensions Act 2004 sections 257 and 258 do apply to transfers taking place after 6 April 2005. In effect, this means that provisions equivalent to the TUPE regulations apply to pension rights from that date. In essence, if the previous employer provided a pension scheme then the new employer has to provide some form of pension arrangement for employees who were eligible for, or members of the old employer's scheme. It will not have to be the same as the arrangement provided by the previous employer but will have to be of a certain minimum standard specified under the Pensions Act.
2.9.9
Is There Any Way to Prevent the TUPE Regulations Applying?
The economic, technical or organisational (ETO) reason relating to the entity which is being transferred is one of the few legitimate factors for the basis of a refusal to take on the transferor's workforce by the prospective transferee. The reason has to be the main cause of the dismissal, thus making the dismissal justifiable provided an employment tribunal decides that the employer acted reasonably in all circumstances. If it can be shown that the economic reasons were a 'sham' and that the workforce were not taken on in order to avoid the application of the TUPE regulations, then the transferee could be liable for potential claims. Employees with less than one year's service cannot usually present claims under TUPE as employment protection rights have not been accrued.
2.9.10
Practical Suggestions
TUPE is a complex area so it is essential to seek legal advice for individual circumstances. Where a business, or part of one, is being transferred, both parties (i.e. the transferor and the transferee) should seek such advice at the earliest possible stage. It may be possible for a legal representative to negotiate an indemnity which will provide a partial, or total, cushion against the financial impact of any claims resulting from the application of TUPE. A useful resource of information is the Department for Business, Enterprise and Regulatory Reform (BERR) website: http://www.berr.gov.uk/employment/trade-unionrights/tupe/page16289.html.
2.9.11
References
The Transfer of Undertakings (Protection of Employment) Regulations 2006. (2006) SI 2006/246. London: HMSO. Available at http://www.opsi.gov.uk/si/si200602.htm
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TUPE Charts
On this and on the following pages are three charts for the most common types of TUPE transfer situations external supplier to external supplier, outsourcing and insourcing. These are basic charts and officers are still advised to take legal advice but they depict a fairly standard diagram of how the process works in each of these situations.
TUPE Transfer Process Chart Service Provision Change Staff Transfers: From One External Supplier to Another External Supplier Approval is given by Procurement Board to tender for services
Contact the Lambeth Legal Team and seek advice about the possibility that TUPE will apply
Proceed On Basis TUPE Is Not Likely To Apply
Continue with the tendering process as per Lambeth procurement rules
Proceed On Basis TUPE Is Likely To Apply
Note: where we are dealing with the provision of employee information we need to flag up issues of confidentiality regarding information provided. Information should either be anonymised or provided on the basis that it is to be used only for the purposes of TUPE Contact Unison and GMB unions informing them that TUPE will apply to your tender and seek advice about union representation and consultation. The Unison branch secretaries are Jon Rogers on 020 7926 5743 and Nick Venedi on 020 7737 2134 Contact the current supplier and notify them that TUPE will apply in the upcoming tender. Send them the necessary letters requesting staff wage and pension information for your tender pack, using the forms in the TUPE Toolkit or as provided by the Legal Team
Contact Lambeth Human Resources informing them that TUPE will apply to your tender and seek advice about union representation
When the wage and pension information is returned from the current supplier, include this information in your tender pack, informing all tenderers that TUPE will apply to the contract to be awarded. Also send this information to the unions (above) requesting their advice on staff consultation
Send out tender packs to all suppliers. Confidentially answer all TUPE queries that suppliers may have
Contract award. Complete contract signoff as per the procurement process. Notify the successful supplier after all standstill periods
Send the new supplier details to Lambeth Human Resources and the unions (as above) and remind all parties (supplier, Human Resources and unions) that transferring staff must be informed and consulted as soon as possible after a decision has been taken to transfer
Once the consultation process has concluded, contact the supplier, Human Resources and unions to enquire about progress. Update any required information
Manage The Contract
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2.10 2.10.1
Risk Management Principles of Risk Management
Risk is the threat of an event that may prevent achievement of an objective. Risk management is the process of identifying, evaluating and controlling risks. Thus risk management is highly relevant to Lambeths business planning process. Lambeths template for the risk management element of business planning offers an effective means of tackling the mechanics of the approach. However, risk management is not a mechanistic exercise and a considerable amount of experience and judgement is needed to get it right. In particular, the identification of risks relies heavily on experience experience within Lambeth and relevant experience elsewhere. Another challenge is to take a balanced view of risk i.e. not too wide and not too narrow. Taking the risk management approach too widely can lead to wasted time and resources. An approach that is too narrow would, on the other hand, fail to deliver the potential benefits. The modern trend in both the public and private sector is to approach risk management with increased formality linking it to many business processes. This formality can bring several benefits, e.g.: Increased focus on how best to meet objectives Greater satisfaction of end users of the service (and fewer complaints) More effective change management Innovation and quality improvement Enhanced justification of decision making Supporting the best value approach
Some of the factors that make risk management more important than ever within Lambeth include: The greater pace of change arising from central government initiatives and corporate pressures Increased public expectations and public scrutiny The modernising agenda and increased devolution within local authorities Best value approaches that demand more innovative procurement and use of partnering principles Specific pressures to increase the use of e-government Challenges presented by Lambeths recent CPA assessment
The types of risk that might arise include: Political risks particularly failure to deliver against the administrations public objectives and targets Economic risks usually budgetary but sometimes related to insurance, investment or asset management Social risks often linked to changes in demographic, residential or socio-economic trends Technological risks technological change or ability to utilise new technology effectively Legislative risks coping with changes in national or European law or interpretations of existing law (e.g. TUPE) Environmental risks environmental consequences of pursuing objectives (e.g. recycling) or delivering services (e.g. pollution or energy efficiency) Competitive risks the competitiveness of services and ability to deliver best value Customer risks meeting current and changing expectations Professional risks risks inherent within particular professions
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Financial risks financial planning and control (differentiated from economic risks as they relate specifically to operational activity) Legal risks possible breaches of legislation through operational activities Physical risks health and safety matters Contractual risks contractor failure or unplanned contract weaknesses Technical risks failures or unsuitability of machinery, computers or similar technology required to deliver services
The 10 practical steps towards effective risk management include: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Identify objectives and key changes Identify critical success factors Identify risks Determine which risks are significant Agree control strategies and risk management policy Agree accountability Consult and raise awareness Implement through changing behaviours, a focus on fundamentals and internal control Ensure early warning mechanisms Monitor, report and review regularly
All these steps offer challenges, particularly in a relatively complex local government environment where operational pressures often result in a fire-fighting approach. It is worth emphasising that weak control and accountability would undermine even the most excellent approach to other aspects. This section does not cover the mechanics of risk management, as this is covered by Lambeths business planning and project planning guidance. The core method is to identify risks, assess their impact and probability and identify mitigating actions. A useful source of additional guidance is British Standard BS6079 1996, A Guide to Project Management. This contains specific sections on risk management. The Office of Government Commerce also provides guidance on risk management linked to procurement - see http://www.ogc.gov.uk and look for Managing Risk.
2.10.2
Risk Management & Procurement
Any procurement decision has risks and these risks have to be identified and evaluated so that they can be effectively managed. Risks ought to be allocated to whoever can manage them best and, in general it is inadvisable to place all risks onto one party. A risk management plan should be applied to every stage in the procurement process. This Guide explains the requirements of each stage and you should use these to identify risks and adopt approaches to reduce or eliminate them. For example, wide consultation at the preparatory stage would reduce the risk of specifying incorrectly. A thorough knowledge of the many issues to take into account at each stage would also reduce the risk of failing to follow Council requirements (e.g. audit trails or policies). This Guide is your prime tool for identifying areas of risk but you must use your own skills and experience to ensure that you minimise the risks while delivering value for money for the Council. When you consider risks related to a procurement exercise you must also consider risks related to the services themselves. You may already have done so as part of service improvement planning. It is always
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worth carrying out both a SWOT (strengths, weaknesses, opportunities and threats) and a PEST (political, economic, social and technological) analysis of the service as part of your approach to managing procurement risks. Service procurement is usually complex and there is plenty of scope for disaster. Heavy reliance is placed on the use of business questionnaires, but the methodology for checking these questionnaires can be poorly developed. Moreover, some questionnaires used by authorities are excessively onerous and serve to deter competition. More effective authorities have used a combination of well-designed questionnaires, careful checking of these questionnaires and proactive checking of references (often including site visits). Some of the risks arise from a contractors financial stability, technical ability or continuity of resource provision (staff, systems, vehicles, etc.). Some arise from changes in customer (or end user) needs, changes in legislation, changes in the market, technological advancement or demographic trends. Others arise from changes on the client side, e.g. internal restructuring, resignations of key officers, failures in systems support or simply through unsuccessful personal relationships. Yet others arise from the activities of third parties, e.g. other Departments, utilities, NHS and central government departments. With certain services, e.g. Housing Benefit administration, there is usually no practicable means of providing a back-up contractor or a rapid termination of a contract. This can represent a massive risk, as exit strategies are prolonged and problematic. Contracts linked to PFI (see Section 2.7) carry unique risks, linked to the potential for conflicting requirements of investors and client (particularly in the best value context). Risks also vary according to the nature of what is being procured. Examples are the continuous provision of a service (e.g. refuse collection), the undertaking of a task or project (e.g. the design and/or construction of a building), a market research survey, the provision of goods (e.g. cleaning materials or library books), or the provision of people (e.g. agency staff). Thus, different procurement approaches can carry different risks. Through long experience it is possible to predict most of the risks that arise from traditional adversarial or CCT type arrangements. It is more difficult to predict the risks associated with more modern or innovative approaches. For example the Latham and Egan recommendations for the building industry were based largely on learning from successful partnerships practised by some of the UKs leading firms. However, these examples were often private sector organisations seeking to reproduce similar buildings in many locations and the partnerships had often evolved over about 50 years of traditional relationships (i.e. a very gradual build up of trust). It does not necessarily follow that a local authority can easily form a similar partnership through a short-term process (whether competitive or not). In some cases a tenderer may be new to the market and may not be able to produce three years of financial accounts. This, in itself, should not preclude that tenderer from consideration. Under Best Value it is quite possible that new markets will emerge and the authority may well obtain best value from a new organisation. In such cases you must obtain guidance from finance staff and make use of a financial risk management process: Presentation by the tenderer of a costed business plan Bank references References from customers (track record) Evidence of current operations Evidence of resources Limitation on the volume of work you allow
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With large-scale procurement activity it is advisable to set up a project management approach. CPT can assist in this process and, in most cases, should be represented within the project management team. The Councils Project Initiation Document (PID) should also be used for major procurement activity. The risk management activity of the team would involve identifying risks, assessing their potential impact and forming strategies to remove or minimise these risks (see Section 2.11). The methodology will depend on the nature of the procurement but there are close links with contract strategy, developing specifications and evaluation of bids. In many cases the assessment of risk requires a wide knowledge of the Councils current patterns of provision as well as its overall procurement strategies. The growth of relatively long-term service contracts coupled with PFI calls for more sophisticated procurement procedures. Without doubt the simple tenders, with selection based on straight price comparison will prove inadequate. Thus various risks are introduced and these must be managed. Key issues to be covered include: As more elements of the service fall within the scope of the competition, it becomes more important to produce output specifications and allow innovations in methods. This makes comparing tenders less straightforward, since tenderers may legitimately offer radically divergent approaches. The financial evaluation will become more elaborate; As more organisations are needed to deliver a contract, and thus to compile a tender, more time needs to be allowed for tendering. Whenever the working relationship between consortium members seems crucial, it will be legitimate to explore precedents and look for successful experience in similar relationships. Involvement of others e.g. central government departments will further extend the timescale; As tender proposals become more complex, more time will be needed for clarification and for negotiation. In fact an additional negotiating stage will be required
In effect, the procurement of a PFI contract becomes a significant project in its own right, and many Councils retain management consultants to Guide them through the process, not to mention legal, financial and technical specialist advisers, each focussing on specific aspects of evaluation. Consultants can also play a special role in acting as go-between to the various parties. They can also help to ensure that the momentum of the process is maintained, that good bidders do not walk away from the competition, and that the client avoids the risk of a challenge to his handling of the selection.
The Financial Risk Management Process

Like most activities, there are risks associated with procurement, and these need to be managed (see Section 2.11). Examples of the risks involved include: Supplier/contractor unable to perform the contract Supplies not meeting the needs of the Council due to poor specification Budget overspends resulting from inadequate financial evaluation of tenders Challenge in the courts arising from failure to comply with regulations
The mandatory requirements (must) and best practice advice (should) contained in the Procurement Guide will enable officers to identify and evaluate the risks involved in procurement, and enable them to take appropriate action. There are aspects of risk assessment, however, that require specialist skills and that
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need to be managed in a corporately consistent manner. There are two specific financial risk management processes: Financial evaluation of tenderers and applicants for inclusion in a shortlist Financial evaluation of tenders
The first of these covers the drawing up of a shortlist for a particular contract in cases where the use of corporate contracts, consortia arrangements or the Councils approved supplier database is not applicable or not sufficient to ensure competition. It would also be used where EU rules apply. Finance staff should be used to assist with these processes, both of which are described below.
Tenderers & Applicants for Inclusion on a Shortlist

The Guide requires that all orders / contracts must be placed through a corporate contract, consortia arrangement or approved supplier database if one exists for the service in question. The Guide also requires that, for a major contract (over 100,000), advertisement should be considered to ensure competition and to reflect any changes in the market place. The financial evaluation process for firms applying for inclusion or retention on any shortlist that is drawn up for a particular contract aims to provide reassurance that all tenderers and shortlist applicants have the financial resources necessary to perform during the term of the contract. All shortlist applicants and any other persons submitting tenders for contracts must demonstrate their financial standing to the satisfaction of finance staff. All advertisements for inclusion on the shortlist, and for expressions of interest in contracts, should state that applicants would be required to complete a business questionnaire to demonstrate their suitability for the contract in question. The business questionnaires must then set out the ways in which organisations can demonstrate their financial standing. For most organisations, this will be through the submission of their latest two or three years of audited accounts. Financial staff will carry out an appraisal of their financial standing, using a number of standard accounting tests and ratios. Where audited accounts are available this method of appraisal should be used. However, there will be occasions where the applicant or tenderer is a new organisation, and may not have audited accounts to submit. This, in itself, should not prevent them being considered. This could be important in the context of the Councils support for local businesses (see Section 1.3.6). Moreover, under best value new markets continue to emerge, and innovative ways of delivering services continue to be developed. In such cases all of the following evidence must be provided, in addition to that already required by the business questionnaire, to enable financial standing to be assessed: A costed business plan (any new organisation must have a business plan to demonstrate its viability) Details of current contracts to provide evidence of trading Details of resources including income from contracts, bank loans, assets and capital investment
The information must include all relevant details e.g. type of work, service or supply and estimated contract value. CPT can advise you of any other information required, e.g. parent company accounts. Finance staff will then advise of the results of the appraisal. This will cover the following: Whether the applicant should be included on the shortlist
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What limitation should be placed on the value of work that can be given to the applicant / tenderer Whether any other conditions need to be met before a tenderer can be awarded any work e.g. provision of a performance bond or a parent company guarantee (if applicable) When the applicant/tenderer should next be appraised this may be particularly relevant to new organisations or to those where there is reason to believe that their financial standing may be deteriorating
Financial Evaluation of Tenders

The aim of this process is to ensure that all relevant issues are addressed in assessing the financial implications of tenders. Applying the process equally to all tenders for a particular contract will ensure parity of treatment. It will not be possible for finance staff to be involved in the detailed evaluation for all contracts. However, procurement officers must advise finance staff (through the relevant service accountant) when tenders require financial evaluation. The Head of Finance (or equivalent) will decide whether there is a need for involvement in the detailed evaluation process, e.g. through membership of the selection team, or whether it can be undertaken within the service department. In the latter case, the procurement officer must provide a brief report showing how the process was undertaken once it has been completed. The process will establish the cost to the Council over the term of the contract. Some of the key issues are noted below: What are the cash flow implications (to determine the cost of the contract at present day prices)? This can be particularly useful when assessing any discounts offered at various stages of the contract Are the services or goods required relatively constant in volume over the life of the contract, or are they likely to change? Is there any risk of the contract being classed as a credit arrangement e.g. a lease? Does the contract involve the use of Council assets?
If the answers to any of the last three questions above are yes, this indicates a more complex evaluation, in which finance staff are more likely to be involved.
2.10.3
Risk & Insurance FAQs
This section has been designed to help answer some of the most common queries that arise in relation to the use of contractors, or when drawing up contracts and the relevant insurance requirements. 1. What insurance policies should contractors have in place? All contractors should have Public Liability and Employers Liability insurance policies in place. Employers Liability is a compulsory class of insurance within the United Kingdom and any contractor with employees is required to have such a policy. Employers liability used to be unlimited in terms of cover, however it is not possible to obtain unlimited cover in todays insurance market and most insurers offer a minimum of 10 million for employers liability insurance. If the contract is for the construction of a building, or for building works to an existing Lambeth owned building, then either the contractor or the council will require buildings insurance and works in progress building insurance. Whether the contractor or the council insures the building will depend upon the wording of
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the contract clauses (these are usually standard JCT wordings). In some contracts Professional Negligence, also called Professional Indemnity cover may be required. Please see the paragraph on professional indemnity insurance for further information. 2. What is the limit of indemnity on the public liability policy and what is the minimum level that the contractor should have? The limit of indemnity is the maximum amount that the insurer will pay for any one event or series of events. Lambeth requires that all contractors hold a minimum level of indemnity of 5 million. This is the minimum level of indemnity required. Particular contracts may require a higher level depending upon the nature of the contract and risks involved. You should carry out a risk assessment and use benchmarking to establish what minimum levels may be required. 3. The contractor has a limit of indemnity of less than our requested minimum, what should I do? You should ask the contractor to increase the limit on their policy to at least 5 million. As this is part of the contract requirement, the contractor should comply. If the contractor states that they are unable to obtain an increase in their insurance you should ask them for a letter from their insurers or brokers confirming that they are unable to increase their limit of indemnity. You should then contact the Risk & Insurance section who can advise you further on the matter. 4. I am only using a contractor for a small job and the value of the contract is not high, does the contractor really need a limit of indemnity of 5 million? It is not the size of the job, or the value of the contract that is important, it is the risk of something happening during the performance of the contract to cause injury or damage to a third party. An example of this could be a contractor cleaning windows on a building. The value of the contract may be low, the contractor may be working alone, but the risk of something falling from a height and injuring or killing people below is real. Whilst high value compensation settlements are rare, they are not uncommon, and a level of 5 million can easily be reached when taking into account legal costs, loss of future earnings over a number of years etc. 5. Do I need to check the contractors insurance policy? You should ask for a copy of the policy or confirmation of cover letter from the contractors insurers or brokers. This should state the start and end date of the policy, the insurer and policy number and the level of indemnity. The Risk & Insurance section will carry out random checks on contractors insurance, which will involve slightly more detailed checks on the standing of the insurer for example. 6. The contractor refuses to increase the level of indemnity as it is too expensive, what should I do? As stated earlier, the insurance requirements should be a condition of the contract for which the contractor should factor in any relevant costs in the tender for the contract. If the contractor does not increase the indemnity level then they are not complying with the contract specification. If there are no alternative contractors, and you are unable to reach an agreement with the contractor to increase the limit of indemnity, then you will have to consider whether to allow the contract to proceed with a lower level of indemnity. In order to make this decision you will have to assess the risks involved, and may have to make changes to the way the contract is performed to minimise the risk of an incident. Should a contract be allowed to proceed with a lower indemnity limit, and an incident were to occur where that limit was not sufficient, the Council would be liable for any amounts awarded
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over the contractors limit. Further, the Councils insurers would require satisfactory evidence as to the reasons for allowing the contract to proceed at less than the Councils own minimum requirement, before cover they would indemnify. 7. What limit of indemnity does Lambeth itself hold for public and employers liability? Lambeth has a limit of indemnity of 50 million on its Public and Employers Liability insurance policies. 8. Professional Indemnity Insurance - What is Required? For some contracts it may be necessary for the contractor to hold professional indemnity insurance as well as public liability insurance. It should be noted that public liability insurance and professional indemnity insurance are not the same things. Professional indemnity insurance is usually required for contracts that involve giving professional advice or designing a scheme for example and is usually associated with the following types of professional specialists such as physicians, architects, engineers, lawyers, accountants. There is no minimum indemnity requirement for professional indemnity cover as each contract will have its own specific risks and requirements. You should seek advice from the Lambeth Legal Department when drawing up any contract specification as to the limits of indemnity required. For larger projects it may actually be necessary to appoint insurance/risk specialists to provide detailed advice on the particular project. Another way of establishing appropriate professional indemnity limits is to benchmark with other authorities and organisations that have run similar contracts to see what limits that they have used, and any particular issues that they have faced. Please note that it is not possible for the Risk & Insurance department to give detailed specific advice relating to professional indemnity on individual projects, as this requires specialist knowledge of the particular contract and industry. If you require such detailed advice you should appoint an external expert. The Risk & Insurance department can put you in touch with our insurance brokers who may be able to assist you (for a fee), providing that they are Knowledge is power. Ideally you not already involved in giving advice to one of the should have a thorough and up to other parties involved in the contract.
2.11
Negotiation
This section offers advice on negotiation skills in procurement and negotiation related to large complex service contracts including those under EU rules or PFI arrangements. Being able to negotiate effectively is an important skill in procurement, but it should only occur before the tendering process (as in benchmarking or stakeholder management exercises) or afterwards in contract management negotiating changes and improvements in service performance or changes in a contracts delivery. Procurement officers must not engage in post-tender negotiation, under any circumstances.
date understanding of the local and national market, information about a contractors organisation and financial position and an understanding of how the contractor is placed within the market. You should also have knowledge of relevant development in the market including technological advances or innovative practices. Talking to other local authorities or public bodies can be valuable. You should certainly talk to current or previous clients of the contractor, particularly where services offered have been similar
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2.11.1
Negotiation Skills In Procurement
Everyone has to negotiate as part of both their private and professional life. We often do this successfully, but effective negotiation remains a challenge and though its often a part of our jobs, training in negotiation is relatively rare. Negotiation linked to procurement activity can be very important and, when dealing with major contractors, you may find yourself up against skilled professional negotiators. Your role is to protect the interests of the authority and to avoid pitfalls that might reduce value for money. Local government is full of examples of poorly negotiated contracts that are both costly and do not deliver the desired quality or performance. This short section is aimed at simply raising some of the relevant issues. You must rely mainly on experience and advice from senior colleagues, although opportunities for specialist training may arise occasionally. It is usually only senior officers that find themselves in major negotiating situations, although all purchasing officers are likely to negotiate at some level from time to time. A key point is to focus on outcome. This is different to outputs and relates to the position that emerges once a contract is in place. Typically, a successful outcome might be defined by customer satisfaction and meeting budget and performance targets. We should also focus more on essential requirements than on desirable requirements. A bidder may want you to focus on its particular strengths, but this may not coincide with what the Council actually needs. Your specification is the key to differentiating between essential and desirable requirement. You should also understand that bidders are likely to focus on what they need rather than simply on what they want. It is helpful if you can understand their needs, which may not always relate entirely to profit. For example, bidders may want a contract as a reference point for expanding into a particular market. If profit is their main aim, you should understand how the contract may or may not allow them to increase profit (e.g. through unplanned variations). You should also remember that a healthy profit for a contractor does not necessarily translate into a poor deal for the Council. The main danger is through not anticipating how the contract may work out in practice and whether the Council might be exposed to unplanned or excessive costs. Negotiation is closely linked to risk management (see Section 2.11). If all the risks are to be taken by the contractor, this is likely to result in high prices. You should also consider the consequences of contractor failure and the costs and difficulties of replacing a contractor that cannot deliver the service or has gone bankrupt. As stated elsewhere in this Guide, risk should normally be placed where it can most effectively be controlled. This often means that the Council should accept some risks in the interests of obtaining the best deal for its customers. Negotiation frequently involves compromise. You should decide, in advance of the actual negotiation, what scope exists for compromise without jeopardising any of the Councils key requirements. This is often not about money, as a competitive process may determine the contract price. It is often about absorbing certain variations, offering value added features and agreeing to more ambitious performance targets. You should identify the areas for negotiation and define both an ideal and an acceptable outcome for each area the difference between the two being the agenda for negotiation.
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The psychology of negotiation is a whole subject on its own. However, a few common points are worth remembering: You should try to remain calm and follow your own agenda and tempo; in particular, you should not abandon your prepared position You should avoid projecting an uncertain position, e.g. by talking about a range of outcomes that is hoped for rather than proposing specifically what you wish to accept You should be prepared to act to some extent as any trained negotiator would do the same; for example, you could openly express concern in response to a suggestion that does not fully meet your needs (verbally or through body language) You should always listen carefully to what is said by the other party and indeed how it is said you need to understand exactly what they are suggesting and how this applies to your requirements It is important to check that the other party understands your position; you should be prepared to rephrase regularly, summarise regularly and take breaks where this might help you take stock of how things are progressing Closing the deal is a crucial stage; in general you are negotiating a package and any concessions by either party depend on the final deal; however difficult or emotional the negotiation has been you need to focus hard on the final stage particularly as additional concessions may be offered by the other party wishing to close the deal
2.11.2
Large, Complex Service Contracts
A major question is how to bring negotiation into the picture. For procurement under EU rules (see section 3) four standard procedures are offered: Open procedure - advertise and allow all applicants to tender Restricted procedure - advertise and screen applicants to produce a manageable short-list to invite to tender; then negotiate only with the preferred supplier Negotiated procedure - select two or three suitable suppliers and negotiate with them Competitive Dialogue for use in complex projects where the best technical, legal or financial solution is not known in advance.
The open procedure is normally unsuitable in view of the open-ended workload involved in properly evaluating an uncontrolled number of tenders. The restricted procedure gives less scope for negotiating with two or three suppliers, whilst the negotiated procedure assumes that the client already knows the best two or three contenders. It is important to remember that the virtues of advertising include that of providing the opportunity to bring in players previously unknown to the client. The negotiated procedure should only to be used after Competitive Dialogue has been considered. It is critically important to follow a procedure that will allow the client to keep options open till the very end, and avoid identifying a single preferred tender too early, without giving rise to unfair treatment of any bidder. It may therefore be essential to appoint advisers who will steer the client down this path and not insist upon following an unsuitably rigid approach. In the final stages of selection, the potential scope for negotiation can be very broad, assuming the tenders cover asset strategy and design, and capital funding, as well as service delivery issues. Pricing will have many elements, and the sensitivity of each element ought to be clarified. There is an overwhelming
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argument against going into negotiations solely with a tenderer who knows she/he has won. It is essential for the competition to be extended into the negotiating process. In order to bring the necessary skill to the table, a negotiating team has to be appointed at a very early stage and given appropriate training. At the end of the evaluation process, when it becomes apparent which the best tenders are, and how many tenderers are worth taking further, it will be necessary to clarify the agenda and objectives for the negotiation. It will also be advisable to explore what is known of each finalists attitudes and objectives. Essentially at this stage one needs to discuss any weak or expensive parts of each tender and persuade the tenderer to improve them. You will not be treating each tenderer equally in detail, since you will have a different agenda for each one. The critical requirement for even-handed negotiation is that each finalist has an equal opportunity to improve, by making clear the areas in which improvements are needed. The finalists are then invited to submit formal Best and Final Offers on the basis of which the final judgement will be made. The work required in this process ought to be kept to a minimum, and finalists allowed a realistic amount of time to complete it. The offer will become contractually binding. A few additional points about negotiation are set out below: Whilst every negotiation will be an individual event, with its own detailed issues to explore and settle, in fact all final contract negotiations have similar features, and it is important to develop a corporate strategy and expertise in handling them; The negotiation and its outcome will be key factors in setting the tone for the working relationship with the successful tenderer; it is important to avoid forcing any win that will cause resentment or risk of financial loss to the contractor; it is equally important to retain the goodwill of the loser, who may be welcomed as a tenderer for another contract; Planning for the negotiation needs to include an exploration of the implications of not reaching a deal, i.e. the best available alternative to a new contract, and to review the budget limitations - this is particularly important when all the present bids appear to be unaffordable; this process will clarify how essential it really is to get an agreement, and what the financial limits are
To sum up, buying a large and complex service contract, especially a PFI deal, is a substantial project which carries risks and often calls for expert professional guidance. Familiar procedures need to be extended to include a final round of negotiation with at least two tenderers. The Councils negotiating team needs specific training, and some concentrated planning before the event. The negotiating process ought to be conducted in such a way as to strengthen the relationship with the selected contractor.
2.12
Council Charging & Trading Powers
The Council is a body created by statute and cannot do things unless they are expressly permitted by statute. As the Council has no general powers to trade it must rely on specific powers provided by parliament.
Section 101 of the Local Government Act 1972 allows a principal authority to ask any other authority to discharge a function on their behalf. What this means in practice is that if Lambeth intends to use a service provided by another local authority, the tendering process does not need to be carried out. However, a service level agreement should be negotiated between both parties, and depending on the value of the purchase, the appropriate Procurement Board notified. Officers should consult their lead procurement officer in their department for more information
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The major power provided is the General power for local authorities to trade in function related activities through a company: Guidance on the Power in the Local Government Act 2003 http://www.communities.gov.uk/publications/localgovernment/addendum . This Act permits local authorities to supply goods and materials, administrative professional or technical services, the use of vehicles and equipment and operators and certain maintenance work as specified in a number of regulations. The provision of goods and services should be related to the functions of a public nature.
2.13
Freedom of Information & Procurement
The Freedom of Information (FOI) Act 2000 came fully into force in January 2005. The FOI Act means that any member of the public, worldwide, will have the statutory right to see any document or record (subject to certain exemptions) held or produced by the Council, including those documents held on behalf of other organizations. The Act is retrospective in that it applies to all records - it is not limited to those created since the passing of the Act. Information must be produced within 20 working days and the Act does not need to be mentioned when information is requested.
2.13.1
Public Authorities & Contractors
The Act applies to public authorities, but the right of access to information given under the FOI Act applies to information, which is held but not necessarily owned by the public authority. This might include information held on behalf of bodies such as highway maintenance contractors, housing management companies, leisure trusts or PFI providers. If a public authority holds information about a contractor it will be accessible, subject to the exemptions discussed below.
2.13.2
Contract Clauses Relating to FOI
The Councils legal team has devised contract clauses relating to FOI which must be included in all contracts issued by the authority post January 2005. These clauses are available from the legal and procurement teams.
Confidentiality Clauses
The Code of Practice on Discharge of Public Authority Functions under Part I of the Act is available on the Department for Constitutional Affairs website (www.dca.gov.uk/foi). The main points in terms of confidentiality clauses in contracts are as follows: Obligations under FOI cannot be contracted out Confidentiality clauses as proposed by contractors should be rejected wherever possible. If they are agreed upon, a schedule of what information is confidential should be included and this should be time bound Authorities should not agree to hold information in confidence, when it is not in fact confidential in nature. This should only occur if it is necessary to obtain the information to exercise any of the authoritys functions and it would not otherwise be provided Any acceptance of confidentiality clauses must be for good reasons and be justifiable to the information commissioner Authorities should not impose terms of secrecy on their own information held by contractors
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2.13.3
Data Protection
This section contains a data protection checklist for all new system developments and or procurements. Officers must go through each of the questions below prior to the development (or procurement) of a new system. Each of the questions requires a yes or no answer. Underneath each of the possible responses to the questions is further guidance to assist in highlighting potential data protection compliance issues.
Preliminary question 1. Is the system going to be holding information relating to individuals?

Yes If your answer is Yes the Data Protection Act applies to how that information is held and you should answer each of the questions below. No If your answer is No then the Data Protection Acts requirements will not apply to the new system and you need not answer the questions below.
Access controls and security 2. Does the system have access controls to prevent unauthorised persons accessing the information contained within it? (e.g. password protected)
Yes Go to next question. No If the system contains personal information it must have access controls to ensure that only those staff that need to access the information can do so. Staff must not all use the same user name and password to access the system.
3. Can the access controls be tailored to allow staff different levels of access so that they only see that personal information from the system which is necessary for them to do their job?
Yes Access levels for different staff must be set up when the system is being developed. Go to next question No Personal data should be accessed on a need to know basis therefore different levels of access must be put in place for the system to be Data Protection Act compliant.
4. Are users forced to change their password to access the system regularly? (e.g. every three months they receive a prompt that requires them to change their password).
Yes Go to next question. No In order to enhance the security of the information contained within the system, users should be required to change their password regularly.
5. Is access to the information contained within the system auditable?

Yes
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You must ensure that regular audits are carried (relating to access and data quality). The system must be able to show audit records of who has had access to information, as well as audit records showing when information was inserted/changed and by whom. Go to the next question. No Access to the information in the system must be auditable. The system must be able to show audit records of who has had access to information, as well as audit records showing when information was inserted/changed and by whom.
6. Is the system going to be backed up to protect against loss of the data?

Yes Think about how often the back ups need to occur and how long the back up copies need to be retained for. Personal information should not be retained indefinitely. Go to next question No One of the Data Protection Act requirements is to protect personal data against loss, therefore having back ups is essential.
Retention and disposal of personal data held on the system 7. Does the system have the capability to remove personal data that is no longer required?
Yes Go to next question. No The Data Protection Act requires us to retain personal data for no longer than is necessary, therefore you must not procure/develop a system which can not remove personal data which has been entered onto it (also the ability to remove information should only be given to limited numbers of staff, with their actions auditable).
8. Does the system have the capability to create disposal schedules for personal data that needs to be removed?
Yes Make sure that the disposal schedules are utilised, so that the retention periods for the different types of data are effectively managed in line with our obligation under the Data Protection Act to retain personal data for no longer than is necessary (this can involve the removal of the whole or part of a record at a pre specified time). No This is optional. Ideally the system would be able to create disposal schedules to assist in the identification of records containing personal data that have come to the end of their life cycle in the system.
Data quality 9. Is personal information being migrated from an existing system to the new system?
Yes You need to consider the data quality issues that can arise when migrating the personal data from the existing system to the new one. Also significant data quality issues may already exist on the information held in the old system and these must also be considered. Seek advice from I.T. if required. No Go to next question.
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Fulfilling the right of subject access 10. Is the system capable of producing a report which will contain all of the personal data (including correspondence and emails if applicable) that are held on the system about a particular individual?
Yes This is necessary to satisfy an individuals right under the Data Protection Act to request access to the personal data that the Council holds on them. Go to next question. No Under the Data Protection Act individuals have a right to request access to the personal data that the Council holds on them. In order to be able to fulfil this requirement the system must allow for all records relating to an individual to be collated and printed.
11. Is the system going to be managed by an outside organisation?

Yes If we are allowing an third party to gain access to the personal information to enable them to manage the system, then our contract with them must include certain Data Protection terms. Seek advice from the Councils Data Protection Advisor. No Go to next question.
12. Is the system going to have links to the Customer Relationship Management system?
Yes You must ensure that you seek advice from I.T. No Go to next question.
Sensitive personal data 13. Is it intended that the system will hold sensitive personal data about individuals?
Sensitive personal data is defined under the Data Protection Act as personal data consisting of information as to (a) the racial or ethnic origin of the data subject, (b) their political opinions, (c) their religious beliefs or other beliefs of a similar nature, (d) whether they are a member of a trade union, (e) their physical or mental health or condition, (f) their sexual life, (h) any offences or alleged offences they have committed. Yes Go to next question. No Go to question 15.
14. Have you defined who needs to access this sensitive personal data held on individuals and considered whether or not the data actually needs to be held by reference to individuals?
Yes Go to next question. No Access to sensitive personal data should be on a need to know basis, and where the sensitive personal data can be held in an anonymised way and still satisfy our requirements it should be.
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Data Protection Registration 15. Has our Data Protection Act registration been checked to ensure that the intended purpose for which the new system will be processing personal data is covered by it?
You can access the Councils Data Protection registration by going to http://www.esd.informationcommissioner.gov.uk/esd/search.asp and entering our registration number (Z7599824) in the relevant search field. Yes End of questions. No You must ensure that the Councils Data Protection registration covers the processing of personal data that is to be carried out by the new system. For further information and advice please consult the Councils Data Protection Advisor on 020 79262341, 07852303266 or at igoodwin@lambeth.gov.uk.
Contracting with Data Processors: Three Separate Security Issues

1. Reliability of staff employed by the processor. This will in practice require staff entering into confidentiality undertakings as part of their employment terms 2. Technical measures taken to avoid the possibility of unauthorised or unlawful processing or accidental loss, destruction or damage of the data concerned. This might involve written protocols to address access e.g. password control, encryption, tracing, verification of parties communicating data, and the like. Adequate insurance cover against loss or damage to the data by any means should be considered 3. Organisational measures for consideration include the following: Is access to the building or room controlled or can anybody walk in? Are the precautions against burglary, fire or natural disaster adequate? Can casual passers-by read data off screens or print-outs? Are back-up copies of the data stored separately from the live files? Is there a procedure for cleaning tapes and disks before they are re-used or is new data merely written over the old? In the latter case is there a possibility of the old personal data reaching somebody who is not authorised to use it? Is printed material containing information extracted from personal data disposed of securely? Often it will be appropriate to dispose of printouts by shredding Is there a procedure of authenticating the identity of a person to whom personal data may be disclosed over the telephone prior to the disclosure of the personal data? Is responsibility for an organisations security policy clearly placed on a particular person or department? Are breaches of security properly investigated and remedied particularly when damage or distress has been caused to an individual?
2.13.4
Information Withheld By Contractors On Behalf of the Authority
The FOI Act covers all information held or produced by the public authority. Therefore information held by others on the authoritys behalf is also subject to the Act. The public authority must rely on their contractors
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and partners to supply this information, if requested, in time for the authority to answer any requests for that information within the 20 days allowed by the Act.
2.13.5
Exemptions
Under the FOI Act some exemptions are absolute (i.e. there is no right of access under FOI), and some are qualified. Qualified exemptions must be put to a public interest test, quite simply a consideration of whether it is in the publics interest to disclose or withhold the information. The following exemptions might be relevant when considering whether to disclose information under the FOI Act about contractors and partners relationships with public authorities, details of contracts and tendering information: When entering into contracts public authorities should refuse to include contractual terms that purport to restrict the disclosure of information held by the authority and relating to the contract beyond the restrictions permitted by the Act. Unless an exemption provided for under the Act is applicable in relation to any particular information, a public authority will be obliged to disclose that information in response to a request, regardless of the terms of any contract. (s40) This exemption might apply to some information received during a procurement process conducted under the EU Procurement Rules: Section 44, the legal obligations exemption (s44) of the Act states: Information is exempt information if its disclosure (otherwise than under this Act) by the Public authority holding it is prohibited by, or under any other enactment, or it is incompatible with any Community obligation The previous provisions suggest that up to and including the evaluation process, all information provided by tenderers, to the public authority is of a confidential nature. Beyond this the provisions of the FOI Act will govern what the Public authority is bound to provide. The personal information exemption (s40) stipulates that certain information supplied by bidders as party of a tender may be of a personal nature (e.g. bidders employees CVs), and would therefore be exempt from disclosure under the Data Protection Act 1998. Under the FOI Act, personal information relating to third parties is a qualified exemption so there may cases where the public interest in disclosing outweighs the individuals privacy rights. The Act contains an absolute exemption, the breach of confidence exemption (s41) - where the disclosure of information would constitute an actionable breach of confidence. This is a tightly defined area of law, and does not include information marked confidential by the public authority or information for which the authority has entered into a confidentiality clause. The following extract from the Lord Chancellors discharge of functions code under FOI, which relates to how public authorities are obliged to act as regards contracts with third parties and information requests relating to them explains this: For this exemption to apply, the following must be true: 1. Information must have the necessary weight of confidence 2. The circumstances in which it was imparted must impose an obligation of confidence
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3. The authority could be taken to court if the information was disclosed The commercial interests exemption (s43) indicates that information can be withheld if it constitutes a trade secret or where disclosure is likely to prejudice the commercial interests of a person, including the public authority. Trade secrets are defined by case law. The prejudice to the commercial interests part might apply, if for example, disclosing details of a winning tender to losing bidders may have an adverse impact on the successful companys future bidding capabilities and also affect the authoritys future negotiating position. FOI is a qualified exemption so the public interest must be weighed each time a request is received. It should be noted that commercial sensitivity may decrease with time. The information commissioner has overruled arguing that disclosure of information may lead to fewer contractors wanting to do business with public bodies. He argues that contractors will see this as the new cost of doing business with the public sector and this will lead to better understanding of the requirements of public authority customers. The following factors should be considered when assessing the public interest:
2.13.6
Accountability of public money being spent Protection of the public from unsafe products or rogue traders/practices Further Information
For further information, use the Instructions for Tendering template which includes an FOI clause - and also use the FOI Clauses in your contracts. All can be found on the CPT intranet site. Also see advice form the Lambeth Legal Team.
2.14
Terms & Conditions of Contract
It is essential that the terms and conditions in any agreement between the Council and third parties fully protect the Councils interests; including its ability to obtain value for money and that there are safeguards against corruption and fraud. It will be appreciated that different requirements in procurement will expose the Council to different risks that could change over the course of a contract and it would be difficult to list all expressions to include in every form of agreement in this document. Accordingly, officers should use terms and conditions drafted by the Lambeth Legal Teams office or the Councils legal services contractors in all cases where they enter into agreements for the supply of goods, works and services. If this is not possible, terms and conditions provided by suppliers should be the subject of negotiations conducted with the assistance of the Lambeth Legal Team or legal services contractors. Contracts for the supply of goods should ensure the titles to the goods pass to the Council at least on payment and goods should be delivered to the location and be of the quality required. Such contracts should also regulate matters where the supplier is in default. Contracts for the purchase of computer hardware and other complex electronic equipment should include terms regulating the testing and acceptance of such goods, the liability of the supplier in the event of the equipment malfunctioning, health and safety, transfer of title, dealing with licences and source codes and payment. If goods are to be hired, officers should be aware
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of the provisions of Part IV of the Local Government and Housing Act 1989 and Regulations in respect of capital expenditure. Contracts for works are based on standard building and engineering forms of contract. The Lambeth Legal Team or legal services contractors should always check amendments and additions, and make an assessment of the need to amend or add to standard forms. The Lambeth Legal Team and legal services contractors have standard forms of contract that may be adapted for the employment of consultants, simple services, IT/IS projects and the externalisation of services. On the CPT intranet site there is an annotated example of conditions of contract applied to the provision of a simple service. This example sets out the most essential conditions. Examples of conditions for IT/IS projects and the externalisation of services may be supplied on application to the Lambeth Legal Teams office.
2.15
Framework Agreements
What is a Framework Agreement?

A framework agreement as an agreement with suppliers, the purpose of which is to establish the terms governing contracts to be awarded during a given period, in particular with regard to price and quantity. In other words, a framework agreement is a general term for agreements with providers which set out terms and conditions under which specific purchases (or call-offs) can be made throughout the term of the agreement. The framework agreement may, itself, be a contract to which the Lambeth and EU procurement rules apply. This would be the case where the agreement places an obligation, in writing, to purchase goods, works or services in exchange for consideration. For this type of agreement, there is no particular problem under the EU rules, as it can be treated in the same way as any other contract. However, the term framework is normally used to cover agreements which are not, themselves, covered by the definition of a contract to which the Lambeth and EU rules apply - though they may create certain contractually binding obligations. Such agreements set out the terms and conditions for subsequent call-offs but place no obligations, in themselves, on the procurers to buy anything. With this approach, contracts are formed only when goods, works and services are called off under the agreement. The benefit of this kind of agreement is that, because authorities are not tied to the agreements, they are free to use the frameworks when they provide value for money but they are also free to go elsewhere if they do not. It is this form of agreement - where the framework itself cannot be readily classifiable as a contract for the purposes of the current EU Directives - which has caused much difficulty in relation to the application of the EU procurement rules. However, it should be stressed that the contractual status of a framework agreement should not cause undue concern; the key is that a means of awarding contracts under framework agreements is provided for without the need to re-advertise and re-apply the selection and award criteria from the outset. When using framework agreements, officers must ensure that all obligations on issues such as sustainability, TUPE and Code of Practice on Workforce
When preparing a framework agreement, procurement officers must take advice from the Legal Team in respect of their terms and conditions of contract. Lambeth has a standard clause in framework terms and conditions that permits other local authorities to access our framework agreements; this must be part of your tendering documentation
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Matters are being met. The use of framework agreements does not remove the need to the address these issues, where relevant, in awarding a contract at the call-off stage.
Setting Up a Framework Agreement

An important first step is to consider whether a framework agreement, as defined above, is the right approach for the particular goods, works or services to be purchased. This will be a value for money judgement, taking account of the kinds of purchases involved and the ability to specify such purchases with sufficient precision upfront. In particular the framework should be capable of establishing a pricing mechanism. However, this does not mean actual prices should always be fixed, but rather that there should be a mechanism that will be applied to pricing particular requirements during the period of the framework. It should also be possible to establish the scope and types of goods and/or services that will need to be calledoff. There should not be any objection to upgrading the product, service or works required so long as it remains within the scope of the original specification. If the framework approach is chosen, it will be necessary to advertise the framework itself in the OJEU, if its estimated maximum value over its lifetime exceeds the relevant EU threshold and the procurements in question are not covered by one of the exclusions set out in the Directives. If the framework itself is not advertised in OJEU, in cases where the procurements are subject to the EU rules, an OJEU notice may be required for individual call-offs. The need to do this will depend on the size of the call-offs and on whether the aggregation rules apply. It is far better, therefore, to advertise the framework itself, so that there is no need to consider the need for advertising as each call-off comes up. Under the EU Directive the OJEU notice must: Make it clear that a framework agreement is being awarded Include the contracting authorities entitled to call-off under the terms of the framework agreement. The authorities can be individually named, or a generic description may be used e.g. Government Departments, health authorities, all contracting authorities in a particular region etc. When generic descriptions are used, it is advisable to include, in the notice, a reference to where details of the authorities covered can be obtained. Although the individual circumstances will need to be considered, it is worth seeking to construct the framework so that it can have the maximum take-up across the public sector. However, if the framework is only relevant to, say, certain central Government Departments, that should be made clear State the length of the framework agreement. Under the new provision, once implemented in January 2006, it will be a maximum of four years except in exceptional circumstances, in particular, circumstances relating to the subject of the framework agreement. It is understood that a longer duration could be justified in order to ensure effective competition in the award of the framework agreement because four years would not be sufficient to provide a return on investment. It is worth considering, in any event, whether a framework agreement is necessarily the best vehicle for a longer term project Include the estimated total value of the goods, works or services for which call-offs are to be placed and, so far as is possible, the value and frequency of the call-offs to be awarded under the agreement. This is necessary in order for providers to be able to gauge the likely values involved and to provide a figure for the framework overall which, as with other contracts, should not normally be exceeded without a new competition taking place
Article 19 of the EU Procurement Directives enables contracting authorities to reserve the right to participate in a public contract to supported employment factories and businesses. The ability to reserve contracts in this way will apply to framework agreements as well as to contracts generally. The OJEU notice, for the
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award of the framework agreement, will need to make it clear that it is reserved for sheltered workshops (the term used for supported factories and businesses in the EU Directive itself) under Article 19 of the Directive. Guidance on Article 19 is to be issued by the OGC and DWP. Once the OJEU notice has been despatched, the authorities setting up the framework agreements should follow the rules for all phases of the procurement process covered by the Directives. This will include the use of the open or restricted procedures or, where the conditions for their use are met, the negotiated or competitive dialogue procedures, and adherence to the rules on specifications, selection of candidates and award. The EU Directives do not explicitly prohibit the possibility of concluding framework agreements under the competitive dialogue procedure but it is difficult to imagine cases where the conditions governing the use of a competitive dialogue would be satisfied and the use of a framework agreement would be practicable. At the award stage, the providers to be included in the framework agreements should be chosen by applying the award criteria, to establish the most economically advantageous tender or tenders, in the normal way. Framework agreements can be concluded with a single provider or with several providers, for the same goods, works or services. In the latter case, there must be at least three providers, provided that there are sufficient candidates satisfying the selection criteria and which have submitted compliant bids meeting the award criteria. The agreement will establish the terms which will apply under the framework, including delivery timescales and daily or hourly rates. The chart below sets out the questions which need to be asked in order to establish how a framework agreement should be treated. When the framework agreement is ready to be awarded, officers must apply the mandatory standstill (Alcatel) rules. The standstill period applies to the award of the framework itself and not to the contracts or call-offs awarded under the framework. For the detail on these rules, please see the separate advice on standstill under the EU procurement section of this Guide.
Call-Offs
When awarding call-offs (individual contracts) under framework agreements, officers do not have to go through the full procedural steps in the EU Directives again so long as the rules were followed appropriately in the setting up of the framework agreements themselves. However, the relevant EU Treaty provisions and Treaty-based principles, including non-discrimination, still apply at this stage and you will need to be careful to ensure that nothing is done which is discriminatory, improper or which distorts competition. The length of call-offs under a framework agreement is not specifically limited by the Directives. For example, call-offs for consultancy services might be for three, six or twelve months or longer. It may be the case, as a result, that individual call-offs extend beyond the four-year term of the framework itself. However, this should not be done in order to circumvent the EU rules. For example, it would be difficult to justify a 12 month call-off, right near the end of the life of the framework itself, where the normal pattern for the goods or services in question had been for such call-offs to last for just one month at a time. The length of call-offs, as with other contracts, should be appropriate to the purchases in question and should reflect Value for Money considerations. See the chart below:
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Where a framework agreement is concluded with just one provider, call-offs under the agreement should be awarded on the basis of the terms laid down in the agreement - refined or supplemented by other terms in the framework agreement but not agreed at that time. It is the same principle as that applying to a normal contract, except that, with a framework agreement, there will be an interval between the awarding of the framework itself and the calling-off of the goods, works or services under it. There can be no substantive change to the specification or the terms and conditions agreed at the time that the framework is awarded. Where frameworks, for the same goods, works or services, are awarded to several providers, there are two possible options for awarding call-offs under the framework:
1. Apply the Terms of the Framework Agreement

Where the terms laid down in the framework agreements are sufficiently precise to cover the particular call-off, the authority awards the call-off without reopening competition. The EU Directives do not specify how this should be done. However, in order to ensure value for money, the authority should award the call-off to the provider who is considered to provide the most economically advantageous offer based on the award criteria used at the time that the framework was established. Where that provider is not capable or interested in providing the goods, services or works in question, the authority should turn to the next best provider. For example, frameworks might be concluded with five providers for the delivery of individual photocopiers, fax machines and printers, separately priced, and for delivery within set timescales. If the authority simply wants to call-off some photocopiers, it would go to the provider offering the most economically advantageous offer, using the original award criteria, for that item alone without reopening the competition. If that provider for any reason could not supply the items required at that time, the authority would go to the provider offering the next most economically advantageous offer, and so on.
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2. Hold a Mini-competition
Second, where the terms laid down in the framework agreements are not precise enough or complete for the particular call-off, a further or mini competition should be held with all those suppliers within the frameworks capable of meeting the particular need. This does not mean that basic terms can be renegotiated, or that the specification used in setting up the framework can be substantively changed; substantive modifications to the terms set out in the framework agreement itself are not permitted. It is more a matter of supplementing or refining the basic terms to reflect particular circumstances for the individual call-off. Examples of such terms are: Particular delivery timescales Particular invoicing arrangements and payment profiles Additional security needs Incidental charges Particular associated services, e.g. installation, maintenance, training, particular mixes of quality systems and rates Particular mixes of rates and quality Where the terms include a price mechanism Individual special terms - e.g. specific to the particular products/services that will be provided to meet a particular requirement under the framework
Where a mini-competition is held for a particular call-off, officers should consult in writing (invite to tender) the providers in the framework which are capable of meeting the particular need. This does not necessarily mean that every provider in the framework must be included. A framework may cover a number of different supplies or services, and there is no obligation to consult those providers which had not agreed, in awarding the framework, to provide the particular supplies or services which are the subject of the call-off. Indeed, the framework may be divided into categories, each covering different supplies or services. In that case, the authority only need consult providers in the categories which cover the goods or services required. However, there is no scope, at this stage, to run a selection procedure, based on technical ability, financial standing etc. This will have been carried out before the framework itself had been awarded and should not be repeated at the further competition stage. The decision on who should be consulted should be made on the basis of the kinds of supplies or services required and which providers can supply them, based on their offers at the time the framework agreement itself was awarded. Procurement officers should state the subject matter for the call-off for which tenders are being requested, and also a time limit which is sufficient to enable the selected providers to submit their bids for the particular call-off. This time limit should take account of the complexity of the call-off and the time needed for the different tenderers to submit their bids. In addition, where the officer has decided to make use of the option to hold an electronic auction for the mini competition, it must abide by the rules covering e-auctions as set out in the EU Directives. Tenders should be submitted in writing, and they should remain confidential until the time limit has expired. The contracting authority should award the call-off to the provider which has submitted the most economically advantageous tender on the basis of the award criteria set out in the framework itself focusing on the particular requirement. New award criteria should not be added, but weighting may need to vary to reflect the particular requirement.
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See the chart below for a diagram of the call-off process:
Examples of Framework Agreements

Examples of each type of framework is below for supplies, services and works:
a. Supplies From a Single Provider

A framework agreement is required for office desks by one authority and is awarded, following OJEU advertisement and selection based on the most economically advantageous basis to a single supplier. The authority calls-off its requirements for desks, during the period of the framework, on the basis of the terms agreed when the framework was set up.
b. Supplies From Several Providers

A framework agreement is required to cover a number of a departments paper needs over four years. Following the OJEU notice and the selection process, based on financial and economic standing and technical capacity, bids are evaluated on the most economically advantageous basis for entry into the framework. A number of suppliers are included in the framework to supply a variety of paper types plain, lined, recycled, coloured etc over the four-year period. The authority goes to the supplier within the framework whose offer is the most economically advantageous, based on the original award criteria, for each call-off required throughout the four years. As the terms do not need to be refined or supplemented in this case, the authority has no need to use the mini-competition option.
c. Consultancy Services
A framework agreement is required for a range of consultancy services. An OJEU notice is issued and candidates for the framework are selected on the basis of financial and economic standing and technical
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capacity including track record and ability. Bids are then evaluated on the most economically advantageous basis, including quality systems and fee rates. A number of companies are included in the framework, covering the range of consultancy services required. Hourly rates for different grades of staff form part of the agreed terms. When there is a need to call-off specific services within the framework, officers hold a mini competition with all providers capable of meeting that need for the category of services required in order to establish which company provides the most economically advantageous offer for the particular mix of grades/rates required.
d. Minor Works
A framework is awarded to several contractors on a UK-wide basis, following OJEU advertisement, selection and award on the most economically advantageous basis. The contractors provide a range of services within categories, such as building, plumbing and electrical services. Hourly rates, call out charges and levels of quality are set under the framework agreement. When a call-off is required, the authority goes to the contractor providing the most economically advantageous offer, on the basis of the original award criteria, for the particular need. There is no need for a mini-competition in this case, as the terms do not need to be refined. An alternative approach might be to award a framework to a single contractor for each region.
e. Major Works 1
A framework is needed for units to be constructed as part of a major works programme. Following an OJEU notice and a selection process based on financial and economic standing and technical capacity, a framework is awarded to a small number of prime contractors for units to be constructed as necessary throughout the period of the agreement. The kinds of units in question might include prison cells, categories of hospital beds (e.g. acute, accident and emergency etc) garages etc, where there is a standard size, design or requirement. The awards are made on the basis of the particular mix of quality/unitary prices to meet the need. At the call-off stage, a mini-competition is held and bids are invited from all contractors capable of meeting the requirement for the specific units, with the call-off awarded to the contractor providing the most economically advantageous bid for the units required.
f.
Major Works 2
A framework is required for the construction of standard building units or office space in various locations over a four-year period. Following OJEU advertisement and the selection process, based on financial and economic standing and technical capacity, a framework is awarded to a number of prime contractors on the most economically advantageous tender basis. Each of the prime contractors has the skills and supply chains necessary to undertake the different aspects of the construction work during the period of the framework. A decision is made, at each call-off, as to whether a mini-competition is needed based on whether the terms need to be refined. If a mini-competition is necessary, bids are invited from all prime contractors capable of meeting the particular need. Call-offs under the framework, which may be awarded any time up to the end of the agreement itself, can continue beyond the period of the agreement until the work is completed.
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Gateway Two: Present the Procurement Strategy to Procurement Board A lot of information has been presented in Gateway Two, much of it aimed at very specific types of contracts or procurement projects. However, all of this more detailed essential procurement knowledge before you move forward to Gateway Three; much of Gateway Three concerns all the activity surrounding the purchasing process, at both low and higher values. If you are going to tender for your purchase or contract (anything with an aggregate value of 25,000 and greater) you will need to produce your Procurement Strategy Report or a Procurement Strategy Report Lite; for purchases or contracts with a value of 500,000 and greater a Procurement Business Case will also need to be completed.
Reports must be presented to the relevant Procurement Board: Contract Value 25,000 - 100,000 100,000 - 500,000 500,000 and greater Approval Form(s) Procurement Strategy Report Lite Procurement Strategy Report Procurement Strategy Report & Procurement Business Case Procurement Board Procurement Board 3 Procurement Board 2 Procurement Board 1: Strategic Procurement Board
All procurement forms and templates can be found on the CPT intranet site here: http://intranet.lambeth.gov.uk/StaffServices/FinanceAndProcurement/Procurement/ProcurementAtLambeth/ ProcurementFormsTemplatesAndDocuments.htm. Once your reports are complete you are ready to seek approval to begin your procurement exercise. Contact your Procurement Board administrator to set a date to appear before the Board and step forward towards Gateway Three
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Gateway Three: Do
Purchasing, Tendering & Contract Award
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3.0
Introduction to Gateway Three

The information and guidance in this Gateway Three section of the Procurement Guide is probably the most important where actual purchasing and tendering are concerned. Once you have done your planning and learned the knowledge in Gateways One and Two, you will have appeared before your Procurement Board to present your Strategy Report and/or Business Case. With their approval, you now need to proceed with your purchase or tendering exercise.
And you can find all the information you need in this section of the Guide. First, be sure to examine the Lambeth Purchasing Cycle at the beginning of this Guide. This flowchart shows all the important steps that need to be carried out, depending on the value of your contract or purchase. There are broadly four procurement routes, based upon the aggregate value of the product or service. These can be found in the Contract Standing Orders document at the beginning of this Guide but are included in the table below: Total Aggregate Value 0.00 to 5,000 5,000 and up to 25,000 25,000 and up to 500,000 Other Essential Requirements The quote must represent value for money At least one quotation must be from a local Lambeth supplier, wherever possible Procurement Board compliance check. Details onto Contract Register 100,000 and greater: contract placed under Lambeth seal 100,000 and greater: award decision reported to Officer Decisions Procurement Board compliance check & contract award approval Details onto Contract Register Details onto Forward Plan Contract placed under Lambeth seal Award decision reported to Officer Decisions External advertisement Executive Member informed
Procedure One written quotation Three written quotes
Approval Business Unit Manager or Other Manager Business Unit Manager or Other Manager 25,000-50,000: Business Unit Manager or Other Manager. 50,000-100,000: Head of Service or Assistant Director 100,000-1 million: Divisional Director and Divisional Director of Resources 100,000-1 million: Divisional Director and Divisional Director of Resources 1 million10 million: Executive Director and Divisional Director of Resources
Formal Tendering (EU rules if over 173,934 for supplies and services, 4,348,350 for works)
500,000-10 million
Formal Tendering (EU rules if over 173,934 for supplies and services, 4,348,350 for works)
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10 million and greater Formal Tendering (EU rules if over 173,934 for supplies and services, 4,348,350 for works) 10 million and greater: Executive Director of Finance and Resources
CPT and Legal team involvement All as above
3.0.1 Supplier Pre-qualification & the Lambeth Business Questionnaires

Pre-qualification is a part of pre-contract supplier appraisal; it is an essential step in the procurement process that establishes if a supplier is sufficiently capable of providing the goods and or services required. If the supplier meets the prequalification criteria, the supplier may be invited to tender or provide a quotation for the work or product required.
Programmes of Work If the project you are working on has multiple procurement projects, each contract within that programme needs to be approved according to the Lambeth Scheme of Delegation not the sum of those contracts added together. Remember it is the value of the contract that matters not the sum value of the programme
At Lambeth, all suppliers that we purchase from or contract with must be pre-qualified. There are two basic steps to pre-qualification: finding suppliers and verifying that they are suitable. In finding suppliers, you need to identify the possible sources of supply for the product or service you require. In the first instance, you should be using suppliers who are already pre-qualified see section 3.0.4. Otherwise, make use of your own known suppliers and making sure they become pre-qualified to use by completing a Lambeth Business Questionnaire. The internet is a good source of information, or even seeing if your colleagues know of a suitable supplier contact them at LambethProcurementForum@lambeth.gov.uk. If you come up completely empty handed, consider advertisement see section 3.1.3 for details. Otherwise, suppliers, unless already pre-qualified, need to complete a Lambeth Business Questionnaire, or BQ online. You need to evaluate the BQ and decide if the supplier is suitable to ask to provide quotations or to invite to tender. It is important to note that the BQ is only meant to seek out supplier information on relevant capacity, financial and resources, experience and expertise of the company as well as insurance, health and safety, sustainability and equalities documentation. The BQ is not a tender and as such must not be used to evaluate possible solutions that the company may offer. Lambeth has two forms of prequalification, 1 for high value and one for low value: 1. The Supplier Self Certification Form Procurements valued below 25,000 2. The Lambeth Business Questionnaire Procurements valued at 25,000 and greater. These must be completed online: http://intranet.lambeth.gov.uk/StaffServices/FinanceAndProcurement/Procurement/eProcurement/ All BQs, evaluation guidance, completion guidance for suppliers and score sheets can be found on the CPT intranet site. Suppliers can access the online BQs here: http://www.lambeth.gov.uk/Services/Business/TendersContracts/eProcurement.htm.
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The Supplier Self Certification Form

The Self Certification Form is used for low value purchases - services, supplies and works valued below 25,000. At this threshold, procurement officers will ask suppliers to provide quotes and may provide suppliers with a short brief or specification. The officer will select the quote that offers best value and the successful supplier will be asked to complete the Supplier Self Certification Form; all suppliers will be asked to complete the form in full before they start working for Lambeth. This form is one page and consists of a series of "yes" and "no" questions that the supplier must answer favourably to all. If the responses are unfavourable or are "nos" the supplier may not be asked to carry out work for the Council. As above, suppliers should contact the officer in charge of the purchasing exercise if they have any questions. All suppliers must complete the Self Certification Form before you place an order with them.
The Lambeth Business Questionnaire

In public sector procurement one of the first stages of a tendering exercise is to establish a supplier's capability for delivering the contract on offer. In a Lambeth procurement exercise where the value of the purchase or contract is at 25,000 and greater all suppliers must complete the Lambeth BQ in full and it must be completed online; all the information and links can be found on the Lambeth internet site here: http://www.lambeth.gov.uk/Services/Business/TendersContracts/eProcurement.htm. Registration on the e procurement website is free. Upon return, all BQs are evaluated consistently and objectively according to a defined model that has been finalised prior to opening and commencing the evaluation of submitted questionnaires. The evaluation model that Lambeth uses is a combination of Pass or Fail and Weighted and Scored criteria - see below. The officers on the procurement project team will total up all the BQ scores and from the highest scored they select a number of the best BQs, as communicated in the initial contract notice published in the Official Journal of the European Union and/or Expressions of Interest advertisement. These best BQs become a shortlist and these suppliers are invited to Tender for the contract to be awarded. The higher the score on a suppliers BQ increases the chances that they will be invited to Tender. The contract notice and/or the Expressions of Interest advertisement shall set out the minimum and maximum number of tenderers to be shortlisted, where appropriate. Once the contract is awarded to a supplier, it is important to note that their Business Questionnaire becomes part of their contract with Lambeth. Therefore all suppliers are strongly urged to answer all BQ questions fully, clearly and honestly. Full guidance for both forms can be found here: http://sharepoint.lambeth.gov.uk/sites/lts/corporateprocurement /Public%20documents/Forms%20and%20templates/Lambeth %20Procurement%20Prequalification%20Guidance.doc.
Evaluation
Typically, in the pre-qualification you will be assessing:
There may be times when a good supplier you have experience of is unable to meet the criteria of the higher value BQs for example, if a supplier does not have any references or if they have only been trading for 18 months. You should use your judgement in these cases and seek a waiver to the procurement rules and include them in your procurement exercise
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The scope and relevance of tenderers track records Stated policies on safety, employment and other matters Opinions of other relevant clients
The criteria in general must bear an explicit relationship to: The Council's objectives for this service, and how this service is intended to contribute to its overall political and social goals and The Council's objectives in putting this service out to contract, or at least exposing it to a market test, and the type of relationship it hopes to develop with an appointed supplier
Three matters have to be resolved: The items, aspects or features of the company that must be evaluated The relative importance of each of those items in contributing to an overall judgment The strength of each company in relation to each item
When evaluating the returned supplier Business Questionnaire, officers should use the score sheets provided assigning a weighting to each criteria according to its importance to the contract or purchase being made. Each criteria is scored and in principle, the suppliers with the highest scores are then considered to be the most capable to provide the service or supply required. You should also review (or have your departments finance manager review) the suppliers submitted audited financial accounts.
Credit Checks
For contracts and purchases valued at 500,000 and greater, officers must carry out a credit check on the suppliers who have submitted BQs. The Corporate Procurement Team can obtain an Experian financial report for you at a recharge cost of 19.95. Just email CPT at corporateprocurement@lambeth.gov.uk with your request, providing the following information: A cost code for recharging For limited companies, the companys registration number & company name For non-limited companies, the full company name and address including post code
If you have any questions do not hesitate in contacting Corporate Procurement on 020 7926 9358 and corporateprocurement@lambeth.gov.uk
Insurance & Business Questionnaires

Insurance requirements require some care, particularly for small firms (see the section Risk and Insurance FAQs). Employers Insurance is always required and the Council normally requires a level of 10m. Public Liability insurance is also required but the level should relate to risk. A typical range would be between 1m and 5m. The Council requires a minimum of 5m for larger contracts and wherever a potential risk is identified. Professional Indemnity insurance applies where the contract requires professional services. The Council normally requires a level of between 2m and 5m for professional indemnity insurance. However, many small businesses may find it difficult or prohibitively expensive to afford this level and the contract in question may not carry any significant risk. You should always assess risk and not simply demand the
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standard levels of insurance on the basis of convenience. If you establish that your contract needs a lower or higher level of cover than the standard, you should ask the Councils Insurance Section for approval. The criteria under which potential tenderers may be ruled out normally include bankruptcy, administration or insolvency, criminal record, the lack of a relevant licence or qualification, and the lack of financial viability. A supplier can also be disqualified if they do not submit the documentation requested in the Business Questionnaire, or if their BQ is not fully completed. The invitation to tender should normally set out these potential disqualifiers. This is required for all EU contracts and must be published in the notice in OJEU. You must keep a record of your score sheets the results. In addition, you must give feedback to unsuccessful firms if they request it. The feedback can be limited but the goal should be to allow the unsuccessful firm to learn in which areas it was weak as compared to other bidders.
3.0.2 Simple Purchases: Services & Supplies Valued Up to 25,000
Information contained in a suppliers completed Business Questionnaire is commercial information and as such should be held as confidential. If a supplier successfully completes a BQ and is consequently awarded a contract, the BQ becomes part of their contract documentation; information contained therein becomes subject to Freedom of Information. If a supplier completes a BQ and they are not awarded a contract, the information contained in the BQ remains commercially confidential and information contained therein can only be given out by the supplier themselves
Before reading this section, you must familiarise yourself with Sections 1 and 2 of this Guide; these sections cover rules, responsibilities and considerations for all purchases. The concept of a simple purchase requires care. Lower value purchases of goods may be classified as simple purchases and most purchases of services may be classified as complex. In terms of the mandatory requirement, you must use formal tendering for any purchase over 25,000 in value. With a simple purchase up to 25,000 in value, you may only need to produce a simple specification, follow a less formal tendering process, evaluate a short list of bids and enter into a simple contract or order. Repeat orders do not normally require quotations but you should satisfy yourself that they represent value for money. The scope and price must not have changed and you must have the original quotation documentation / e mail for reference and audit purposes. You should ensure that you specify your requirements, including quality standards appropriate to the value and complexity of the purchase. In addition, you should also give consideration to contract conditions that you may need to include and the evaluation process. You must also ensure that you clearly set out your requirements so that you can unambiguously relate any prices you obtain to those requirements.
You should normally base your decision on the essential requirements rather than on desirable ones. This links to how you have put together your specification, i.e. a clear statement of what you need (without overelaboration). You should always try to understand the market and follow any significant changes. For example you should be aware of when products you buy have become out-dated or if new cheaper or better suppliers emerge. For this reason, repeat orders may not offer best value
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The Simple Purchase of Goods

For simple purchases of goods, the providers terms of business may be entirely acceptable and there will be no need to develop a contract. However, you should be aware that a providers terms of business may contain expressions that restrict its liability to the Council and/or restrict implied terms that relate to the fitness for purpose of the goods and they need to be read with this in mind. You should ensure that the terms of business do not prevent you from receiving what you want, when you want it and in the manner that you want it. In addition, you should check that the providers termination clauses are acceptable. The specification can simply be a reference to a catalogue or model number. The description of features and quality standards in a catalogue is equivalent to a specification. A less straightforward purchase would be one requiring something bespoke or tailor-made for the Council; this might require a diagram, a list of materials and a method of construction. The pricing exercise might be a review of catalogues to choose the best model, plus receipt of e-mailed or faxed quotes from selected suppliers quoting model numbers and prices. Formal letters might be required for larger or unusual purchases. Any verbal quotation must subsequently be confirmed in writing, by fax or e mail, and be sure to keep files and folders for storing this information on your PC or in your office. Selection would require a comparison of prices plus consideration of value for money. The latter might include quality differences; e.g. one product might be double the price but would last five times longer. It might also include what guarantees are provided (e.g. immediate replacement of faulty goods, an on-site repair service, availability of up-grade to a new model). As with complex purchases, your original specification should include basic quality requirements and you would need a good reason not to choose the lowest price.
The Simple Purchase of Services

A simple purchase of services is where you are purchasing a service that you have often purchased before (or that is commonly available), the outputs are easily defined and the cost is low. For example, regular watering of indoor plants might fall into this category. As with goods, the providers terms of business would probably suffice as long as they do not prevent you receiving the service that you expect. The specification might simply define the output; e.g. all the plants in each office will be watered three times weekly. However, you may need to specify security measures, time of day or week, etc. The pricing exercise would be similar to that for goods, as you would be comparing a simple, commonly provided service. Selection would also be similar to that for goods, but services are very likely to have more potential variables. You need to ensure that you have thought through what you really need and made some effort to predict how the service may go wrong (you cannot always replace a service as easily as you can an item of goods).
Processes
Once you have identified your requirements and produced your specification, you need to find the right supplier for the goods or service you require. While many of the principles in this Guide apply to simple purchases, you should not create bureaucracy where it is unnecessary. Instead you should carefully note your departments requirements and apply the simplest process to meet those requirements.
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Even for simple purchases you should recognise the need for records that are auditable. A good guide for record keeping is to assume that such records might be used in Court. Record keeping is particularly important if you do not accept the lowest quote. For large and complex purchases you should have an independent witness of the process.
3.0.3
The Quotation Process
When requesting quotes from approved suppliers, be sure that they are submitted in writing fax, e mail or posted letter. Be sure to retain all written quotations for audit purposes. See the chart below:
Request A Quotation From A Local Supplier, Wherever Possible Get Written Quotes 0 - 5,000: 1 Quote that Represents VFM 500 - 25,000: Three Quotes
Consider Regeneration Issues & Local Businesses
Specify The Necessary Requirements
Produce A Simple Specification
Identify The Best Suppliers
Ensure Technical Competence & Financial Viability
Make A Selection based On Value For Money
Existing Contracts Lambeth Approved Supplier List OGC, ESPO & LCSG Contracts Existing Suppliers Supply Lambeth Portal
Supplier Successfully completes the Supplier Self Certification Form
Maintain Auditable Records
Process Supplier Setup Form
Wherever possible, you must get a minimum of one written quotation from a local Lambeth supplier. You may already know of local suppliers that you currently use; be sure to have them complete a Lambeth Business Questionnaire. Alternatively, have a look at Regeneration & Enterprises Supply Lambeth Portal you will find a database of local Lambeth suppliers form all areas of supply, who have expressed an interest in doing business with the Council. You will find a direct link here: http://suppliersportal.lambeth.gov.uk/.
3.0.4
Using Lambeths Resources
The first place to look for your supplier is from those suppliers that you currently contract with and have established good working relationships with. Plus, as they have a contract in place already, they will not need to complete a BQ. Ask these suppliers first if they can provide what you are looking for; these can be found on the Contract Register. See section 1.1.7 for more information.
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You should also consider suppliers who have already been through the pre-qualification process, in order to speed up the procurement process: 1. The Lambeth Approved Supplier List - see section 1.2.3 2. Buying Solutions and ESPO Contracts see section 1.3 3. Other departmental and public sector framework agreements see section 2.15
3.1
Formal Tendering: Services & Supplies Valued at 25,000 and Greater
3.1.1
An Overview of the Tendering Process
There are six main stages within the formal tendering process:
1. 2. 3. 4. 5. 6.
Identify the requirement Plan the tendering exercise Engage with the market Invite tenders Evaluate tenders Award the contract.
As a guide, refer to the Lambeth Purchasing Cycle at the beginning of this Guide; it can be useful in tracking your way through the entire procurement process.
Stage 1: Identify the Requirement

This first stage involves establishing user need and setting out requirements in a specification, although at Stage 1 a draft specification is sufficient. For service contracts in particular, it may also involve a consideration of the contract strategy, i.e. factors such as scope, packaging and duration. It is also advisable to decide on an evaluation criteria at this stage. These may need to be built into any advertisements, tender documents and the final draft of the specification itself.
Stage 2: Plan the Tendering Exercise

This requires identifying the elements of work and their sequence, who is required to undertake each element, timing, liaison needs and overall timescale; this planning is essential to the tendering process. The Council has developed a Project Initiation Document that covers basic project management planning and this could prove useful for major procurement activities; a copy is attached to this Guide. The regulatory framework (see Section 1) also needs careful consideration at this stage as many requirements apply to larger contracts. EU rules have an impact on time-scales once certain financial thresholds are reached; full details are included later in this section.
Stage 3: Engage with the Market

Research may be required to establish the source of potential suppliers. This will be most important where there is either a shortage or a glut of suppliers. For uncommon services or a new combination of services it may be necessary to hold some discussions with potential suppliers to establish the likely response from the market. This stage also includes advertisement (in the local press and/or trade press as appropriate) and shortlisting, usually through pre-qualification with a business questionnaire.
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Stage 4: Invite Tenders

This stage comprises of issuing the invitation to tender. This requires full tender documentation, including the specification. The terms and conditions of contract need to be prepared with advice from the Lambeth Legal Team as required.
Stage 5: Evaluate Tenders

This includes the receipt of tenders and the actual tender evaluation. Making the recommendation to award the contract completes this stage.
Stage 6: Award the Contract

This stage completes the formal tendering process. It may be necessary to clarify and amend the tender and this is followed by the formal award of contract At Gateway Four is the contract management stage (see Section 4) which commences upon award of contract. However, it is important to think ahead to this stage when planning the procurement and developing documentation. There is also a direct link between procurement principles and the treatment of variations and extensions.
A Two Stage Process

The tendering process has two distinct stages - the first, or selection stage and the second the award stage. In the selection stage, Business Questionnaires are sent out to suppliers who have expressed interest in the contract we are tendering for and officers asses the suppliers ability, experience and capacity to deliver the contract; CAN they do the work required? In the award stage we ask those suppliers that we have invited to tender to provide details about price, quality, innovation, added value and HOW they will deliver the services or supplies required. The selection and award stage of tendering are two entirely distinct phases in formal procurement and their processes must never become mixed up. See the 5 points below: 1. Procurement officers must not mix up selection criteria - technical capacity, financial and economic standing, which are used at BQ stage - and award criteria 2. On framework call-offs, only award criteria should be applied, not selection criteria 3. "Experience" is a "selection" criterion, and should not be used in the "award" phase, on a framework call off or otherwise 4. At the award stage, sub-criteria and weightings should be disclosed in the tender documentation 5. Where an authority is using sub-criteria and weightings at the selection/prequalification stage, including pass/fail questions, these should also be disclosed to bidders in advance Additional guidance can be found in an OGC guidance note at http://sharepoint.lambeth.gov.uk/sites/lts/corporateprocurement/Public%20documents/Office%20of%20Gove rnment%20Commerce/Procurement%20Selection%20and%20Award%20April%202009.pdf. Suppliers are increasingly looking to make challenges to our procurement processes. This can be avoided by taking on board this advice. If you have any questions or if anything is unclear please contact CPT directly.
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Project Management
Any major procurement activity should be thought of as a project and the standard features of a project management approach should normally be adopted. The Procurement Guide provides most of this required guidance - for example, Section 1.1 explains the regulatory framework including the roles of officers and Procurement Boards and core processes that are required. Section 1.2 explains the preparatory work and some essential considerations as the project proceeds. Section 3.0 covers simple purchases while Section 3.1 gives full details of the formal tendering route. In addition, Section 2 offers guidance on matters such as risk management and negotiation. Using Prince 2 project management methodologies are also recommended as these tie in with Lambeths commitment to using Prince 2 for project management. To complement this guidance you need to apply a standard project management approach. Guidance on project management is readily available within the Council and from many other sources. The following paragraphs offer a brief introduction based on guidance from the Office of Government Commerce. A project is a set of co-ordinated activities with defined starting and finishing points, undertaken by an individual or team to meet specific objectives within defined time, cost and performance parameters. A project normally has the following characteristics: A finite and defined lifespan Defined and measurable business products (that is, deliverables and / or outcomes to meet specific business objectives) A corresponding set of activities to achieve the business products A defined amount of resources An organisation structure, with defined responsibilities, to manage the project
Projects should contribute to business objectives; typically their funding is identified as part of business planning. They may be part of an overall programme of business change. Project management is much more than the tasks carried out by a project manager. Project management is a combination of the roles and responsibilities of individuals assigned to the project, the organisational structure that sets out clear reporting arrangements and the set of processes to deliver the required outcome. It ensures that everyone involved knows what is expected of them and helps to keep cost, time and risk under control. Experience has shown that projects are inherently at risk through overrunning on time and cost and/or failing to deliver a successful outcome. Such failures are almost invariably caused by: Poor project definition by the projects owner, perhaps because of insufficient consultation with stakeholders or their failure to be specific about requirements and desired outcomes Lack of ownership and personal accountability by senior management Inadequately skilled and experienced project personnel Inadequate reporting arrangements and decision-making Inconsistent understanding of required project activities, roles and responsibilities
Project management helps to reduce and manage risk. It puts in place an organisation where lines of accountability are short and the responsibilities of individuals are clearly defined. Its processes are clearly documented and repeatable, so that those involved in the project can learn from the experiences of others.
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Collaborative Procurement
Local authorities are encouraged to look at cross-cutting themes and work collaboratively wherever possible. Within a local authority this normally means looking at issues that cut across the responsibilities of different departments (e.g. housing and street care). At a higher level it means looking at issues that cut across the responsibilities of different agencies (e.g. local government social services and the NHS). Lambeth Council has embraced this approach and many corporate objectives are of a cross-cutting nature. It is common for Value for Money reviews to include collaborative issues and Lambeths CPA assessment itself covers several collaborative procurement themes. It follows that some procurement activity may be of a crosscutting nature and you should be aware of the implications. The most important aspect of a cross-cutting procurement activity is close cooperation between the departments or business units concerned. This is often not a simple matter. The cooperation must be between officers of the right level with the right responsibilities, knowledge and authority. Successful cooperation also requires that participants find enough time to coordinate their efforts, and that there are shared objectives, openness and willingness to compromise. It is also essential for senior management to show leadership and empower their officers to work effectively with the other parties. The procurement activity will probably require a single overall leader who will take responsibility for the success of the cross-cutting project. This would normally be the most senior officer involved from the Department or business unit that has the greatest direct involvement in the services to be undertaken. In many cases the predominant part of the procurement will relate to one department or business unit, while other parties have a minor interest. However, the points made above would still apply. A collaborative contract is often innovative not only from the Council viewpoint but from the supplier market viewpoint. If the market lacks any real experience of tackling the mix and nature of services that you require, you should take particular care with all aspects of the tendering process. The procurement activity is likely to be a learning experience for all concerned. It is worth remembering that customers or end-users of Council services rarely care about which section delivers a service their concerns relate to service quality and reliability. Success will be far more likely if all participants understand and follow the guidance in the Procurement Guide. The CPT, Departmental Procurement Boards and the Strategic Procurement Board are likely to make important contributions.
3.1.2
Planning Your Procurement Exercise
Preparation is key element of the preliminary stage of every procurement exercise. See the planning chart 3.1.2 below:
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Before you begin the series of steps that make up the preliminary stage of procuring services and or products, you must consider how a contract will operate. The contract will only be successful if you have thought ahead to its operation from the very first stages of the procurement process. The simple questions below can help you to think ahead: What performance measures will be required? Will it possible to express these as measurable performance indicators and targets? How will it be possible to monitor these indicators and targets in an efficient and effective manner? What client resources will be required? What arrangements can be built in for defaults and, if necessary, contract termination due to nonperformance? Does the procurement process require a project management approach with a team involvement? How will risk management be incorporated?
The answers to these questions can help you at all stages of the process: developing a specification, asking for method statements, evaluating bids and ultimately, in managing the contract.
Nine Planning Steps

There are nine basic steps in planning a procurement exercise, as shown in the flowchart: 1. 2. 3. 4. 5. 6. 7. 8. 9. Identify your customer & confirm their needs Calculate the purchase or contract value Confirm the authority to spend Check for existing similar contracts Consider your options buy, lease, rent Confirm options against the market Consider regeneration, local businesses, social enterprises and the charitable & voluntary sectors Decide on contract type and packaging Confirm costs and check Value for Money
This list may seem long, but not all steps on the list are action points some are merely thought processes. It is by no means exhaustive and the more experienced you become in planning out your procurement exercise, the better you will become at it. But do be sure to consider each point in the flowchart and list. Very often in procurement there are no opportunities to turn the clock back and its always better to have planned out things well in advance. Further information on each of the planning steps is following:
Remember to give yourself enough time to plan your procurement exercise. All too often officers are so busy and rushed, the planning stage suffers and gets squeezed sometimes with ill consequences later on
Step 1: Identify Your Customer & Confirm Their Needs

Firstly, you must consider your customer and ask WHO IS your customer? What do they NEED? Is there a need to consult, either on a formal or informal basis? End Users and Stakeholders are a very important part of the process, as they will ultimately use or be affected by the service or product you are procuring. You may be part of a customer chain; you may be buying on behalf of someone else who is the end user of the product or service; you need to be clear about your role and your customers needs.
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Step 2: Calculate the Purchase or Contract Value

Be sure to calculate a pre-tender estimate of your contract or purchases cost and record it in writing. Consider: Benchmarking Talking to other departments, boroughs, suppliers Review past contracts and invoices Check Buying Solutions & ESPO contracts
Remember that contracts must not be artificially under or over estimated or divided into two or more separate contracts where the effect is to avoid the application of Standing Orders, Financial Regulations or EU Directives
You should only use aggregated values, payable in pounds sterling exclusive of VAT.
Step 3: Confirm the Authority to Spend & Budget Availability

It is important that officers who are contracting for services or supplies have the authority to do so; this is mainly to avoid the possibility of fraud. No contract shall be let unless the expenditure involved has been fully considered and approved and sufficient money has been allocated in the relevant budget and you should ensure that your department or section has the ability to pay. Speak to your department finance manager or Business Unit Manager if you are unsure about your departments budget.
Step 4: Check for Existing Similar Contracts

In the spirit of collaboration, you should check if there is already a corporate or Lambeth contract in place that covers your intended purchase or contract. It is always easier to vary an existing contract that is in place than to undergo a full tendering exercise. Be sure to speak to your departments procurement team or contact Corporate Procurement; they will know which contract are already in place, that you can make use of for your purchase. Also check the Lambeth Contract Register for details on contracts in all Lambeth departments. See the Register here: http://comp-dev-4/contractms/ You can also ask your procurement colleagues via the Lambeth Procurement Forum. The Forum e mail address is on the Lambeth address list and you can access it here: LambethProcurementForum@Lambeth.gov.uk. Simply ask your colleagues if they have a contract that you can make use of, and follow any contract variation rules that apply. Check for existing pre-Tendered contracts, available through the OGC or LCSG; more information on purchasing from Central Purchasing Bodies can be found in section 1.3.
Step 5: Consider Your Options

At approximately the mid-point of the planning process, you should step back and decide exactly what you need; officers have a responsibility to think through all the major options. In procurement, this step was often called the Make Or Buy Decision in the past now we think more in terms of Challenge The Requirement. Procurement professionals are constantly challenging their requirements. Balancing ours and our customers NEEDS with WANTS and aiming towards getting real value for money is a constant challenge. If you are considering purchasing a new supply or Tendering for a new service you and your department may
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have a very clear picture of exactly what you want; you may know which make and model of the product you want and you may already know the supplier that you would like to have provide the service you are looking for. Of course you will check to see if you have money in your departmental budget to pay for this service or supply. But this is not enough - your job is also to Challenge The Requirement you must think through all the alternatives and come to a cost-effective decision. The list below presents some Challenge the Requirement questions to consider, using a product purchase as an example: Have you contacted the Corporate Procurement Team for advice before making one off purchases? Are you sure that only THAT supplier has the product you need? Are there other suppliers available who can provide the product that meets the specification? 3. Have you contacted other Lambeth departments? Does another department have a similar product that they no longer require, and would be willing to give it / transfer it to your department? 4. Does the product have to be purchased? Is leasing or rental an option? 5. Does it have to be new? Would a re-conditioned product (at a lower cost) suit the specification? 6. Have you thought through the total cost of ownership? For example does a relatively cheap product use expensive consumables? Is repair or maintenance included? Does it come with a limited service contract that might push up the real cost? What about training? Storage? Are there any hidden costs? 7. What about any environmental implications? Does the product use electricity? If so, how much? If the product uses consumables, can the product use recycled or re-manufactured consumables? 8. Will a particular option limit future choice? For example, are there options to for upgrading the product or improving/enhancing it in the future? 9. Have you considered the IT implications? Have you contacted Lambeth IT for advice? 10. What will happen to the product when you are done using it? How will it be disposed of? CAN it be disposed of safely? Can it be repaired or recycled for further use and given a second life? Some good practice points to consider concerning customer needs is given below: WHAT will the product or service be used for? WHAT is being used at the moment (if anything) and what is wrong with it? HOW often will the product or service be used? WHERE will it be used, and by whom? (This should confirm the end user) For HOW LONG will the service or supply be required - a week, a month, a year, five years? WHAT are the key criteria or features that the product or service MUST have? What are the key criteria or features that the product or service MUST NOT have? CAN any of the items in 1 7 be placed in any form of order or priority? WHAT time constraints exist? HOW might needs change during the period the service or product is required? 1. 2.
Step 6: Confirm Options Against the Market

Officers must engage with the market in order to identify options relating to their proposed procurement activity. This will of course require some research, reading, meeting with suppliers, etc. and officers should be aiming to gather information about the market their product or service is in, in order to develop the best specification. Good specifications that are well written and composed will always attract Value for Money
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and will usually stimulate supplier innovation. In all except for very bespoke or technical service or supplies, you should always allow potential bidders to propose innovative ways of meeting the Councils needs. More information on benchmarking can be found in section 1.8.
Step 7: Regeneration & Local Businesses

Our procurement activities can significantly influence the local economy. Contracts can secure local jobs and support local businesses. Contact the Councils Enterprise & Regeneration Team for advice where you believe your purchase or contract may have an impact on regeneration issues within Lambeth. You should also think ahead about advertising locally and local business involvement opportunities. More information can be found in the Local Business section of this Guide in 1.6.8.
Step 8: Decide on Contract Type & Packaging

At the eighth step, you should think about how you will you package your contract. There may be little or no choice about the contract type and how you package or divide it up, but clever or innovative contract packaging can stimulate innovation and present Value for Money opportunities. You should also think ahead to the contract management stage and ensure that your contract strategy enables efficient and effective management be sure to see additional guidance in section 2.3 of this Guide.
Step 9: Confirm Costs and Check Value for Money

When you reach the last step, be sure to compile all the information you have gathered in one place and review details and costs. The best way to record this information is in the Procurement Business Case and the Procurement Strategy Report. These templates organise all your information neatly and should you then be required to seek approval from your Procurement Board(s), they will be needed to accompany your Procurement Approval Form. The templates can be found on the Corporate Procurement intranet site at http://intranet.lambeth.gov.uk/StaffServices/FinanceAndProcurement/Procurement/ProcurementAtLambeth/ ProcurementFormsTemplatesAndDocuments.htm. At this last stage in the planning process, you should also be able to determine if your procurement exercise provides Value for Money. More information on Value for Money can be found in section 2.4 but briefly VFM is the optimum combination of whole life costs and benefits to meet the customers requirement. It is not always the lowest initial price option! It requires the assessment of the following: Initial capital investment Fitness for purpose Quality issues Delivery and availability Whole-life costs or cost of ownership On-costs transport, storage, power The cost of procurement itself YOUR time! Longer term costs - contract management, costs that accumulate over the life of the contract
Another way to think about the achievement of Value for Money is to check if your procurement exercise meets the 5 Rights to Buy: 1. 2. Right Product or Service Right Time
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3. 4. 5.
Right Place Right Price Right Quality
3.1.3
Advertisement for Expressions of Interest
The definition of advertising is to announce or praise (a product, service, etc.) in some public medium of communication in order to induce people to buy or use it. Advertising is all around us, obviously: on television, radio and billboards and the internet. In procurement it is a very powerful tool as well; advertising your tender in the right place at the right time can not only stimulate competition, it can drive down tender prices, improve service delivery and inform you of businesses that you did not even know existed some which may be right in Lambeth. At Lambeth, the Procurement Boards expect all contracts over 100,000 to be advertised externally in some way (trade magazines, local publications, internet, etc.) and these costs need to be considered when planning the procurement exercise. Even tenders below the 100,000 mark can benefit from some kind of external advertising, primarily from those reasons already stated: increased competition, price reduction and to find out about new and local businesses who can do the work we are tendering for; the advertisement invites expressions of interest from potential tenderers. Advertisement can also be used to supplement the Councils Approved Supplier List unless you are sure that the Approved Supplier List provides adequate and up to date coverage of the relevant market. An exception to this requirement is building and works contracts where using the Approved Supplier List or an OGC or LCSG supplier would be sufficient. In any case, you need to consider the cost of advertising as well some trade publications charge a lot of money for tender advertisements, as do broadsheet newspapers.
In cases where you are not satisfied that the approved supplier database will yield an adequate shortlist, you should consider the use of public advertisement to attract potential tenderers; this may be mandatory where EU rules apply; where the procurement exercise is conducted under EU directives (where the procurement is valued at 173,934 and greater for services and supplies or at 4,348,350 and greater for works and construction) public sector procurement officers may be required to advertise their Tender in the Official Journal of the European Union (OJEU)
However, there are 2 very easy to use and FREE advertising options, right under your nose. The first, the Contracts Finder internet site has already been covered in section 1.6.9; the second is our own Lambeth Internet website. Expressions of interest can be advertised on our own Lambeth internet site at no charge. Adverts are placed in the Tenders and Contracts section of the site, at http://www.lambeth.gov.uk/Services/Business/TendersContracts/ and getting the word out on the Lambeth internet could not be easier: 1. Complete the advertisement in full you can find it here: http://sharepoint.lambeth.gov.uk/sites/lts/corporateprocurement/Public%20documents/Forms%20an d%20templates/Expressions%20of%20Interest%20Advert%20Template.doc 2. Email the completed form to our Web team at WebTeam@Lambeth.gov.uk. Be sure to include the start and end date of the advert
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Thats all you need to do to get the word out about your Tendering exercise and its all for free!
3.1.4
Shortlisting
Shortlisting is the compilation of a list of suitable, pre-qualified suppliers that will be invited to tender. A shortlist can be created by using suppliers on the Approved Supplier List and the OGC and LCSG websites, suppliers on the Contract Register or the suppliers with the highest Business Questionnaire scores, if BQs have been used. Your aim should be to compile a list of the best, most suitably qualified and experienced suppliers in order to ensure both good competition and good tender returns. But how many suppliers should you aim to put on your shortlist? A good answer would be as many as you can handle should all the suppliers submit a tender; more competition is better. But you dont want to get stuck evaluation 80 tenders! You want the best suppliers to submit their best offer, and one methodology is the 50% Rule. Taking into account that about 50% of your suppliers will not submit a tender (they may have changed their mind, or their tender is late or otherwise disqualified) by creating a shortlist of the 10 best suppliers, you may expect to get 5 (as a minimum) tenders back; this is easily managed in evaluation and represents good competition. Using the EU requirements for minimum and maximum tenders in the restricted procedure is also a good method: under the restricted procurement route, a minimum of 5 tenders returned is required and a maximum of 20. There are cases where it may be desirable to produce a balanced shortlist, containing representatives of various classes of organisation. For example, it might be sensible to include some large and some small companies, or some general-purpose service companies, voluntary organisations or specialists. It might also be important to include at least one local organisation, if possible. These are examples of the additional considerations that may not fit within a purely numerical evaluation. Whatever the criteria are, they must be agreed before responses are received, and preferably before applications are invited.
3.1.5
The Specification
The specification for the works or services is a description of what is required. It should be clear, to the point and allow reasonable scope for innovation. Other local authorities or organisations may be able to provide you with examples of specifications related to the services concerned. However you must ensure that your specification meets your needs. You should ensure that you think ahead to both the evaluation stage and the contract monitoring stage. Tender documentation, together with the specification, should always reflect the manner in which you intend to evaluate bids and subsequently monitor the contract. If it is the intention to apply quality thresholds or to carry out quality evaluation, you must establish the criteria and include them in the tender documentation You can build up a specification by including sections on: The objectives of the service or product The key customers What the product or service is meant to do What each customer or end user is meant to receive Critical timings in the process Quality criteria each output or sub product is meant to satisfy Quality assurance procedures which contractors must follow Information or activity reports to be generated
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Training or maintenance requirements Problem solving techniques the contractor may need to employ
There is a danger in over specifying services and products. For example, it would be possible to require that particular types of vehicle are used to undertake a refuse function. However this might limit the scope for innovation by the contractor. As a rule it is often best to focus on service or product outcomes (the what) rather than the inputs required (the how).
The Output Specification

You may find yourself where you are not altogether sure of WHAT to specify in a supply or HOW a service should be delivered you may simply know that you want to reach a certain goal in your tendering exercise. For instance, if you are placing a contract for the supply of a staff catering service, you may not know exactly what types of foods are possible and how the service will be delivered. In cases like this, an Output Specification might help, as you are presenting to the tenderer your desired goal: in the catering instance, you just want to feed the staff members. Your Output Specification approaches the tenderer to provide YOU with the specification, based upon your set minimum criteria. The Output Specification is the basis on which the Council and its stakeholders state in output terms what they need to achieve from the facilities and services to be provided. It helps to frame the tenderers response to the tender. The items in this Output Specification detail what needs to be achieved - not how it is to be achieved - and are presented as guidance to represent those minimum areas that each tenderer needs to address in preparing their tender. A well-drafted Output Specification is fundamental to developing a robust contract and the successful delivery of long-term services. It is part of a process that is radically different to traditional procurement, in that the emphasis is on service outcomes and outputs, explicit allocation of risks, and the integration of design and builds with the operation of service facilities. In comparison, conventional procurement methodology is often an iterative process in which an outline of the project is drawn up and costed. Further iterations and costing revisions normally occur before a final scheme is agreed and the contract for development is let. Using this process, the risks of cost increases and failure due to inappropriate design, planning etc., tend to fall on the client. As a result, the completion of the project can be delayed; it can cost more than originally anticipated, or can fail to meet all of the initial objectives. Additionally, little account is taken of ongoing running costs in terms of building life-cycle maintenance, the ongoing provision of services, and the efficiency of facilities. Output Specifications encourage a focus on strategic needs rather than the history and detail of current provision. A
The challenge is presented to the successful tenderer to deliver a service or supply to the London Borough of Lambeth which will genuinely enhance the service or supply provision sought, both by the positive contribution that standards make to the staff environment, and by the removal of unwanted problems. This challenge can only be met effectively if the local authority and other stakeholders are clear about their requirements, and communicate these in a way that allows the Contractor to develop the optimal solution. Hence, tenderers need to be able to work to a well-written Output Specification from the outset of the tendering process.
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well-produced Output Specification allows for new ideas about the design, construction and operation of the service or supply to flourish. Most critically, because this approach encourages bidders to develop the means to deliver the outputs within the context of a set of guidance points, it focuses much more attention on project risks. This should lead to better-designed and operated services in the longer-term. The emphasis which this type of specification places on outputs is intended to encourage innovation in service provision and operational methodology. A reliance on experience - what both the Authority and the Supplier knows will work will always be at the heart of the best projects, but innovation, imagination and flair are always welcomed and are strongly encouraged. The Output Specification process itself also offers scope for innovation. New forms of teamwork may well develop between the Authority and the successful tenderer, with the potentially creative synergy between stakeholders, contract managers and all end users kickstarting innovative ideas working with charitable and voluntary sector staff, for example. In addition, this approach The Specification & Pricing should encourage bidders to focus more sharply on ideas and When writing your specification value-added solutions that will drive down the whole life-cost you should also be clear about of the project. You should ask for method statements for the provision of services wherever this might help to differentiate between bids. But remember that method statements take time to assess and they are only helpful where there might be more than one way of delivering the service. You should review your tender documentation, specification and requirements for method statements from the point of view of contract management (see Section 4). Tender documentation will become part of contract documentation once the contract begins. Successful contract management, and hence successful delivery of the service, is highly dependent on a well-designed and carefully formulated contract. By thinking ahead you will be able to ensure effective and efficient contract management.
how the specification relates to pricing. This might include stages or a build up of prices according to a number of sub activities or products. Pricing should normally relate to outputs or products unless you specifically seek a day rate. Pricing should also take account of the technical and financial risks. The traditional approach is to invite tenderers to quote either firm prices (where there can be no subsequent adjustment for inflation) or fixed prices (subject to variation of price clauses). Under both these approaches the tenderer is encouraged to achieve efficiency savings during the life of the contract.
Good Practice Guidance for Service Specifications
Use simple English and avoid the passive voice (make it clear who is responsible for each specified requirement) An alternative approach is to ask tenderers to provide target costs State your requirements clearly, concisely, and and efficiency plans from which comprehensively (but keep to essentials) savings can be shared between Express requirements in output terms (the result of contractor and client. what is provided rather than how it is provided) Ensure that the contents of the specification do not contradict any matters in the conditions of contract or other tender documents Ensure that essential supporting information is available to bidders
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Bear in mind your chosen approach to evaluation and ensure that responses will enable a full and fair evaluation Provide the opportunity for innovative solutions Make use of an Output Specification, wherever possible
Specifications should contain the following: The service objectives The activities to be carried out The range and volume of work Any resources or qualifications that are necessary to fulfil service requirements An invitation to provide proposals for delivery of outputs in a method statement, which must not be over-detailed Performance standards and quality of service expected, related to widely accepted professional standards How performance is to be monitored and assessed (use of Performance Indicators and measurable standards) A mechanism, where possible, for the continuous improvement of the above indicators and standards (in line with Best Value principles) What happens if there is a failure to deliver Users/customers served by the activity Interfaces with other departments/organisations Statutory or other constraints on performance How future variations will be handled How payments will be made (including variations and volume or budgetary changes)
The specification should not: Contain features or requirements that discriminate unfairly between potential contractors Include anything that might deter suitably qualified contractors from bidding
3.1.6
Tender Documentation
The expression Tender Documents refers to all formal documents sent out to potential bidders including the business questionnaire, tendering instructions, evaluation criteria, the specification, and all contract conditions. These, together with the bidders response (e.g. method statement, pricing document, signed Form of Tender) become Contract Documents once you have accepted a bid. The Executive Director must ensure that tender documents are adequate and this process will normally include consultation on legal and financial matters (through officers authorised by the Legal Team and the Head of Procurement and Partnership Strategy). For major contracts it may be prudent to discuss the contract with your finance section. The Executive Director must also ensure the accuracy and reliability of all documentation. You should identify any potentially ambiguous items and you should indicate the action required by prospective contractors. You should identify such action in advance in cases where you cannot avoid the ambiguity. A requirement for a method statement may be a suitable course of action, or alternatively, you may identify
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such action later in the tendering process and it may be a result of an error or unforeseen option. In this case, you must inform all bidders about the action required. Your tender documentation should include: Sufficient information for issue to applicants expressing an initial interest; this information should outline the reasons for the tender, the type of service or product required and an indication of the evaluation criteria and pricing philosophy expected Instructions to tenderers setting out how they must tender together with the criteria for evaluation Relevant contract conditions to be issued during the tender process A relevant and consistent pricing mechanism for the tender stage A specification against which bidders should tender Arrangements for payments: for simple purchases or small contracts, it is likely that standard terms of payment from the supplier or contractor are likely to be sufficient; however, you should include any special requirements in your specification; major contracts should normally set out payment arrangements within the contract conditions The Councils corporate policies can be found online at www.lambeth.gov.uk. Bidders should be advised that if they have questions about Lambeths policies they should contact the named officer as listed in your tender pack
You can build up most of these from previous checklists and materials you have researched. They may vary from one contract to another.
Contracts Under Seal

Any tender over 100,000 might need to be made and accepted under seal or as a deed. The Lambeth Legal Team (which should already be involved for such contracts) will require a request to seal accompanied by a short report approved by SPB or PB and signed off by the Executive Director. The contract to be sealed needs to be signed in advance by the successful contractor.
Contract Conditions
Corporate Procurement and the Legal Team maintain a Legal Contracts Library, for use by all Lambeth staff who are involved in procurement or contract management; many model forms of contract terms and conditions can be found here. The site has model contract conditions for software licences, software maintenance, service contracts, consultant contracts, training contracts and purchase of goods. You can also find conditions developed for Joint Venture Agreements. In the case of computer software, there may be a requirement for additional conditions and you should check this with the Legal Team. The library can be found on SharePoint here: http://sharepoint.lambeth.gov.uk/sites/projects/eGovernmentProjects/TSOTheme/LegalContrLibrary/default.aspx. To use the library, procurement staff should review the PDF documents available and apply to their Departmental Procurement Team, the Legal Team or CPT for a Word copy which can be tailored to the specific contract. The final version of the terms and conditions must be checked with the Legal Team. Remember: Where you use industry standard building or engineering contracts, you should ensure that these conditions are supplemented by relevant clauses of the Councils standard conditions; check this with the Legal Team.
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Officers must consult the Lambeth Legal Team about whether a Parent Company Guarantee is necessary when a supplier is a subsidiary of a parent company and the total aggregate value of the contract exceeds 250,000 or the award is based on evaluation of the parent company or if there is concern about the stability of the supplier.
Officers must consult the Lambeth Legal Team about whether a performance bond is needed. This may be where the total aggregate value of the contract exceeds 1,000,000 or where it is proposed to make staged or other payments in advance of receiving the whole of the subject matter of the contract and there is concern about the stability of the supplier. Contact Andrew Pavlou in the Legal Team at apavlou@lambeth.gov.uk.
3.1.7
Inviting Tenders & the Tendering Period
Sections of this Guide describe the use of corporate contracts (which obviate the need for tendering) and the Councils approved supplier database (which can provide a shortlist for most categories). You will also find information on Buying Solutions and ESPO contracts in this Guide, use of which negates the need for call for expressions of interest from potential tenderers, and the application of a business questionnaire - again where required. See an outline of the process in chart 3.1.7 below:
Maintain All BQ Information For The Duration Of The Exercise
Request Expressions Of Interest From Potential Tenderers
Send Out Business Questionnaires to Potential Tenderers
Assess Business Questionnaires
Compile Shortlist of Tenderers
Send Invitation To Tender To Tenderers
Inform Unsuccessful Suppliers of BQ Assessment
Establish A Period For Queries, Site Visits & Clarification Meetings
Securely Receive Tenders
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This section relates to the formal tendering period in between shortlisting and receipt of tenders. The meaning of formal in this context is that tenders are invited and received in writing, queries and information flows are carefully controlled, all tenderers are treated equally and tenderers engage in the vital activity of preparing their formal bids. Thus there is an auditable procedure to cover what can be a highly sensitive and challenging period. The whole process is handled within the department, but note that the receipt of paper tenders for contracts over 100,000 must be handled by FM staff. The Instructions to Tenderers are on the intranet and are important for contracts as they contain legal requirements as well as setting out the formal process. Once you have prepared your list of organisations to approach, you need to send out the Invitation to Tender (ITT) letter. This letter must be formal, it must refer to attachments and it must set out (or refer to) the tendering instructions quite explicitly. You should require Tenderers to confirm receipt of the ITT and tender documentation. You should normally offer a single named point of contact for the tenderer so that you handle all queries consistently. You should answer queries promptly and always take account of your overall time-scales. Should you provide clarification to any one tenderer you should also circulate this clarification to all other tenderers. An easy way of doing this is to set up an e mail group of all tenderers, so information requested from ONE can be easily and quickly distributed to ALL. This part of the process is usually straightforward. However, where you cannot precisely define the services or goods required, you may have to answer many questions and tenderers may ask you for meetings. Indeed tenderers may want to arrange site visits. You must allocate time for this period, as you will need to work between yours and your Tenderers schedules and you must take great care to offer equal opportunities to all tenderers and not give any preferential treatment. During this period you must not accept any hospitality from any of the tenderers involved in the procurement exercise. Tendering effort should be in proportion to the value and complexity of the contract. You should seek the simplest approach that is compatible with fairness and obtaining best value.
3.1.8
Secure Receipt of Tenders
Executive Directors must make arrangements for the receipt, custody and opening of all competitive tenders and they must ensure that these arrangements are fully auditable. They must also ensure that these arrangements are fully observed by anyone acting as an agent on behalf of the Council. All tenders valued at 25,000 and greater must be returned by the online tendering service, before the advertised return date. The secure opening system requiring 2 different people to open the electronic tenders must be used. Suppliers are not required to submit hard copies but the oficer may request one copy as a reference In exceptional circumstances Officers may ask suppliers to return paper tenders instead of using the online system. In these cases approval must be given by Corporate Procurement. For paper tenders you must inform potential tenderers that you will only consider their tenders if they send them in a plain envelope or parcel with a label provided by the Council for the purpose, on which is printed the word "Tender" followed by the subject of the contract. Bidders must seal the envelope and must not show their identity in any way. Bidders must ensure that the envelope is delivered to
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the place and by the time stated in the tender invitation For contracts over 100,000 in value where a paper tender is being returned it will need to go to the Document Solutions Centre at Ivor House: To the Council of the LONDON BOROUGH OF LAMBETH Post Room Document Solutions Centre 1-9 Acre Lane (entrance in Buckner Road) London SW2 5TB All tenders delivered to the Document Solutions Centre must be marked with the date and time of receipt and the signature of the receiving officer. Late tenders must be treated similarly but marked received late and the date and time of the postmark must also be recorded (if legible). All tenders must be left unopened and stored in a locked cabinet until the due time for opening. Where you engage an outside agent to undertake the tendering process on behalf of the Council, then you must follow the usual arrangements. That is, tenders must be submitted to the Chief Executive and sent to the Document Solutions Centre where the opening will be witnessed by a Chief Executives nominee, opened and logged before being passed to agents. Any departure from these arrangements will need advance authorisation by the Chief Executive with clear justification provided. Paper tenders that are returned to the Document Solutions Centre will be opened by the post room staff one working day after receipt. This standstill period is to ensure that any late tenders that arrive during this time can be accepted. Once the standstill period has passed, the returned tenders can be picked up by the relevant officers, but not before. Be sure to factor this into your planning schedule. A paper tender submitted in competition cannot be accepted if it is not submitted in the correct, unmarked envelope or if it is late (unless there is evidence that it was posted First Class at least one day before the due date). If an identifying mark has been added by the Post Office (e.g. for registered post) then the tender is still acceptable. Any unacceptable tender must be opened purely to determine the senders details so that the tender can be returned with a letter of explanation from the Executive Director. All tenders for contracts over 100,000 in value must be opened at the same time in the presence of at least two people; at least one of these persons must be the lead officer for the procurement project, or their nominee. The authorised person must open each paper tender, number it and mark it with the date of opening. He or she must also sign in the relevant place on the Certificate of Bona Fide Tender (which contains the tender sum). A record of all tenders must be made including name, number assigned and amount of tender. The words and last must be inserted against the last numbered tender and this record must then be signed by the authorised person.
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A tender submitted in competition cannot be considered if: The Form of Tender and/or any of the declarations is not properly signed and dated or documents referred to in the submitted tender are not properly identified (although the Executive Director should give the bidder an opportunity to sign and date the Tender form within four days of being asked to do so); or The tender price or summary of rates is not clear from the tender documents; or The Bills of Quantities, Specification, Schedule of Rates and other supporting documents are not priced and returned to the Executive Director with the tender or within four working days of a request to provide them
Before proceeding to the evaluation stage you must check that the tender submissions are compliant with the Instructions to Tenderers, pricing schedule and any other explicit requirements (e.g. submission of method statements). In particular, you should check whether bidders have submitted their own terms and conditions as these might have the effect of qualifying the bid. If in any doubt, seek advice from the Lambeth Legal Team.
Electronic Tenders
The easiest and most efficient and effective way to receive tenders is electronically. Timed receipts of tenders are done automatically by electronic mail, postage costs are saved and security can be better ensured when tenders are received electronically. The guidance following is provided in order than you can ensure the secure return of your electronic tender. Once you have decided to receive your tenders electronically, you are, effectively, running an eITT project and electronic Invitation to tender project. You must make all tenderers aware of this at the outset, in order that all tenderers are given equal and fair consideration and that they can prepare their processes accordingly. This may involve some cost on their part, as it is not always a good idea to assume that all your tenderers have e mail or indeed that they have the same computer programmes that you do. In the event that any one of your tenderers is not able to return their tender by e mail, provision must be made for their secure receipt of tender, placed on CD ROM, for example. If you are unsure of what the options are, please contact the CPT for advice. Electronic Tenders should be returned to one point of contact only within your procurement exercise team, and this e mail address should be indicated in your invitation to tender letter, along with the receipt deadline date. Full instructions should also be included in your letter, in order to avoid any confusion and you should provide all your contact details to assist with this. Tenderers should be advised that if they have any questions either initially or at any point during the tendering process or if there are any doubts as to what is required or if they will have difficulty in providing the information requested that they can contact the nominated officer for this exercise for clarification. For a template of an eITT letter, please contact the CPT. Lambeth principally uses the Microsoft Word and Excel programmes, and though these tend to be universally used, you should notify all tenderers that these programmes will be used for your electronic tendering exercise. Once prepared, all tenderers should be strongly advised that they distil their tender documents into secure PDF (Portable Document Format) format before emailing to you or your named exercise contact. Secure PDF documents will provide adequate security against revision of all tender documents. tenderers should be
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advised to use the Standard Security application (preventing any changes to the document) to all documents, which will provide sufficient security and will allow printing of the documents, which of course, you will need to do. Tenderers must also apply a PDF Digital Signature, to all tender documents. Where a digital signature cannot be applied, the signature page must be signed and dated manually and the signature page scanned and distilled into PDF format and included with an/all tender documents. All tenderers must be notified of the e-mail address to which tender documents are to be returned, and by what time. Should the tenderer have any concern that their tenders have been received on time, it is strongly recommended that they call the Procurement Officer in charge of the exercise, in order to guarantee receipt. Once a tender pack of documents has been received, you should provide each tenderer with a Confirmation of Receipt of Tender email. It is also advised that all parties retain copies of these receipts for future reference.
3.1.9
Tender Evaluation
General Principles
This section covers the final tender evaluation process. This section relates to contracts over 25,000 and it covers considerations that may apply only to large complex contracts or outsourcing. However, the principles also apply to smaller contracts, particularly where price is not the overriding consideration. Tender evaluation is a key part of the procurement process. If the invitation to tender is all about asking the right questions, evaluation is all about interpreting the answers. More than that, it is the process by which the successful bid is chosen, thus establishing a contractual relationship for what may be a substantial period with a commitment by the Council to spend a significant sum of public money. See chart 3.1.9 on the following page for a simple diagram of the evaluation process. Thinking ahead in the evaluation process is very important. You must ensure that your approach to evaluation considers the specification. This section of the Guide will deal with a number of critical success factors in the evaluation process. These are: Deciding who does the evaluation Setting up the procedures and documents for evaluation Seeing clearly the differences between the two stages of the process, namely selecting bidders and picking the best tender Ensuring that the process of evaluation is fair, consistent and auditable Dealing effectively with the factors which may potentially disqualify some bidders Evaluating tenders on both price and quality
Initial Requirements
On completion of the tendering exercise, you must submit the results to the Executive Director or Procurement Board. In seeking approval to award a contract you must clearly demonstrate the reasons for not recommending the lowest bid if this applies.
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Also remember: If the tendering exercise has been subject to the EU procurement regime, you must place an award notice in OJEU using the specified format and timescale Declaration of interest in procurement matters is also important where evaluation is concerned. This is a serious obligation and extends to anyone involved in evaluation activities
Detailed Tender Evaluation Information

It is very important to plan the decision-making process in advance, and to clarify the people or groups who will take part. Typically there will be three tiers of involvement: Relevant Members (perhaps through a formal Council body) or the Executive Director responsible for the service A selection (evaluation) panel, usually at service manager or second tier level Working groups set up to evaluate specific aspects of the tenders, particularly the proposed method of working
The Executive Director should allocate responsibilities. The selection panel will take responsibility for the evaluation exercise. It should include service managers and other technically qualified people who are aware of the service requirements. It may also be useful to include senior officers responsible for finance, personnel and legal advice. The meetings should be provided with formal agenda papers. The papers discussed, including the tenders and supporting submissions from bidders, and any formal advice supplied by consultants should be filed, for audit to defend any challenges to the process or to its outcome. Also, its proceedings must be properly recorded. Any specialist groups must also be staffed by named officers who have expert knowledge of the matters on which they will be making judgements. Whilst it is less important to minute their discussions, the outcome in the form of the recommendations passed up to the selection panel must be on the record.
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Setting Up the Procedures & Documents

Before the competition is advertised, the selection panel should recommend to the relevant Members, Executive Director or Procurement Board the main criteria for evaluation, and a plan and timetable for the whole process. It should also agree a breakdown of the main criteria into its subsidiary elements, so that the proposed tests of each criterion can be seen in detail. Remember that the EU rules specifically pertain to the selection of tenders and evaluation. It is likely that forms need to be prepared, on which the detailed tests, the evidence and the judgements can be recorded side by side in a methodical fashion. The officers or consultants who are advising the panel will need to work through the implications of each criterion, and decide what evidence will be used as the basis for each judgement, and then provide the panel with a convenient format for reviewing the evidence and recording their opinions about each bid separately.
After the preliminary reading and checking has been carried out, the panel will meet to discuss the evidence and make its judgements. A panel does not have to operate as a committee, with every member having an equal vote; panel members are there because of special expertise or responsibility - some will carry more weight than others, particularly in their area of expertise, and may even be able to exercise a veto. Whilst it is normal for those panel members with special knowledge and expertise in an aspect to offer their opinions and assessments, the whole panel should be associated with the outcome and if possible should agree on each component assessment. Any significant disagreements should be recorded and reported upwards. The panel might meet at least twice prior to the final evaluation meeting, once to eliminate firms that do not meet the Councils minimum criteria for the contract and to record provisional assessments, and again to consider supplementary evidence and finalise the assessments. To carry out the final evaluation the panel may meet several times, including those occasions when it interviews tenderers and their prospective local management teams. At all times there must be an official record made of each meeting, to record who attended, what agenda was followed, and what firm decisions were made. The ability to audit the entire process is a fundamental requirement.
In the early tender panel discussions, there should be provision for a not proven assessment to be recorded where insufficient evidence has been supplied by a supplier. The required evidence may then be chased up and clarified if sufficiently important, and if time permits. It is of course legitimate to reject or not consider (depending on what is said in the instructions to tenderers) a tenderer for not providing information that was specifically requested
Evaluation Criteria
Irrespective of the value of a contract, you must establish the evaluation criteria at an early stage; the best way to do this is to prepare the evaluation criteria at the same time the specification is created. If this is done, you can guarantee that only what is specified is then evaluated and vice versa. This will also help if you are advertising to the European Union as the advertising notice requires that award criteria are mentioned in the advertisement and in the award notice. Moreover the EU rules also prevent an Authority from awarding a contract on the basis of criteria which have not been specified either in the contract notice or in the contract documents.
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You must accept tenders on the basis of either: Lowest Price MEAT - Most Economically Advantageous Tender. This is the tender providing the most benefit to the Council, as determined by such criteria as are relevant to the type of contract an evaluation of both quality and price is undertaken. Where the decision does not involve the lowest price you should document your decision process with particular care
Lowest Price Tenders

Accepting tenders based upon price alone is fairly straightforward; suppliers are requested to submit tenders (usually for products) indicating the price they would charge. The lowest price tender, obviously, wins the contract or purchase. Where prices are being converted to points, a simple formula can be used. This is helpful in scoring evaluations and in subsequent de-briefings to unsuccessful tenderers; prices can be given scores in order to maintain commercial confidentiality. The chart below represents a tender exercise for the purchase of some widgets. Five companies have submitted their bids, and they are recorded in the table as below:
TENDER ABC Widget Company Widgets & Co. Widgets R Us Widget-mania The Widget Man
PRICE 500.00 622.00 440.00 575.00 625.00
CALCULATION 440500x100=88 440622x100=71 440575x100=77 440625x100=70
CONVERT TO 100% 100x88100 100x71100 100x77100 100x70100
POINTS 88 71 100 77 70
Allocate 100 points for the lowest price submitted the 100 points represents the 100% you are allocating as the evaluation percentage for price in this tendering exercise. Then allocate points to the remaining tender prices as a percentage of the lowest price (as submitted by Widgets R Us), and then convert to a point score to reflect that this carries 100% of the total score. Based upon lowest price alone, Widgets R Us wins the contract.
Most Economically Advantageous Tenders

The Most Economically Advantageous Tender (MEAT) is one that has the lowest evaluated cost and not necessarily the lowest submitted price. The criteria which the authority may use to determine that an offer is the most economically advantageous include delivery date, running costs, cost effectiveness, quality, aesthetic and functional characteristics, technical merit, after sales service, technical assistance and price. The objective of a MEAT is to identify the tender that offers best value for money and to allow evaluation of bids on commercial, technical and quality terms not just ion a price element. It also allows for optional requirements to be priced and evaluated on a lifetime cost basis, i.e. it allows each criteria to be shown as either 'mandatory' or 'optional'.
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Quality vs. Price

In the first instance, officers who are evaluating both price and quality must determine what percentage of their scoring should be allocated to both price and quality; as a general rule, the weighting given to cost and quality is dependent on the risk and value of the contract to be awarded. An easy way to make this decision is by using Peter Kraljics matrix for products and services. The Kraljic Matrix separates services and supplies into four primary areas: 1. Leverage Products & Services Leverage procurement represents a high percentage of the organisations spend and there are many suppliers available. It is easy to switch supplier. The quality is standardized. Buyer-seller power situation: buyer dominated, moderate level of interdependency. Recommended purchasing strategy: competitive tendering, framework agreements with call-off orders placed as an administrative formality 2. Strategic Products & Services Strategic procurement involves the purchase of products and services that are crucial for the organisation. They are characterized by a high supply risk caused by scarcity or difficult delivery. Buyerseller power situation: balanced power, high level of interdependency. Recommended purchasing strategy: strategic partnerships, close relationships, early supplier involvement 3. Non-critical Products & Services Non-critical products & services are easy to buy and also have a relative low impact on the financial results. The quality is standardized. Buyer-seller power situation: balanced power, low level of interdependency. Recommended purchasing strategy: reduce time and money spent on these products by enhancing product standardization and efficient processing 4. Bottleneck Products & Services Bottleneck products & services can only be acquired from one supplier or their delivery is otherwise unreliable and has a relative low impact on the financial results. Buyer-seller power situation: supplier dominated moderate level of interdependency. Recommended purchasing strategy: partnering arrangements, look for potential suppliers At the early stages of your procurement exercise, you should determine which category your product or service fits into. Using the Kraljic methodology, evaluation percentages for your evaluation can be easily determined for each type of product or service.
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See the Kraljic matrix below:
+ Leverage Products & Services Price 60% : Quality 40% R I SK Collaborative & corporate contracts High volume routine items Strategic Products & Services Price 50% : Quality 50% High value goods and or services critical to the continuance of a service Strategic Partnerships
O F
L E V EL
Routine Products & Services Price 60% : Quality 40% Routine high volume supplies such as stationery, furniture, clothing, computer consumables
Bottleneck Products & Services Price 40% : Quality 60% Partnering arrangements Very few suppliers in market Low value supply which is critical to a front line service +
VALUE
Whole Life Costs & Tender Evaluation

The price criteria should be assessed using all whole life costs applicable to the goods / services / works being procured. Whole life costs comprise all costs to the authority of acquiring, owning, maintaining and disposing of goods, services or works. The list below provides an indication of the types of costs that may be included in whole life costs. Those to be included will vary dependent on the goods / services / works being procured: Initial price Delivery and installation Costs of operation In-house management resources Consumables Spare parts Licences Taxes Maintenance Energy consumption Depreciation Disposal Environmental impact
When tendering, the commercial aspects (previous experience of company, capacity of company, financial stability, insurance provisions, health and safety procedures, etc.) of a company should be assessed following the submission of a Business Questionnaire (BQ) or prequalification questionnaire. The BQ enables you to undertake a preliminary assessment of the interested companies and invite a short-list of companies to tender. Once the BQ information is assessed, the criteria used at the pre-qualification should not be used again or revisited when evaluating the invitation to tender
The quality aspect should include all criteria which will be used to assess the quality of the goods and or services. A
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summary of the criteria that could be used for the qualitative evaluation is listed below. This list should be used for guidance purposes only and is not intended to be exhaustive: Quality of goods / service / works Aesthetic and functional characteristics After sales service Delivery date / delivery period / period of completion Value added services Equality in service provision Quality assurance e.g. ISO9000 Environmental aspects e.g. ISO14001 Technical merit Running costs Cost effectiveness Technical assistance An explanation of what
Sub-criteria should be added either within the notice or in the contract documents. MEAT means can also assist suppliers.
Fairness & Consistency

It is an absolute requirement of public sector competitions that all companies wishing to enter the competition must be given equal opportunity to succeed. There are three dimensions to this equality of opportunity: 1. All competitors must be treated equally, that is, given the same opportunity, be supplied with the same information at the same time, given the same access to the client, and subjected to the same tests 2. The criteria for selection must be established at the outset and remain consistent and objective throughout 3. The reasons for rejection must be given and, if challenged, must be backed up by documentary evidence that will show that the competition was properly conducted The first dimension is relatively straightforward but may be difficult to manage in practice if many people are involved in dealing with applicants. It is essential to set up procedures to ensure that all prospective applicants are given opportunity, and that all applicants receive the same documents, including the answers to all the supplementary questions asked by any tenderer. The second dimension is harder to guarantee unless the contract is of a very simple nature and the selection based essentially on price. When advertising, you should make clear if the award will be made based upon lowest price or on MEAT. The advertisement or tender documents must state what non-financial criteria will be taken into account and it is good practice to set out these criteria in descending order of importance. The question of guaranteeing fairness is still relatively straightforward provided that the client wishes to restrict the performance of the contract to established practice. However, wherever a client wishes to give tenderers the opportunity to innovate, in the hope of finding a new and beneficial approach to service delivery, there will be a potential opportunity for one tenderer to steal a march on the others by introducing
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fresh considerations into the evaluation process. The client should take great care to ensure fairness in this respect. For example, the client for a revenues service contract may invite tenderers to offer their own computer system as the basis for operating the service. In this case tenderers may offer different systems, and the choice between those systems may legitimately determine the outcome of the contract. But if the client lays down that the successful tenderer shall make use of the Councils present system on the Councils mainframe computer, then any tenderer who bases a bid on a different system is presenting a non-compliant bid that must be ruled out. In the first example innovation was explicitly allowed, in the second it was explicitly ruled out. In many cases, use of one or more method statements is the best approach. The scope of the method statement(s) would have been carefully defined in the tender documentation and should not be onerous for tenderers by being prescriptive or asking for extensive detail. A direct comparison of method statements allows for judgements to be made on how proposals will affect outcomes. These judgements often require skill and experience on the part of the evaluation team and, as with all aspects of the evaluation, a written record to explain the judgements is required. The third dimension of equal opportunity requires a procedural solution, based on minuted meetings and clear records that show the evaluation approach being agreed before being applied, and then the agreed approach actually being applied. Records of assessments by individual panel members, and of votes on key judgements may also be helpful in establishing that the process was conducted above board and in a consistent manner. This is indeed the best way to defend the Council against an appeal from an aggrieved loser.
Potential Disqualifiers
The final evaluation process by definition involves only companies who have passed the disqualification tests in the first part. Nevertheless, it is advisable to repeat them. Companies may lose business, court cases and key staff between the first part and the second. Moreover, there is a new batch of disqualifiers to be overcome in the final evaluation. These all take the form of some failure to meet the terms of the competition, for example by not tendering on time, by not supplying all the information requested, by failing to get satisfactory insurance cover or by failing to provide the necessary performance bonds. Many such defects will be apparent on a cursory reading of the tender documents, but the wider concept of a compliant bid is vital to the selection process. A compliant bid is one that meets all the requirements and conditions laid down by the client authority. It may take substantial work to establish whether a bid is compliant in all respects. However, it is quite clear that bids may be disqualified for being non-compliant, and this will preclude them from being included in the final analysis. In practice, the most significant of the potential disqualifiers is the risk associated with the stability of each tenderer. You must take all reasonable steps to obtain assurance that any company invited to tender has the resources, as well as the expertise, to deliver the service for the duration of the contract, and is not likely to be bankrupted by any of its other business activities. You must also be satisfied that the proposed contract will not constitute a dominant part of the companys business, to the extent that any difficulties encountered with this contract will not themselves put the company at risk. Clearly this is a matter for informed judgement by officers who are experienced in interpreting company reports and whatever other intelligence may be in the public domain.
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The following case study is an example of how a tender can be effectively evaluated using the Kraljic model:
Case Study: A Tender for the Purchase of Widgets

You are a purchasing officer who needs to place a contract for the supply of widgets. After doing some benchmarking and research you determine that the widget market is a very tight market. Using the Kraljic matrix above, you determine that this is a bottleneck product; you set your evaluation balance at 60% for quality and 40% for price. For your evaluation you decide to use a scoring range of 0 to 5; 0 is failure and 5 is excellent, using the following matrix: 0 1 2 Failure - Failed to address the question/issue. Very Poor - An unfavourable response/answer/solution. There is limited or poor evidence of skill/experience sought; a high risk that relevant skills will not be available. Poor - The response/answer/solution/information lacks convincing evidence of skill/experience sought; lack of real understanding of requirement or evidence of ability to deliver; medium risk that relevant skills or requirement will not be available. Satisfactory - An acceptable response/answer/solution/information to the particular aspect of the requirement; evidence has been given of minimum skill/experience sought. Meets minimum requirements. Good - The response/answer/solution/information demonstrates real understanding of the requirement and evidence of ability to meet it (based on good experience of the specific provision required or relevant experience of comparable service or supply. Excellent - The response/answer/solution provides real confidence based on experience of the service or supply provision required. Response indicates that the supplier will add real value to the organisation with excellent skills and a deep understanding of the service or supply requested.
The weighting of each criterion is based on a scale of 1 5; 1 being low importance and 5 being highest in importance: 1 2 3 4 5 Low Importance Not Very Important Important Very Important Extremely Important
You may prefer to use a range of 0 to 4 (0 = poor, 4 = excellent) but it is not recommended to use a range greater than this - say 10 or 1000. You place advertisements for expressions of interest and ask suppliers to complete a Business Questionnaire. The BQs are evaluated on the commercial aspects alone and you create a shortlist of the below widget manufacturers: 1. 2. 3. 4. 5. ABC Widget Company Widgets & Co. Widgets R Us Widget-mania The Widget Man
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These are the suppliers you invite to tender and each receives an ITT pack, informing them that their bids will be assesses on MEAT and you include with each pack a blank evaluation form indicating your evaluation criteria of 60% for quality and 40% for price. All 5 suppliers submit a bid.
The Financial Evaluation

The key issue for financial evaluation is to assemble all the aspects of the tender that have a financial impact on the Council, and to segregate them from those that do not. The client needs to assess the financial liability to which the Council will be exposed throughout the life of the contract, insofar as it can be judged from the evidence of the tender. Finance staff members are responsible for any financial risk management process and they must carry out appraisals for each contractor before any significant contract is entered into; it is therefore essential that you take advice from your departments finance manager when undertaking tender evaluation. It is essential to align the financial impact of every tender so that differences in that impact can be assessed against the perceived value of the non-financial elements. In other words, you should rank the bids in order of financial impact. The one with the lowest impact is potentially the cheapest bid. You must then decide whether it is worth paying more to secure the non-financial benefits associated with more expensive bids. In the case study example, allocate 40 points for the lowest price submitted the 40 points represent the 40% you are allocating as the evaluation percentage for price in this tendering exercise. Then allocate points to the remaining tender prices as a percentage of the lowest price (as submitted by Widgets R Us), and then convert to a point score to reflect that this carries 40% of the total score. For example: TENDER ABC Widget Company Widgets & Co. Widgets R Us Widget-mania The Widget Man PRICE 500.00 622.00 440.00 575.00 625.00 CALCULATION 440500x100=88 440622x100=71 440575x100=77 440625x100=70 CONVERT TO 40% 40x88100 40x71100 40x77100 40x70100 POINTS 35.2 28.4 40 30.8 28
The Non-financial Evaluation

The non-financial or quality evaluation is most important starting with the choice of the quality criteria that will be evaluated. Most of these criteria will be relatively easy to identify as they are common to most evaluations of a service. However, it is important to ensure a comprehensive list. For example, if the Council aspires to develop better local delivery of customer service, then the selection criteria ought to reflect that. If the Council wishes to work with a supplier as a strategic partner in developing and investing in the service, then the criteria must incorporate the relevant judgements. A common evaluation approach is for the client to list all the features she/he expects to see in the proposal and to list and weight those relative to each other. This works well in cases where the approach is prescribed, or where innovation is not encouraged, but where variant bids are invited, it may become necessary to break the general rule and write a detailed supplementary evaluation scheme after seeing all the variants. Nevertheless, variants must still conform to the overall objectives set for the whole competition. And of course the overriding criterion for any variant bid ought to be that it offers a better financial deal than can be achieved by following the basic specification.
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Your tender for widgets will be evaluated on both quality and price. Considering the quality aspects first, you decide to evaluate on the following 5 quality criteria: 1. 2. 3. 4. 5. Quality of Goods Resourcing Plans Quality Management & Customer Care Programmes Environmental, Sustainability and Recycling Programmes Implementation & Business Plan
In creating your tender evaluation score sheet, you use the following weightings for each criterion: # 1 2 3 4 5 CRITERIA Quality of Goods Resourcing Plans Quality Management & Customer Care Programmes Environmental, Sustainability and Recycling Programmes Implementation & Business Plan WEIGHT 5 4 4 3 SCORE 5 5 5 5 TOTAL 25 20 20 15 10 90
2 5 Highest Possible Score for Quality
The highest possible score that ant tenderer can get for quality is 90. The first tender you evaluate is ABC Widget Companys tender; you score them on your score sheet accordingly: # 1 2 3 4 5 CRITERIA Quality of Goods Resourcing Plans Quality Management & Customer Care Programmes Environmental, Sustainability and Recycling Programmes Implementation & Business Plan WEIGHT 5 4 4 3 2 SCORE 5 3 2 1 3 Grand Total Quality Score TOTAL 25 12 8 3 6 54
ABC Widget Companys score for the quality aspects of the tender is 54. In order to convert that quality score into a final score, use the below formula: 54 ABC Widget Companys Quality Score 90 Highest Possible Score for Quality 60 For the 60% Set For Your Quality Percentage = 36 The Final Score for Quality
Evaluate each tenders quality score in the same way.
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Making The Final Decision

It is now necessary to make the final decision by bringing together the financial and non-financial evaluations. The balance between price and quality is a key issue in this final part of the evaluation. In the case study for your widget contract, add the total scores for both quality and price together. The company with the highest score wins the contract. Transpose all your tender scores onto a table. For the sake of argument, the quality scores for the remaining 4 tenderers have been added to the below table: TENDER ABC Widget Company Widgets & Co. Widgets R Us Widget-mania The Widget Man QUALITY SCORE 36 40 34 28 22 PRICE SCORE 35.2 28.4 40 30.8 28 TOTAL SCORE 71.2 68.4 74 58.8 50
The contract is duly awarded to Widgets R Us. The evaluation criteria and methodology should be designed to ensure that the successful tender meets all essential requirements. However, if the non-financial evaluation indicates major qualitative advantages of a tender that is only marginally more expensive, a judgement may be made by the evaluation panel to select a tender other than the cheapest. Using this methodology, the most economically advantageous tender would be selected. The evaluation methodology need not employ a pre-determined mathematical scoring to weigh quality differences against price differences. It must, however, provide a firm basis for an objective and auditable evaluation of whether a tender meets the Councils essential requirements and the importance of qualitative differences between tenders. The way in which technical differences are weighed against financial differences is a fundamental part of the decision making. Strong evidence is required to reject a significantly cheaper bid that is compliant with all mandatory conditions and requirements. However, the fundamental criteria are that the decision must be: Based on invitation to tender documentation that fully specifies requirements; Based on accurate and comprehensive evaluation dossiers and Auditable
The widget case study illustrates one type of evaluation methodology. It sets out the various stages and gives examples of criteria. The use of a formula and the score and weighting system can be easily computed, its easy to document and communicate to tenderers and it is easy to audit.
The Two Envelope Method

It can sometimes be advantageous to use the two envelope process. This requires tenderers to submit their main bid in one envelope but their price in a separate envelope. The evaluation panel would then open
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the first envelopes and identify those tenderers who have passed a quality threshold. The second envelopes for these tenderers are then opened to determine which among them offers the lowest price.
3.1.10
Clarification & Amendment
It is usually acceptable to clarify arrangements with bidders following opening of tenders. This might include areas of genuine ambiguity (not caused by the bidder), liaison arrangements, use of support or administrative procedures and suchlike. Thus, there may be circumstances where an officer may contact a bidder in order to clarify an ambiguous tender. This does not constitute post-tender negotiations. Clarification issues and all communication with bidders must be in writing or recorded in writing. It can be dangerous to seek to re-negotiate any aspect of the contract at this or any later stage. This advice particularly applies to price or any significant aspect of the original competition that might be subverted. You should always assume that an unsuccessful bidder would find out if there has been any post-tender negotiation and they might lodge a formal complaint. It is perfectly reasonable to: Ensure bids have been constructed correctly Ensure the tenderer has fully understood the specification Seek clarification about quality and performance Seek clarification about terms and conditions Clarify or supplement the Councils requirements
Where there may be changes to the prices offered as a result of the above, you need to take care not to distort competition. You must not make fundamental changes to the contract specifications or the award criteria. This is because tenderers which are not party to such discussions might be able to match or better the offer which is accepted. If it becomes clear that significant changes to the specification or award criteria would be advantageous, you must give all bidders the opportunity to revise their offers. In certain restricted circumstances, an Executive Director may accept amendments to tender prices. Essentially they relate to the opportunity for the Council to secure better value for money from the successful tenderer, but in a manner that does not undermine the basis of the original competition.
3.1.11
Contract Award
Once the evaluation of tenders has been completed and any clarification has finished, the usual course of action is to award a contract to the successful tenderer. This is the usual course of action, because Lambeth procurement officers must be advised that if none of the returned tenders represent value for money there is no obligation to award a contract. However, in most cases a decision to award a contract is made and that decision must be confirmed in writing as a recommendation to award to by your Procurement Board. This section covers the award procedures for both lower and higher
A common, and entirely acceptable, aspect of post-award clarification is to discuss matters such as routine procedures, data flows, sharing data, joint monitoring, programmes of meetings and general administration; this links to thinking ahead to contract management (Section 4). These discussions may also involve an element of negotiation, but of a different nature to negotiating contract details. Your goal should be to ensure the most effective and efficient means of managing the contract over its lifetime, based upon the tenderers original submission
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valued procurements but procurement officers must be aware that award approval must be obtained from the relevant Procurement Board before either an initial order is placed or work can begin on the proposed contract. Depending on when the boards are meeting, this can take time so be sure to plan for this! Officers must also ensure that they have the delegated authority to award the contract.
a. Procurements Valued from 25,000 and up to 100,000

For lower valued contracts and/or purchases, once evaluation is completed a supplier is selected based upon lowest price or MEAT. The lead procurement officer must write the Officer Delegated Decision Report Lite Procurement recommending the suggestion to award a contract by their Procurement Board. They must also complete a Contract Register Form; forms can be found on the CPT intranet site. The officer completes the main body of the Delegated Decision Report and sends it to the Legal and Finance departments for their comments. The finished report and Contract Register Form are submitted to the Procurement Board for presentation by the lead officer.
b. Procurements Valued from 100,000 and up to 500,000

For medium value contracts and/or purchases, once evaluation is completed a supplier is selected based upon lowest price or MEAT. The lead procurement officer must write the Officer Delegated Decision Report Procurement recommending the suggestion to award a contract by their Procurement Board. They must also complete a Contract Register Form; forms can be found on the CPT intranet site: http://intranet.lambeth.gov.uk/StaffServices/FinanceAndP rocurement/Procurement/ProcurementAtLambeth/Procur ementFormsTemplatesAndDocuments.htm. An Officer Delegated Decision Report Procurement: Part 2 Not for Publication must also be written, containing all commercial, sensitive and confidential information. The officer completes the main body of the Delegated Decision Report and sends it to the Legal and Finance departments and their departmental councillor for their comments. The Constitutional Process also must be followed as regards Officer Decisions; see details in section 3.1.12. The finished report and Contract Register Form are submitted to the Procurement Board for presentation by the lead officer.
All reports and forms must be presented to the Procurement Boards in person; depending on when the boards are meeting, the lead officer will need to plan for this. Upon approval by the Procurement Board, the signed reports are returned to the officer for their Business Unit Manager or Head of Service to sign and the lead officer retains a copy. Only after all approvals have been attained and the 10 Day Standstill Period observed - where the procurement has reached the EU tendering threshold - will the Contract
The 10 Day Standstill period in public sector procurement is a cooling off period after the decision to award a contract has been made. The Standstill period does not apply to procurements below the threshold for advertisement in OJEU or to procurements otherwise outside the full scope of the EU Directives. This means it does not apply to procurements of Part B services or to procurements where there is only one tenderer following the extreme urgency provision under the negotiated procedure. Once evaluation and award processes are completed but before actual contract award and implementation, officers must notify and debrief all suppliers of the intention to award the contract. A mandatory 10 Day Standstill Period must follow (10 calendar days), allowing unsuccessful suppliers to challenge the award decision, should they choose
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Register be updated; see right and following. A purchase order can be raised and work can then begin on the contract.
c. Procurements Valued at 500,000 and Greater

For purchases and/or contracts valued at 500,000 and greater, a similar reporting process is carried out in order to award these higher value contracts. Once a tenderer is selected, the lead procurement officer must complete the reports as in a above, and whilst the reports also recommend the suggestion to award a contract, submission is made to the Procurement Board. As above, the officer completes the main body of the Officer Delegated Decision Report as per the Lambeth Scheme of Delegation and sends it to the Legal and Finance departments and their departmental councillor for their comments. The Constitutional Process also must be followed as regards reporting to Scrutiny; see details in section 3.1.12. When comments have been added, the finished report is submitted to the Procurement Board. All reports and forms must be presented to the Procurement Board in person; depending on when the boards are meeting, the lead officer will need to plan for this. Upon approval by the Procurement Board, the signed reports are returned to the officer for their Business Unit Manager or Head of Service to sign and the lead officer retains a copy. Only after all approvals have been attained and the 10 Day Standstill Period observed where the procurement has reached the EU tendering threshold - will the Contract Register be updated; see right and following. A purchase order can be raised and work can then begin on the contract.
There may be times when a contracts initial approval to tender and contract award approval is not reviewed by a Procurement Board. In the case of very high value, sensitive or complex procurements, these approvals and reviews may be conducted by the Lambeth Cabinet or another Council body, group or committee. Otherwise, all other procurement processes will be the same
d. Contract Award, the Document Trail & the Contract Register

When a procurement officer has completed tendering and tender evaluation, they will submit their Officer Delegated Decision Report Procurement and if required, the Officer Delegated Decision Report Part 2: Not For Publication for procurements valued at 100,000 and greater. They will also complete a Contract Register Form and submit these to the Procurement Board. These forms must have Board approval before the next steps are taken. The following responsibilities have to be shared out between the Board Administrators and the procurement officer responsible for the procurement project. Be sure that all communication routes are kept open in order to prevent contract implementation. All contract documents must be entered into the Contract Register and the Register must be updated before a purchase will be raised. Once approved, the steps required in Gateway 3 or the contract award process are basically down to three parties: the Board Administrator, the procurement officer who is leading on the contract that is to be awarded and the departmental Committee Continuity Officer. It is strongly recommended that the lines of communication between these parties are kept open so contracts can be implemented as speedily as possible.
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For Contracts Valued from 25,000-100,000 Procurement Officer Tasks

1. Once the relevant Procurement Board(s) have recommended a contract for approval, the Board(s) signs the Procurement Approval Form Award and the Officer Delegated Decision Report Procurement. The reports are then given to the procurement officer responsible for the procurement exercise. 2. The procurement officer must then have the Officer Delegated Decision Report Procurement signed off by the relevant manager as per the Lambeth Scheme of Delegation. 3. See the table below for the Scheme of Delegation: Value of Contract, Contract Variation or Extension Over 10 million More than 1 million up to and including 10 million More than 100,000 up to and including 1 million More than 50,000 up to and including 100,000 Up to and including 50,000 Authorising Officers Executive Director of Finance and Resources Executive Director and Divisional Director of Resources Divisional Director and Divisional Director of Resources Head of Service or Assistant Director Business Unit Manager or other Manager
4. Once the Officer Delegated Decision Report Procurement is signed off by the relevant manager (as per the Lambeth Scheme of Delegation) the procurement officer must then check to see if the supplier is on Oracle. If not, the officer must set them up following the Supplier Setup process. 5. The procurement officer compiles the following contract documents for scanning: The Procurement Approval Form Award The signed Officer Delegated Decision Report Procurement ALL contract documents: terms and conditions of contract, specifications, method statements, financial arrangements agreement, etc.
6. The officer scans all these documents into the Contract Register SharePoint site: http://sharepoint.lambeth.gov.uk/sites/lts/contractdoclib/default.aspx into the folder allocated to their department. 7. When all contract documents have been scanned, the procurement officer notifies the Procurement Board Administrator for completion of the final steps and they should send the Board Administrator the SharePoint links to their contract documents this will speed up the process greatly!
Procurement Board Administrator Tasks

1. The Procurement Board Administrator logs into the Contract Register at https://lambethcrs.saas.nipltd.com/crs/ and opens the relevant Project. They will Create Contract for Project and it is at this stage that the Project becomes a Contract. 2. Using the contract documents that the procurement officer has scanned into SharePoint, the Procurement Board Administrator completes the data entry for the contract in the Contract Register.
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3. Once the Contract Register is updated with all linking contract documents, the Procurement Board Administrator contacts the procurement project officer and has them set up their purchase order. No purchase order will be set up by Oracle without all Contract Register information being updated.
For Contracts Valued from 100,000 and Greater Procurement Officer Tasks
1. Once the relevant Procurement Board(s) have recommended a contract for approval, the Board(s) signs the Procurement Approval Form Award and the Officer Delegated Decision Report Procurement. The reports are then given to departmental Committee Continuity Officer (CCO) who will manage the Constitutional Process in Procurement. 2. When the Constitutional Process is completed, the procurement officer compiles the following contract documents for scanning: The Procurement Approval Form Award The signed Officer Delegated Decision Report Procurement The signed Officer Delegated Decision Report Procurement Part 2: Not for Publication (if relevant) ALL contract documents: terms and conditions of contract, specifications, method statements, financial arrangements agreement, etc.
3. The officer scans all these documents into the Contract Register SharePoint site: http://sharepoint.lambeth.gov.uk/sites/lts/contractdoclib/default.aspx into the folder allocated to their department. 4. When all contract documents have been scanned, the procurement officer notifies the Procurement Board Administrator for completion of the final steps and they should send the Board Administrator the SharePoint links to their contract documents this will speed up the process greatly!
Points to Remember
The communication routes between all parties must be kept clear in order to facilitate effective contract implementation. The Contract Register requires that contract documents are scanned and stored on SharePoint - see the link above. Documents can be scanned direct to email using a Sharp Multi Functional Device has a file size restriction of 4mb which is set by Lambeth IT. This will equate to approximately 15 20 black and white pages and less for colour pages. Therefore documents containing photos and large amounts of solid colour will increase the file sizes and reduce the number of pages scanned.
To scan a larger volume of documents there are two options: 1. Use a memory stick in the USB port on the side of the MX2700 Sharp MFD (Colour device only). This way you will only be limited by the size of the memory stick. 2. Or preferably please use Pitney Bowes. Pitney Bowes will provide pricing for each job upon request: o Pitney Bowes Print Management Phone: 020 7926 2206 Fax: 020 7926 3043 Email: lambeth.print@pb.com
For new supplier setups, an online supplier setup form is available within Oracle i-Procurement. It enables the efficient raising of a request for a new supplier and allows the requester to follow the progress through the approval process.
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You can find the form on Oracle here: http://comp-ap-65/training/. The Supplier Setup Form e-learning course can be found here: http://comp-ap65/training/flash/enhancements/Supplier%20Creation%20Form%20%20output%20Files/Trainers%20Are%20Us%20Supplier%20Set%20Up%20Form_demo/T rainers%20Are%20Us%20Supplier%20Set%20Up%20Form_demo.htm. The e-learning course for a new Supplier Setup approval can be found here: http://compap65/training/flash/enhancements/Approval%20of%20Supplier%20Set%20Up%20Form%20%20Output%20Files/Approval%20of%20Supplier%20Set%20Up%20Form_demo/Approval %20of%20Supplier%20Set%20Up%20Form_demo.htm and the New Supplier Setup Form Approval course can be found here: http://comp-ap65/training/flash/enhancements/Approval%20of%20Supplier%20Set%20Up%20Form%20%20Output%20Files/Approval%20of%20Supplier%20Set%20Up%20Form_demo/Approval %20of%20Supplier%20Set%20Up%20Form_demo.htm. For additional e-learning courses, see the links below: Linking a Contract to a Requisition http://comp-ap65/training/flash/enhancements/Attaching%20a%20Contract%20to%20a%20Requisition%2 0-%20Output%20Files/Attaching%20a%20Contract%20to%20a%20Requisition_demo Approving a Requisition Linked to a Contract http://comp-ap65/training/flash/enhancements/Approval%20of%20Requisition%20With%20CPA%20%20Output%20Files
Remember: do not forget to send the SharePoint links to the Procurement Board Administrator! When the above steps are completed, the Procurement Board Administrator takes over. They log into the Contract Register and open the relevant Project. Using the contract documents that the procurement officer has scanned into SharePoint, they complete the data entry for the contract. Once the Contract Register is updated with all linking contract documents, the Board Administrator contacts the procurement project officer and has them set up their purchase order. Remember: no purchase order will be set up by Oracle without all Contract Register information being updated.
The Oracle Link

All Lambeth contracts valued at 25,000 and greater must be listed on the Contract Register and all purchase orders raised for these contracts must link to the Contract Register. To ensure that your PO is processed without any problems ensure that: The PDF of the scanned, sealed and signed contract has been uploaded to the Contract Register. The officer raising the requisition has the full 10 character Contract Register number in this format: C00XXXX-0XX.
All revenue POs are re-raised at the beginning of each financial year, so if you issue an annual or quarterly PO to a supplier, you need to ensure that everything is in place to prevent any problems at the beginning of each financial year. Should you have any queries please contact your departmental procurement team.
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Written guidance is available (along with FAQs) and a viewable demo has been created; please see links below. Both documents are also located on the Oracle Financials Intranet site.
Written Guidance
http://sharepoint.lambeth.gov.uk/sites/lts/orafingroup/All%20staff%20documents/Training%20Guides/Guidan ce%20Notes%20for%20Submitting%20a%20Contract%20Requisition.pdf
Viewable Demo
http://comp-ap-65/TRAINING/flash/iproc/Raise%20Contract%20Requisition_demo%203%20Dec%2009.htm
The FAQs
http://sharepoint.lambeth.gov.uk/sites/lts/corporateprocurement/Public%20documents/Oracle/Oracle%20Link %20to%20Contract%20Register%20FAQ%27s.doc For further guidance, speak to your departments procurement team. For Oracle training queries speak to Erika Creary: Erika Creary Financial Systems Training Officer London Borough of Lambeth 020 7926 9891 ecreary@lambeth.gov.uk
Contract Register Exemptions

All contracts and waivers valued at 25,000 and greater must be listed on the Lambeth Contract Register. However, if you feel that a company and their contract should be exempt from being listed on the Lambeth Contract Register, you need to request approval for this. Exemptions from the Contract Register can be either permanent or temporary, for a specific period of time. An exemption form must be completed and submitted to your departmental head of procurement; the form can be found here: http://sharepoint.lambeth.gov.uk/sites/lts/corporateprocurem ent/Public%20documents/Forms%20and%20templates/Cont ract%20Register%20Exemption%20Request%20Form.doc and a descriptive flowchart can be found here: http://sharepoint.lambeth.gov.uk/sites/lts/corporateprocurem ent/Public%20documents/Oracle/Mandatory%20Link%20De partmental%20Flowchart.pdf.
Bidder Feedback & the PostTender Survey For each tender exercise undertaken, a bidder survey should be carried out to obtain feedback as to how businesses found the tender process. This feedback can be used to continuously improve the Councils tendering processes and procedures; the post-tender supplier survey template can be found on the CPT intranet site. Please note that the survey should be issued after the bidders have been advised if they were successful or not so that feedback on the debriefing process can also be captured
When the award approval process has completed, the actual acceptance of a contract with the tenderer is usually a fairly simple, although important, formality. However, you must ensure that this is communicated to the tenderer by a properly executed letter of acceptance and not by letter of intent.
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You must not allow the successful tenderer to start work until all approvals have been obtained. This will also include the issue of a formal, legal contract. For works contracts, it is usually essential for proof of insurance requirements to be provided and evidence of registration under the Construction Industry Tax Scheme. Depending on the nature of the contract, it may also be essential to arrange site availability, processes, management arrangements, management information systems and financial protocols. Contracts valued below 100,000 will have to be signed in accordance with Lambeths current Scheme of Delegation; contracts valued at 100,000 must be placed under seal in respect of the Constitutional Process and this is detailed further on in this section. You must ensure that you inform everyone concerned of the outcome of the tendering exercise in a formal way. Particularly with unsuccessful tenderers, remember that news of the outcome may be a sensitive issue to some parties. A letter of regret should be sent to each unsuccessful tenderer. This should be done after you have undertaken any post-tender clarification with your chosen tenderer and both sides have accepted the contract. As with shortlisting (Section 3.1.6) you must give feedback to unsuccessful firms if they request it. The feedback can be limited and should be linked strictly to evaluation criteria but it should allow the unsuccessful firm to learn in which areas it was strong, average or weak as compared to other bidders.
3.1.12
The Constitutional Process in Procurement
When contracts valued at 100,000 or greater are awarded under delegated authority, officers must be aware of the requirements and procedures to be followed in respect of councillor engagement, contract Sealing, the Forward Plan and Officer Decisions. In Lambeth procurement practice, this is known as the Constitutional Process in Procurement and these steps must be observed by all procurement officers at Lambeth. Where a procurement decision is valued at 100,000 and greater, details of the contract must be entered onto Officer Decisions. When the Officer Delegated Decision Report has been signed and approved by all concerned, the entry onto Officer Decisions must be made within 2 days of the award report being signed. Members of the Council will then have 5 days to call in the report if they have any issues they want to raise with Officers. Once this period has elapsed the contract start up work can commence. For contracts and purchases valued at 100,000 and greater, officers need to engage with their departmental council portfolio holder. Officers should contact their elected Member at the beginning of the project and provide updates through to contract award. Certain officers at Lambeth have been designated as Committee Continuity Officers (CCOs). The CCOs will publish the Delegated Decision Report at two stages before the decision is taken and afterwards; they will place the report on Officer Decisions after the final signoff has been obtained. You can find out who the CCO for your department by contacting Democratic Services on 020 7926 2754. In addition to the Officer Decisions requirements above, all contracts valued at 500,000 and greater must be included in the Forward Plan. These contract details must be entered onto the Forward Plan a minimum of 1 month prior to the final award decision being made. You can find the Forward Plan pro forma on the Lambeth intranet.
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For procurements valued at 500,000 and greater, the Officer Delegated Decision Report that was approved by the PB and SPB must also be sent to the Chair of Overview & Scrutiny Committee (c.c. Head of Scrutiny); this will be done by the CCO. Members of the Scrutiny Committee will then have 5 days to call in the report if they have any issues they want to raise with Officers. Once this period has elapsed the contract start up work can commence. Every contract valued at 100,000 and greater must also be affixed with the Councils seal. Two copies of the contract documents for signing must be sent to the Lambeth Legal Team with a Sealing Memorandum (the memo can be found on the CPT intranet site); contact Legal Services in advance and they can arrange the contract signing for you. When both copies have been signed, one copy should be sent to the supplier for their records. Officers should remember that contracts over 25,000 must be placed onto the Contract Register and that a purchase order must be placed on the Oracle system.
The signed Lambeth copy of the contract should be first returned to the Procurement Board Administrator for scanning into the Contract Register. This is important because when the requisition is raised for the suppliers payment, the requisition must link to signed contract documents on the Contract Register. The process map on the following page details the Constitutional Process in Procurement.
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3.1.13
Contract Variations, Extensions & Amendments
Contract Variations
A variation is where the terms of a contract are varied to include additional works, services or supplies which were not part of the original contract. Where the variation is a change in specification such as a change in delivery method or frequency where no additional costs are involved the variation only needs to be approved by the Lambeth contract manager and the suppliers contract manager. If there are changes to the contract terms and conditions, you need to seek legal advice from Lambeth Legal. If any of these variations do involve the spending of additional money on the contract, then the variation needs to be approved at either departmental level or by a Procurement Board, depending on the value of the variation. The contract must make provision for or set out how cost variations may be valued in the contract. The variation should be lawful and comply with European Procurement regulations. If the contract is silent about how to value the required variation it should be treated as a waiver. All contract variations must be approved according to the Lambeth Scheme of Delegation: Value of Contract, Contract Variation or Extension Over 10 million More than 1 million up to and including 10 million More than 100,000 up to and including 1 million More than 50,000 up to and including 100,000 Up to and including 50,000 Authorising Officers Executive Director of Finance and Resources Executive Director and Divisional Director of Resources Divisional Director and Divisional Director of Resources Head of Service or Assistant Director Business Unit Manager or other Manager
When you are computing the amount of the variation that needs to be approved, you need only seek approval for the additional cost added onto the contract. For instance, lets say you had a contract for widgets that was valued at 50,000. After 2 years, an increase in the price of widgets means that the contract is going to cost 10% more, or 5,000. The new total value of the contract would be at 55,000 but the amount you would seek a variation approval for is 5,000; this is the amount you need approval for variation.
Variation Value & Approval

Where the total value of a contract variation does not exceed 10% of the original contract value and/or 100,000, the variation can be approved by your business unit manager and your departmental head of procurement. Simply complete the Officer Delegated Decision Report and the Extensions and Variation Form and have them signed off at departmental level; be sure to retain copies in your department. Where the value of the variation exceeds 10% of the original contract value or is 100,000 and greater, you must complete the Officer Delegated Decision Report Procurement and the Extension and Variation Form. You will also need to complete an Officer Delegated Decision Report Procurement Part 2, where you will record the commercial and confidential information from your tender. This report is not published online. Have your forms signed off by the relevant Procurement Board.
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In addition to the financial limits, an Executive Director may only authorise contracts within his or her Department, a Divisional Director contracts within his or her division, an Assistant Director contracts within his or her section and a Business Unit Manager contracts within his or her business unit. Contract variations are normally negotiated between the contract manager and the supplier. There should be clear objectives and outputs in relation to the variation. Any change should be made in accordance with the change control procedures outlined in the contract documents. The requirement for a contract variation may or may not arise as a result of the usual business of contract management and monitoring or during a contract review. Typically changes include: Quantity or quality of goods or services being required Timescales for delivery of goods or services New or different locations Changes to the nature of the services being provided, due to market demand, new technologies, new legislation etc. Unforeseen events e.g. discovering asbestos during a building contract not identified for removal in the specification
Contract Extensions
Extensions to contracts let under EU rules are only allowed if provided for in the original OJEU contract notice and/or set out in the contract. Contract extensions may arise as a result of: The original contract made provision for extensions It is inappropriate to re-tender and let a contract for a short period of extra time (the cost of re-tendering may outweigh the cost of the extension) The contract has over-run due to unavoidable delays The original timescales and expectations were unreasonable Development work led on to further activity which was not specified at the time of tendering
First you first need to determine the reason you are requesting a contract extension. You then need to consider carefully what the costs for the additional time will be are they just costs for a longer term or will the extension include costs for additional products or additional services? What changes need to be made to the specification? Will the terms and conditions need to be reviewed? Speak to your departmental procurement team for advice. Remember the possible pitfalls of contract extensions:
When planning your procurement exercise, think carefully about the term of contract. If you are considering a 3 year contract, for example, think about the possibility that the contract might overrun or that there might be situations where the work is not completed on time. As such you may need to extend the contract and as this must be indicated in your tender advertisement and terms and conditions the planning phase is the time to think about it. Your term could be advertised as 3 years with the possibility to extend by 2 years and this will allow you the option for extending at a later date. You are not obliged to use the extension of course but it is there just in case you need it
Value for Money may cease to be achieved without the competition of the market place Claims may be made if suppliers continue to get more and more work on continuous extensions
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Aggregation of the original contract and extension(s) may exceed financial thresholds and EU thresholds Assuming that your budget availability and market conditions have not changed since the contract was originally let. Re-examine the position and consult on the basis of current market and budget position taking account of changes that have taken place
Extensions to a contract can only be allowed under the EU and Lambeth extension and variation procedure if provision has been made for the extension in the original advertisements and the original contracts terms and conditions. If no provision has been made for the extension you will need to seek an Extension As Waiver; see below. Extensions to a contract, where permitted must be approved as per the Lambeth Scheme of Delegation, as above.
Extension Value & Approval

If the total value of the extension is less than 100,000 it can be approved by the departmental head of procurement and the officer's business unit manager. This is the value of the extension only not the value of the extension added to the original contract value. Also, all of the following criteria must be met. The possibility to extend must be set out: In the contract documents In the original contract advertisement In Key Decisions - if applicable To include a 5% cashable savings to be made from the annual contract value. These savings need to be signed off as having already been stripped out of the budget(s) by the head of finance prior to the head of procurements approval. The only exception to this rule is for construction contracts and extensions of time only; in those circumstances the 5% cashable savings would not apply
The forms you need to complete for departmental level approval are the Officer Delegated Decision Report Procurement and the Extension and Variation Form. For an Extension as Waiver the same forms need to be written but the ODDR must be written as a waiver. The reports are signed off at departmental level by the officers business unit manager or head of service and the departmental head of procurement and copies for these all need to be retained at departmental level. Where all the above requirements are not met or the value of the extension is at 100,000 and greater, the extension reports must be presented to the appropriate Procurement Board for approval again, depending on the aggregate value of the extension. You must complete the Officer Delegated Decision Report Procurement and the Extension and Variation Form and you will need to complete an Officer Delegated Decision Report Procurement Part 2, where you will record the commercial and confidential information from your tender; this report must be published online. The reports are first signed off at departmental level by the officers business unit manager or head of service and the departmental head of procurement and then by the Chair of the relevant Procurement Board. Where the possibility of an extension to the contract has not been included in the advertisement or the contracts documents, the extension must be pursued as a Waiver. See Extension as Waiver, following.
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Extension as Waiver
Where the contract to be extended has no provision for an extension and/or the original advertisement did not include the possibility for an extension, any contract extension sought must be sought as a waiver. This is known as an extension as waiver. The same guidance as above applies and the same forms need to be completed for this type of extension, except that the ODDR must be written as a waiver rather than an extension.
Contract Variations, Extensions & Purchase Orders

Contract variations and extensions that result in price increases will mean that the purchase order must be amended. This is done when the change is entered by the Procurement Board Administrator on the Contract Register; the Register links through to the ORACLE system.
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3.2 3.2.1
Procurement Under EU Directives Process Overview
This section provides an overview of procurement requirements under the EU Directives. You should contact the Corporate Procurement team or the Lambeth Legal team to check whether EU rules apply to your particular contract; any contract over 100,000 requires legal involvement. All written contracts above certain financial thresholds for goods, services and building works being tendered by local authorities are subject to European Community Directives on Public Procurement. The aim of these Directives is to assure competition throughout the EU, requiring that contracts be advertised widely and do not discriminate against suppliers or contractors from different member states. It is important that you apply the Directives, as there is also a remedies directive that could result in an aggrieved tenderer being paid compensation by the Council. EU rules apply above certain threshold values. The relevant Directive is the EU Consolidated Directive 2006 of the European Parliament. This directive aims to simplify the EU procurement process by combining the supplies and services directives whilst maintaining the directive for works procurements. The current threshold values for Lambeth are as below.:
Public Contracts Regulations 2006 from 1 January 2012
Value Indicator Contract Notices Prior Information Notices Small Lots
Supplies & Services 173,934 (200,000) 652,253 (750,000) 69,574 (80,000)
Construction, Works & Maintenance 4,348,350 (5,000,000) 4,348,350 (5,000,000) 869,670 (1,000,000)
Utilities Contracts Regulations 2006 from 1 January 2012
Value Indicator All Sectors Prior Information Notices Small Lots
Supplies & Services 347,868 (400,000) 652,253 (750,000) 69,574 (80,000)
Construction, Works & Maintenance 4,348,350 (5,000,000) 4,348,350 (5,000,000) 869,670 (1,000,000)
If two or more supply contracts of a particular type are being tendered you must aggregate them to establish whether they reach the threshold.
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The thresholds in the Directives apply to the total value across the full term of a contract (excluding VAT). For example, if a services contract is worth 70,000 per annum for three years this raises it above the threshold. Remember that you cannot fragment a contract in order to avoid EU rules. In addition to threshold values, the EU rules apply to specific services that are classified as Part A (priority) services and Part B (residual) services. For Part A services you must place a notice advertising your intention to seek tenders. For Part B services you are only required to place an award notice within OJEU.
Prior Indicative (or Information) Notice (PIN)

As soon as possible after the start of the budgetary year, the Council will publicise its intended purchases in each of the categories listed as Priority Services and for Supplies for the following 12 months. This applies where the estimated total of such purchasing is as shown in the second row of the table above. For Works the notice is placed after the decision to approve the works (normally at the beginning of the year). To meet this requirement the Prior Indicative Notice (PIN) must be drawn up. It can be very useful to make use of the PIN even if your requirements are uncertain as this gives you advantages in terms of time scales and threshold values. The Council must prepare the PIN before the beginning of the financial year.
Key Points
Key points for EU purchasing and procurement are given below: If your contract is likely to be above the threshold, you must check with the Legal Team whether EU Directives apply (they may not). It is not necessary to contact the Lambeth Legal Team if a PIN has already been placed. EU Directives will apply where a PIN has been placed You must decide from the outset whether you will accept the lowest tender or the most economically advantageous tender You must advertise notices in the Official Journal of the European Communities (OJEU) and there is a specific format for this. You cannot publish advertisements in UK journals or newspapers before the date on which you dispatch the notice; it is better to send the notice electronically. In general you must not distort competition by favouring a local supplier
There are four types of tendering procedures - Open, Restricted, Negotiated and Competitive Dialogue. The Restricted procedure is normally used as this allows for a selection process to be applied prior to invitations to tender, i.e. through use of business questionnaires. The Negotiated procedure is designed for use in exceptional circumstances only. When drafting specifications you must take care not to discriminate against other member states by specifying UK standards or brand names, if you use it to demonstrate a standard, you must add the phrase equivalent or similar. There are clearly defined time scales for the tendering procedures as follows: Open Procedure: Minimum 52 days between dispatch of notice and the deadline for submission. This time may be reduced if a PIN has been published or documents are transmitted or accessed electronically Restricted Procedure: Minimum 37 days between dispatch of notice and invitation to tender; this will include the supplier appraisal and a further minimum 40 days to the return of the tender submission. This time may be reduced if a PIN has been published or documents are transmitted or accessed electronically)
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Negotiated Procedure: This is usually used where it is not possible to establish a specification with sufficient precision to award a contract under the open or restricted procedure. Advice from the Legal Team is essential for all stages of this procedure Competitive Dialogue Procedure: This may be used where purchasers consider that the open or restricted procedure will not allow the award of the contract. This must be considered before use of the negotiated procedure
Advance planning is therefore critical and it is good practice to have the invitation to tender documentation completed before commencing the process. It is essential that you keep detailed records including the procedures used, companies involved, and the reason for rejection or award, value of contract. Finally you must place an award notice in OJEU. This applies to all public contracts including Part B service contracts (where EU rules have been applied) and the notice must be published within 48 days of the award. You should send a copy of the notice to the Corporate Procurement Team who will arrange for it to be placed in OJEU. You need to comply with the criteria for the award of contract. You need to check whether the Code of Practice on Workforce Matters in Local Authority Service Contracts applies to your contract.
A Plan for Using EU Procedures

You should check with the Legal Team or CPT to determine whether the contract relates to a priority service where there are very strict rules for all key stages or other services where less stringent rules apply, mainly around notifying which awards were made. You should have enough information to complete the information indicated below: Query Does the potential contract value suggest that EU rules may apply? If YES, which procedure will be used: Open Restricted Competitive Dialogue Negotiated Query How long is the process likely to take? Before issue of invitation to tender During notice period seeking applicants To shortlist (restricted procedure) To notify shortlisted candidates and issue tender documents To allow for the tender period To allow for the evaluation period To complete the award Query To make formal appointment To start the contract or deliver goods Estimated Days Target Date YES NO
Estimated Days
Target Date
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There are four types of procedure: 1. Open Procedure: Where all interested providers or suppliers may submit tenders 2. Restricted Procedure: Where the Council can choose to invite a certain number of providers or suppliers to tender 3. Negotiated Procedure: Where the Council consults suppliers or providers of its choice and negotiates the terms of contract with one or more of them 4. Competitive Dialogue: Where the Council is aware of their needs but does not know in advance what is the best technical, legal or financial solution for satisfying those needs The first two are more standard, or usual procedures. Under these procedures, the Council cannot enter into fundamental discussion of price or terms of contract. However it is permissible to clarify these during the tender process and reach a final agreement on the price for the final scope of the work. Of the two, the Restricted procedure where the Council chooses which bidders to invite after an initial trawl is probably the more common. If you intend to use a Negotiated procedure, you should contact the Legal Team for approval. This will almost certainly involve the Executive Directors approval as a minimum. When seeking such approval you will need to explain the grounds for negotiation. The competitive dialogue procedure must be considered before use of the negotiated procedure. There are rules about the minimum time limits that you must give bidders to submit requests to tender and submit the tender itself. We summarise these below. Explicit provision is made in the Directive for communication and exchange of information to take place through various means, including electronically, at the discretion of the purchaser. Timescales for the Open, Restricted and Negotiated procedures may be shortened considerably when notices are compiled and transmitted electronically and, for open and restricted procedures, when tender documentation is available electronically. Accelerated time scales may only be used where normal time frames are rendered impractical by extreme urgency. See the chart below: Procedure Open Guidance Minimum time for receipt of tenders from date contract notice sent Reduced when PIN published And not less than: Electronic transmission reduces all the above by 7 days so 52 days becomes: And 36 / 22 becomes: Full electronic access to contract documents reduces 52 by 5 days, becoming: This can be added to the reduction for 52 days to 45 for electronic transmission: Restricted, Negotiated & Competitive Dialogue Minimum time for receipt of expressions of interest / requests to participate from the date contract notice sent: Days 52 36 22 45 29 / 22 47 40
37
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Electronic transmission reduces the 37 days by 7 days so this then becomes Minimum time for receipt of tenders from the date invitation sent Reduced to (when PIN published - subject to restrictions) to: Full electronic access to contract documents reduces 40 by 5 days, becoming: Accelerated Restricted * Minimum time for receipt of tenders from date contract notice sent Dispatch of ITT to tender return date Further information provided a minimum number of days before Tender return date: Accelerated Negotiated * Dispatch of ITT to tender return date
30 40 22 35 15 10 4 15
* Accelerated time scales may only be used where normal time frames are rendered impractical by extreme urgency. In order to use the Accelerated - Restricted or Accelerated - Negotiated routes, this must first be agreed with Legal Services in advance. Competitive Dialogue timescales follow timescales for expressions of interest in the restricted procedure and negotiated procedure with prior publication of a contract notice. Tender periods in the open procedure and requests to participate in other procedures may be shortened by seven days when notices are submitted for publication in the format required for submission via the SIMAP website. SIMAP is the Commissions procurement web site and information can be found at http://simap.eu.int/. Tender periods in the open and restricted procedures may be shortened by five days when unrestricted electronic access is provided to all tender documentation. An assessment period of 15 days applies for the assessment of bidders wishing to join a dynamic purchasing system. This means that, for restricted procedures (other than accelerated and tenders transmitted/accessed electronically), the minimum time between the request to apply and the start of shortlisting will be 91 calendar days assuming: 37 days for the advertisement 14 days for the shortlisting and invitations to tender to be issued 40 days for the tender process The process is often longer if you need to extend the short-listing process
Your plan will also need to take into account the estimated time between (a) receipt of tender and final award and (b) between award and delivery of the product or commencement of the service. In evaluating tenderers you are limited to matters concerning eligibility (where the bidder is bankrupt or has committed an offence or act in relation to his trade or business), economic and financial standing, ability and technical capability. Evaluation criteria and their relative weighting must be set out in the contract notice or tender documents.
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Communication
The Public Sector Directive makes explicit provision for communication by a variety of means including post, fax and by electronic means (e.g. e mail). Article 42 describes the circumstances when each method of communication may be used. The chosen means of communication must be generally available and must not be discriminatory or restrict access to the procurement procedure adopted. Telephone communication is limited to requests to participate and must be confirmed in writing within the stated timescale. Where fax is used, purchasers may require written confirmation if this is necessary for reasons of legal proof. Standards for electronic communications devices are included in the full text of the Directive and cover issues such as encryption, connectivity and electronic signatures.
Maintaining Information
The EU rules set up some specific information you must maintain in writing on all procurement using the procedures. These requirements are sensible and you should maintain them for all procurement, even if they fall outside the EU thresholds. Information must include: Name and address of contracting authority Subject and value of the contract Names of contractors/bidders admitted and reasons for selection Names of contractors/bidders not admitted and reasons Name of successful bidder with reasons why that tender was chosen Any share of the contract that may be subcontracted to a third party (if known)
3.2.2
The EU Public Sector Procurement Directive
Key Points for Lambeth Staff

Please note that this section is under regular review, as EU procurement procedures are reviewed every two years. Key points to be aware of in the first instance are: You should contact either the Legal Team or the Corporate Procurement Team if you consider that your contract may be fall within the EU Procurement Directives If your contract is estimated to be above the EU Threshold values of 173,934 for services and supplies and 4,348,350 for works you should check with Legal or the Corporate Procurement Team You must advertise in OJEU but the EU rules do not require you to advertise in other publications The Executive Director and procurement boards will normally expect all contracts over 100,000 to be advertised in the relevant trade press as well as many organisations do not track OJEU You need to ensure that the advertisement dates dovetail with those in OJEU. Remember that you cannot advertise in the UK until you have emailed your advertisement to OJEU; allow at least 3 days for this.
Background to the Directive

The public procurement regime is part of the EU single market programme set up by the Treaty of Rome in 1957. The Treaty itself laid down various obligations on the free movement of goods, the right of establishment, the right to provide services and the prohibition on discrimination on the grounds of nationality. These general obligations remain to this day and there are no thresholds (as in latter legislation) or other barriers to their general application to types of procurement.
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In 1972 the UK joined the Common Market. By that time the members of EU had adopted two Directives in relation to the purchase of building and engineering works and goods with public money. The UK did not adopt these Directives until the advent of the Remedy Directive, which provided remedies for complainants. Accordingly, the UK introduced national implementing legislation in the form of statutory instruments made under the European Communities Act 1972. These Regulations now provide the principal source of law for this area. The Public Sector Directive introduced in January 2006 simplifies and consolidates the three previous Directives for public works, supplies and services into a single text. Many of the basic provisions remain the same as in the earlier Directives. New provisions were added to take account of modern procurement methods and developments in best practice. These include explicit provisions on: Framework agreements Central Purchasing Bodies Electronic Auctions Dynamic Purchasing Systems
The Competitive Dialogue procedure has also been introduced to complement the previously existing Open, Restricted and Negotiated procedures. It is intended to be used for large complex projects in circumstances where, currently, use of the negotiated procedure might be considered. The Commissions view of the negotiated procedure as a fall back in circumstances where other procedures are not workable remains unchanged. The Directive seeks to clarify the extent to which social and environmental issues can be considered. In essence, the Commissions interpretative communications of 2001 concerning environmental and social issues have been reflected in the new Directive along with more recent and relevant European Court of Justice case law. The Law A Directive is a form of law making and comprises an instruction from the EU to member states to adopt measures compliant with those Directives. In effect, they form a blue print for national legislation It should be noted that the Court of Justice takes a purposive rather than a literal approach to interpreting any of the procurement provisions. Accordingly, the Directive should be interpreted in the light of its intention and not the exact legal meaning of the words from which it is composed. The overriding intention of the procurement Directive is to ensure non-discrimination against member states and that it is all embracing. To monitor the achievement of these purposes, all tendering processes are to be as transparent as possible The three sets of legislation affecting the Council are below: a. The Public Works Contracts Regulations 1991which adopted the Works Directive 93/37/EEU b. The Public Supplies Contracts Regulations 1995 which adopted the Supplies Directive 93/36/EEU c. The Public Services Contracts Regulations 1993 which adopted the Services Directive 92/50/EEU These were replaced by a single consolidated Public Sector Directive in January 2006 via regulations made under section 2(2) of the European Communities Act 1972. Known as EU Consolidated Directive 2004/18/EU of the European Parliament, this contains many of the features of the earlier directives but is intended to provide a simplified framework adapted to modern procurement methods.
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There is further legislation that regulates procurement of public utilities. The Regulation requires the Council to comply with a regulated tendering process, to be undertaken within a strict timetable and preceded by a formal advertisement published throughout the EU. Other requirements relate to the specification, other tender documents, selection, evaluation, award and record keeping.
Contracting Authorities
The organisations which have to follow the Regulations, include the Council, and are defined as contracting authorities. The regulations would also apply to a corporation established, or a group of individuals appointed to act together, for the specific purpose of meeting the needs in the general interest, not having an industrial or commercial character, and: a. Financed wholly or mainly by another contracting authority; or b. Subject to management supervision by another contracting authority; or c. More than half the board of directors or members of which, or, in the case of a group of individuals, more than half those individuals, being appointed by another contracting authority In addition, where partnerships have been formed with private sector organisations, contracts, if more than half the price of the contract is to be paid by the contracting authority (if for example, part of project is funded by a government department, another contracting authority and the Council), then it would be classified as a subsidised public services contract. On these occasions, the Council would have to stipulate that the private sector organisation must follow the public procurement rules.
Which Regime to Follow?

All contracts for purchase by the Council will either fall into the Works or Supplies and Services categories. They are defined as follows: a. Works, which is a list of activities covered by the Regulation. In general the Regulations cover contracts for the execution of major building and engineering projects and include: General building, civil engineering and demolition work Construction of flats, office blocks, hospitals and other buildings, both residential and nonresidential Civil engineering: construction of roads, bridges, railways etc. Installation of fittings and fixtures Building completion work (plastering, joinery, painting etc.)
Note: Reading the Regulation it is possible to conclude that maintenance is not covered by the Works classification and should therefore be covered by Part B/Residual Services. If this were the case the Council would find itself in a considerable disadvantage, considering the relatively low threshold of 173,934 for services when all service contracts are required to comply with the full requirements of the Regulation. It has at least been tacitly agreed that construction and maintenance work as defined by the Local Government Planning and Land Act 1980 should be advertised as works. b. Supplies include contracts for the purchase, hire, siting or installation of goods. Goods are defined very widely and include electricity, gas and computer software.
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c.
Services include whenever a contracting authority seeks offers in relation to a proposed public service contract but not contracts for employment or a public service concession.
Services are separated into Part A (also known as priority services) and part B (also known as residuary services). The categories of services are as follows:
Part A Priority Services

Category 1 2 3 4 5 6 Service Maintenance and Repair of Vehicles Transport by land, including armoured car services and courier services but not including transport of mail and transport by rail Transport by air but not transport by mail Transport of mail by land, other than by rail and by air Telecommunications services other than voice telephony, telex radiotelephony paging and satellite services Financial Services, Insurance, Banking and Investment services other than financial in connection with the issue, sale, purchase or transfer of securities or other financial instruments, and central bank services Computer and related services Research and Development services where benefits accrue exclusively to the contracting authority for its use in the conduct of its own affairs and the services are to be wholly paid for by the contracting authority Accounting, auditing and book-keeping services Market research and public opinion polling services Management Consultancy services and related services, but not arbitration and conciliation services Architectural services: engineering services and integrated engineering services: urban planning and landscape architectural services: related scientific and technical consulting services: technical testing and analysis services Advertising services Building cleaning services and property management Publishing and printing services on a fee or contract basis Sewerage and refuse disposal services: sanitation etc. services
7 8
9 10 11 12
13 14 15 16
Part B Residual Services

Category 17 18 19 20 21 22 23 24 25 Services Hotel and restaurant services Transport by Rail Transport by water Supporting and auxiliary transport services Legal services Personnel placement and supply services Investigation and security services, other than armoured car services Education and vocational education services Health and social services
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26 27
Recreational, cultural and sporting services Other services
The categories of services are further sub-divided into Central Product Classification (CPC) numbers which need to be quoted in contract notices.
Mixed Contracts
If a contract is for a mixture of works, supplies and/or services, then one has to follow the Regulations according to whatever is the largest component of the contract. If it is unclear as to whether the highest value component of a contract is works, supplies or services you should err on the side of safety and publish contract notices accordingly.
Exemptions & Exclusions

Excluded from the Regulations are contracts relating to national security and international obligations. These exclusions only affect central government. Exclusions, which would affect the Council, include: contracts for the acquisition of land; contracts for arbitration and conciliation services; and contracts for financial services in connection with securities and other financial instruments. A public services concession, where the concessionaire has the right to charge the public for the services, is an exemption under the Services Directive.
Threshold Values
Subject to the aggregation rules (see below), only part of the public procurement Regulations apply to contracts below certain threshold values. These values are net of VAT and are the estimate of the costs of contract. The current values are set out in the previous table.
Frameworks
Framework agreements are used in the case of repetitive purchases to choose suppliers who, when the time comes, will be able to meet the purchasers needs. Frameworks may be used in conjunction with any procedure. Framework agreements in the context of the Directive are agreements to agree. They set out terms applicable to contracts formed at the call off stage. If the framework establishes rights and obligations by, for example, guaranteeing a volume of work to a supplier, it is not a framework agreement as defined by Article 32. Provision for framework agreements in the Directive is very similar to established UK practice but there are some important differences. a. Framework duration is limited to four years unless, exceptionally, a longer term can be justified, in particular, by the subject matter of the framework agreement. The contract notice must state the planned duration of the framework b. Where there is only one framework supplier, work may be awarded directly provided the terms of the framework agreement are applicable
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Where a single appointment has not been made, the minimum number of framework providers is three or the number passing the selection criteria if less. The original framework terms and conditions can be used to award work if sufficiently specific d. Where there is a need to refine or supplement however, a further mini competition will be necessary involving all those companies on the framework who are capable of providing the goods or services e. Those capable of supplying must be consulted in writing. Bid periods must be reasonable taking account of the particular circumstances and the award must be based on the criteria used in setting up the framework agreement Call offs can extend beyond the life of the framework agreement subject to a test of reasonableness. For example, the duration of such call offs should be consistent with the trend established throughout the life of the framework. Rules governing frameworks are illustrated below:
c.
Guidance on framework agreements is available at the OGC website, at http://www.ogc.gov.uk
Central Purchasing Bodies (CPBs)

There are many examples of Central Purchasing Bodies (CPBs) throughout the public sector such as OGC Buying Solutions, London Contracts & Supply Groups and other Local Authority Purchasing Consortia. Under the Consolidated Directive, purchases may be managed through a CPB and organisations using the CPB are deemed to have complied with the Directive in so far as the CPB has complied. The CPB must be a contracting authority for this provision to apply. The Council is free to buy through private sector bodies
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acting as agents. However, in this case the Council is still responsible for ensuring compliance with European procurement legislation.
Valuation Methods
As the nature of payment for service contracts vary widely the Regulations provide that specific valuation methods are to be used for certain services: a. Insurance services: the premium payable b. Banking and financial services: fee, or commissions c. Contracts involving design: fee or commission payable
Where the price of a contract is not stipulated, the estimated value is to be valued as follows: a. Fixed term contracts up to 4 years: total consideration payable over the term b. Contracts for an indefinite or uncertain period (or for a term of more than 4 years) c. consideration payable in respect of each month multiplied by 48 Where a contract uses more pricing options, the Council should always base its estimate on the highest amount payable. Where the Council enters a series of contracts or a renewable contract the value should be calculated as follows: a. Take the aggregate value of all such contracts during the preceding financial year (or alternatively, the period 12 months prior to the date of dispatching a contract notice) and adjust it to take account of any changes in quality or cost expected over the following twelve months b. Estimate the value of the consideration the authority will have to pay under such contracts over a period of twelve months from the date of the first service performed or, where the contract is for a definite term of more than 12 months, estimate the value of the consideration to be paid over that period
Aggregation Rules
The Regulations would also apply to contracts that fall below the threshold value through the aggregation rules. The principal of the aggregation rules is that only if the total expenditure on a particular category of work, supplies or services falls below the relevant threshold, will there be exemption from compliance with the of the Regulations (except the need to comply with technical requirements in specifications and the publication of a contracts award notice). In respect of services, the service should be identified with reference to its CPC classification. The Council is expressly prohibited from entering into separate contracts with the intention of avoiding the application of the Regulations.
Works
In carrying out the aggregation, individual contracts for works with the estimated value of less than 1,000,000 Euros (684,221) can be ignored, provided that the total value of these small contracts is less than 20% of the total of all contracts for carrying out the work.
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Supplies
Where the Council has a single requirement for goods and a number of contracts will be entered into, the estimated value for calculating the threshold is the total of all the payments due under all of the contracts.
Services
Only individual contracts with a value over the contract period of less than 80,000 Euros (54,738) will escape aggregation, and then only if the sum of these small contracts does not exceed 20% of the total value of all contracts comprising any single service or requirement.
Common Advertising Rules

The rules on advertising in advance in relation to the award of public contracts provide 3 ways in which contracts must be advertised, but these dont apply to residual, or Part B services: a. Advance or Prior Indicative Notice - this is sent out as soon as possible after the beginning of the budgetary year b. Notice calling for tenders - a second notice giving more specific details of the project and calling for tenders or for persons who wish to be considered to make tenders c. Post-award Notice - Contracting authorities must publish a notice giving details of each award made
Advance or Prior Information Notice

As soon as possible after the start of the budgetary year, the Council must publicise its intended purchases in each of the categories listed as "Priority Services" and for Works and Supplies for the following 12 months, where the estimated total of such procurement is at least 607,935 (750,000) for Supplies and Services and 4,348,350 (4,845,000) for Works. The prior indicative notice must be drawn up in accordance with the requirements of the Regulations.
Notice Calling For Tenders

The Council, when it wishes to award a specific public works, supplies or priority service contract, must make known its intention by means of a contract notice. This is a notice that publicises a specific contract, giving the contract details and indicates whether it is to be awarded by (1) open, (2) restricted, (3) negotiated procedure or (4) competitive dialogue (see below). Contract notices must be drawn up in accordance with the requirement of the Regulations. Model notices are available from CPT.
Contract Award Notice

Within 48 days of awarding a contract, the Council must publish details of the results of the award in a notice drawn up in accordance with the requirements of the Regulations. A model notice is available from CPT. The requirement to send the post-award notice applies to services in both categories (i.e. "priority" and "residual" services).
Technical Rules
The contract documents must not include terms, which might discriminate directly or indirectly against tenders from EU states.
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Technical specifications which the Council requires a provider to meet must be set out in the general documents or the contract documents relevant to each contract and should be defined by reference to: a. National standards implementing European standards; b. By reference to European technical approvals (none as yet) c. By reference to common technical specifications The general rule set out above may be departed from in certain exceptional situations, which are as follows: a. Where there is an obligation to define technical specification by reference to mandatory UK technical specification b. Where it is not possible to establish conformity to the relevant European specification. c. Where there is a genuine innovative project d. Where European specifications would oblige the Council to acquire goods or materials incompatible with equipment etc. already in use or would entail disproportionate costs or disproportionate technical difficulties e. In the case of supplies and services where this would conflict with requirements in respect of IT and telecommunications equipment (see below) Contracting authorities which depart from the general rules concerning standards must state, where possible, their reasons for doing so in the contract notification or contract documents and must in all cases keep a written internal record of their reliance on any of the exceptions set out in the Directive. The Commission may request sight of this information. Where there are no applicable European standards, European technical approvals or common technical specifications, the Council may specify: a. British technical standards recognised as complying with the basic requirements of any Council Directive on technical harmonisation b. British technical specification relating to design and method of calculation and executions of works and use of materials or c. The following standards in order of preference: British standards implementing international standards Other British standards and technical approvals Any other standard
Even where a British or other standard is specified, the Council must consider a solution meeting other national standards as long as these standards meet minimum standards required. This is to ensure that a state is unable to use a national standard in a discriminatory way, as in the Dundalk case. There is a strict prohibition against any reference to products of a specific make, source or particular process, especially any indication of trademarks, patents or types. Any such reference might favour particular producers. Where the Council is not able to give a description of its requirements with sufficient precision to be intelligible to all would-be bidders, specific indications of its requirements may be given even if this entails the mention of a trade mark or source, but such indications must be accompanied by the words "or equivalent"; and any products or processes which are equivalent to those specified in the technical specification must be accepted by the Council.
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Special conditions relating to the performance of a contract may be specified provided these are compatible with Community law. Special conditions can embrace sustainability criteria and/or social conditions relating to the performance of the contract. Relevant environmental and social requirements may be specified but must be defined sufficiently precisely to allow bidders to understand the requirement and to allow award of the contract. Production process standards and eco label criteria can be referenced but alternatives which demonstrate equivalence must be considered. Consideration should be given to disabled access arrangements whenever possible and applicable. When identified in the contract notice, relevant contracts may be limited to sheltered workshops, employing mostly disabled people unable to gain normal employment. Common Procurement Vocabulary (CPV) codes are now included in the Directive. They are referenced alongside NACE codes in Annex I of the directive which lists construction related activity. CPV codes are also referenced in Annexes II A and II B alongside the service related CPC codes. The NACE and CPC codes take precedence in the event of differences of interpretation. CPV codes must be quoted in Prior Information Notices, Contract Notices and statistical returns.
Contract Award Procedures

As stated above, public services contracts can be offered under four criteria namely (1) Open, (2) Restricted, (3) Negotiated procedure or (4) Competitive Dialogue. The general rule is that contracting authorities must award their contracts by open or restricted procedures. The Competitive Dialogue procedure is intended to be used for large complex projects in circumstances where, previously, use of the negotiated procedure might have been considered. The Commissions view is that the Negotiated procedure is a fall back in circumstances where other procedures are not workable No justification is needed for the use of the Restricted tendering procedure. An Accelerated tendering procedure may be used in cases of urgency. The use of the Negotiated tendering procedure is permitted only within certain limits and then, in most cases, only following the prior publication of a contract notice. The provisions regarding the choice of tender award procedure do not apply to the Residual Services, but the following will apply to those services contained in the Priority list. Use of the 10 day standstill period must be used for all Part A services the 10 day cooling off period before formal announcement of award which will allow unsuccessful tenderers to challenge the decision, if so desired. See below for more on the standstill period. The Council is required to state the relative weighting given to each criterion used to judge the most economically advantageous tender in the contract notice. The Directive makes explicit provision for sustainability issues to be taken into account in technical specifications, selection of tenderers and award criteria.
Open Procedure
Tendering under this procedure is not only open to the extent that the work must be advertised but also to the extent that any contractor expressing an interest is automatically entitled to tender.
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Contract documents must be supplied within 6 days. The minimum period of 52 days from the date of dispatch of the contract notice to the submission of tenders must be extended if the contract notices are too bulky to be supplied to tenderers within this time or tenderers wish to visit the site. If a prior information notice has been published this period may be reduced to 36 days. Reasonable requests for information relating to the contract documents must be met provided the request leaves the Council sufficient time to comply by no later than six days before the end of the tender period.
Restricted Procedure
The difference between the Open and Restricted procedures is that the number of tenderers able to tender is limited. The procedure consists of two distinct stages: the selection of suitable tenderers; and the evaluation of tenders. The Council is able to restrict the number of tenderers between a minimum of 5 and a maximum of 20 provided the figure is included in the notice; the minimum number must be sufficient to ensure genuine competition. If it is not then all tenderers expressing an interest must be invited. The Regulations are silent as to quantitative selection. Where the number expressing interest exceed the maximum set out in the contract notice a sensible system of ranking candidates for elimination should be devised. The minimum time limit for the receipt of requests to participate in a tender is 37 days from the date of despatch of the notice. In cases of urgency that render such a time limit impractical, it may be reduced to 15 days. The time limit for receipt of tenders must not be less than 40 days from the date of despatch of the written invitation. Again, in cases of urgency where such time limits are impractical, this may be reduced to 10 days. The time limit for receipt of tenders in the restricted procedure may be reduced to 26 days where the contracting authorities have published a prior indicative notice. The time limit for receipt of tenders must be extended appropriately where tenders can only be submitted after a site visit or on the spot inspection of the documents supporting the contract documents. Reasons for the use of the Accelerated procedure must be included in the contract notice. Acceptable reasons would include financial, operational or other factors outside the Council's control. All communications with contractors should be carried out in the most rapid method.
Negotiated Procedure
There are certain extremely limited situations where the Public Procurement Regulations allow the Council to use the Negotiated procedure. The Negotiated procedure may either be preceded with or without the publication of a contract notice. Where a notice is published the number of contractors to be invited to negotiate should be not less than three and must be sufficient to ensure genuine competition. The Negotiated procedure may be used without the publication of a contract notice when: a. An Open or Restricted procedure produced no, or inappropriate tenders b. For technical, artistic or other reasons the work or goods may only be provided by a single service provider c. A repetition of a previous contract is required (only if stated in the original contract notice) d. Where the procurement are additional to, and an integral part of those for which a contract has already been awarded in accordance with the requirements of the Directive e. Situations of extreme urgency brought about by events unforeseen by the Council f. An Open or Restricted procedure was discontinued because of irregular tenders
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The Negotiated procedure with the prior publication of a contract notice may be used, when: a. An Open or Restricted procedure was discontinued because of irregular tenders and it is not intended to invite all contractors who originally submitted tenders to negotiate (the terms and conditions in these circumstances may not be altered) b. In exceptional cases, when the nature of the services, or the risks involved do not permit prior overall pricing. This exclusion is obviously very wide and until it has been examined by the European Court of Justice, it is difficult to describe its parameters However, following previous decisions, the precondition that these must only occur in exceptional cases will be very rigidly construed by the Court of Justice c. For services only, where the nature of the services is such that contract specifications cannot be established properly. This, in particular, covers intellectual services and services in the legal, financial, insurance, banking and investment areas d. For works only, when the work or works are carried out purely for the purpose of research, experiment or development The Directive implies that provided there is more than one irregular or unacceptable tender submitted, contracting authorities can indeed resort to the negotiated procedure, but that they have to choose to invite all the previous tenderers, or publish a notice in writing for fresh tenders and then use the negotiated procedure. It is clear from the above that the discretion given to the Council to use the negotiated procedure, either with or without a prior publication notice, is quite large. This is therefore an area where there is a higher potential for challenge. It can be expected that the Court of Justice will not allow the impact of the procurement Directives to be circumvented by a very wide interpretation of the exceptions allowing a recourse to the Negotiated procedure. It would therefore be advisable, before the Council decides to use the Negotiated procedure, for it to examine its reasons carefully, in particular where the negotiated procedure is used with prior publication, as in those circumstances the potential tenderers, not having been invited, will have the information and motivation to challenge the decision.
Competitive Dialogue Procedure

Competitive Dialogue is a procedure introduced in 2006 for use where purchasers consider that the open or restricted procedure will not allow the award of the contract. It can only be used with the most economically advantageous award criteria and this must be stated in the contract notice or accompanying descriptive document. Purchasers needs must also be stated in one of these documents. The potential to use the Competitive Dialogue procedure should be considered before use of the negotiated procedure with prior publication of a contract notice. See the chart at left. In the case of particularly complex contracts, purchasers may be well aware of their needs but not know in advance the best technical, legal or financial solution for satisfying those needs. The Council may also want to allow innovative solutions or may be unable to objectively assess what the market has on offer.
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A Competitive Dialogue procedure between purchasers and suppliers is therefore necessary to identify the solution or solutions that best meet their needs. Such a dialogue is not allowed under the current open and restricted procedures. See the chart below:
The procedure may be done in successive stages in order to reduce the number of solutions by applying the particular award criteria. Tenders based on the solution or solutions identified are assessed against the published award criteria. Clarification can be sought pre and post final assessment provided this does not distort competition and is not discriminatory Confidential information provided by participants at any stage of the dialogue cannot be communicated without their agreement. Purchasers may specify payments to participants in the dialogue. It is for the purchaser to determine whether payment is appropriate and, if so, how much on a case by case basis The Commission envisages the competitive dialogue procedure being used for many private public partnerships where contracts are complex and the legal and financial structure cannot be determined without dialogue with suppliers.
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EU Procurement & the Standstill Period

A recent revision in EU Directives has prompted changes in the time allowed between communicating the award decision to all tenderers and contract conclusion. This period is a mandatory minimum of 10 calendar days and is known as a standstill period. The mandatory standstill period only applies to procurement under EU Directives and does not apply: To procurement activity below the threshold limits To procurements outside the full scope of the procurement directives Where single tendering takes place under the urgency provision of the negotiated procedure Part B services
The standstill period must also be: Extended if necessary, e.g., around public holidays Started the day after the award decision is issued and must end on a working day If there is a legal challenge, authorities should wait to see if interim measures are granted before proceeding If interim measures are granted, they should wait until the outcome of legal proceedings before concluding the contract
When contacting tenderers about the outcome of the tendering exercise, formality must also be exercised as already mentioned. Regarding the standstill period, notification of the contracting authoritys award decision must contain: Award criteria Where appropriate, the tenderers score Where appropriate, the winning tenderers score The name of the winning tenderer
Also, in regards of the standstill period, new debriefing rules include: Providing additional debriefing within the standstill if requested by the end of the second working day of the standstill period Allowing three working days between this debriefing and end of the standstill
Criteria for Contract Award

Contracts must be awarded on the basis of either: a. The lowest price only; or b. The most economically advantageous tender taking into consideration various criteria, such as quality, technical merit, aesthetic and functional characteristics, technical assistance, after-sales service, delivery date, delivery period or period of completion or price. Most economically advantageous award criteria may also embrace sustainability issues and environmental and other characteristics provided these are linked to the subject matter of the contract and are economically advantageous from the point of view of the Council.
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The Council may exclude service providers who are ineligible, bankrupt, convicted for corruption etc., and who do not meet the minimum standards for financial and economic standing and technical capacity. The Council may decide what its minimum standards for financial and economic standing and technical capacity are. The Council may consider the service providers ability, taking into account in particular its efficiency, experience and reliability, including the exclusive items below: a. b. c. d. e. f. g. h. i. The service providers technical capacity taking into account the following information Education and professional qualifications References for the past three years Manpower Available equipment Quality assurance measures Technical resources Sub-contracted work Any supplementary information as may be reasonably required
Where relevant for works and services contracts, assessment of bidders technical/professional capability may encompass environmental management measures applicable to the performance of the contract. Environmental and social issues may also be relevant to track record, grave misconduct findings and technical capacity and ability. Purchasers can encourage suppliers to submit a range of offers through use of the provision for variant bids. Variant bids may be used to compare different levels of environmental (and other) performance where related to the subject matter of the contract. Minimum requirements including environmental and other criteria must be specified. Higher standards of performance or particular production processes are then specified in the form of variants against which a range of offers can be generated. Most economically advantageous award criteria must be used. The evaluation criteria should be set out in the contract notice or in the Invitation to Negotiate and, where possible, in descending order of importance. The criteria should include the evaluation of submissions in respect of service delivery and technical solutions together with such matters as quality, technical merit, functional characteristics, technical assistance, delivery date and/or period of completion. Abnormally low tenders may be rejected but before doing so a contracting authority must require the supplier in question to explain the individual components of his tender. The contracting authority must then verify those elements in the light of any information it has received from the supplier. This procedure is obligatory in the case of every bid that a contracting authority wishes to reject as being abnormally low and where bids are so rejected, the Commission must be informed of the reasons for doing so. The Council is obliged to exclude all those found guilty of corruption offences, organized crime or fraud. Work is underway by to identify the means by which purchasers will obtain information on relevant criminal convictions
Enforcement of Obligations
The possible enforcement actions that my be brought against the Council for a breach of the Regulations may lay either against the national government or the Council itself depending on whether the complainant enlists the aid of the Commission or seeks independent action. If action is sought against the government
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then the remedies available to the complainant are in the European Courts. They would make a preliminary ruling before referring the matter to the local courts who would have to apply the law to the facts in question. A complainant is more likely to seek an independent remedy in the UK courts. The remedies available depend on the stage at which a tendering process has reached. Where a contract has not been awarded the court may make an interim order suspending the award process. Where a contractor has been appointed, a court may only impose a financial remedy. Damages in these circumstances would be difficult to assess as potential complainants have only been put to the cost of tendering and therefore the loss would be speculative based on the likelihood of winning a competition exercise and then making a profit out of the contract. To achieve this the complainant must prove, on the balance of probabilities, that it would have won the contract and thus be entitled to their loss of profit. If the loss of profit was calculated at say 10,000 and the chances of winning the contract was held to be one in four then damages could be awarded 25% of the loss or 2,500. The choice of action may lay in contract or tort. In addition, action may be taken by the District Auditor or a complaint may be made to the Local Government Ombudsman.
Information & Reporting Obligations

A number of reporting requirements are imposed on contracting authorities, the most important of which obliges the Council to make a written report for each contract awarded including: a. b. c. d. e. f. g. The name and address of the contracting authority The subject and value of the contract The names of candidates or tenderers admitted and reason for their selection The names of candidates or tenderers rejected and the reasons The name of the successful tenderer and the reason for his selection If known, the amount they intend to sub-contract The circumstances justifying use of the negotiated procedures
This report must be retained and the report, or the main features of the report, must be given to the EU Commission at its request. However, the Directive provides for an immediate report to be given to the EU Commission if the contracting authority uses the Negotiated procedure without prior publication of a contract notice due to an absence of tenders following an Open or Restricted procedure. In addition, the Directive places the following obligations on contracting authorities: a. To inform tenderers of the reasons for the rejection of their tender giving the name of the successful tenderer (this must be provided within 15 days) together with reasons for the non-award of a contract where a call for competition was made. This latter report must also be given to the Office for Official Publications in the European Communities b. The Directive obliges contracting authorities who wish to derogate from the use of European Technical Approvals because of concerns about incompatibility to record the reason for such derogation and to supply such recorded details, on request, to either the Member States or the EU Commission c. In a similar manner, contracting authorities are also obliged to notify the EU Commission of the rejection of the lowest tender, if the contract had provided for the award of the contract to the lowest tenderer
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Contracting authorities must provide the Commission, every second year, with a detailed report of the number and value of service contracts (falling within the scope of the Directive) awarded in the preceding year. Reports are required in connection with Frameworks and Dynamic Purchasing Systems. Contracting Authorities must compile reports covering: Contract details Selection decisions Justification for use of the selected procedure Name of successful tenderer Reasons for selection
These reports are provided to the Commission upon request only.
IT & Telecommunications Standards

In accordance to the Council Decision 87/95/EEU all member states must ensure that all contracts for information technology with an estimated value of 100,000 (68,383) or more must reference European or international standards, or pre-standards. The idea is that these standards will form the basis for the exchange of information and data for systems interoperability. Directive 91/263/EEU requires compliance to ensure that telecommunication managers use common conformity specifications when purchasing terminal equipment.
Electronic Auctions
Electronic auctions are on-line auctions where selected bidders submit offers electronically against the purchasers specification. All communication following and including the invitation to pre qualified bidders to submit new prices and/or values must be instantaneous (electronic). Electronic auctions can be used for goods, services and works. All aspects of the bid must be assessed at the initial evaluation stage. Only price and quality elements which can be expressed as a value suitable for incorporation within a formula can then be carried forward to the auction stage. Limits to quality values arising from specification requirements must be stated in the specification. It follows that auctions should be used only where the requirement subject to auction can be specified precisely. The Directive sets out the rules governing the conduct of electronic auctions and recital 14 discourages the use of auctions for intellectual services. Electronic auctions may be used in conjunction with the open or restricted procedures or in circumstances where open and restricted procedures cannot be brought to a satisfactory conclusion and the negotiated route with a contract notice is therefore adopted. In all cases, the contract notice must state that an electronic auction will be used. Electronic auctions may also be used on the reopening of competition within a framework and on the opening for competition of contracts to be awarded through a dynamic purchasing system as long as, in both cases, the intention to use e-auctions has been stated in the contract notice.
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Tenders are invited in accordance with one of the procedures and a full initial evaluation is made using the award criteria specified in the contract notice or tender documents. Following the initial evaluation, successful tenderers are invited simultaneously by electronic means to participate in the auction. Connection details and date and time of the auction must be stated in the invitation but the auction cannot start sooner than 2 working days after transmission of the invitation. Where the auction is to be conducted in phases, the invitation to participate must state the number of phases and timetable. If adopting most economically advantageous selection criteria, the invitation to participate must be accompanied by the outcome of a full initial evaluation of the tender and the mathematical formula to be used in the auction to determine automatic re-rankings on the basis of price and quality values that are subject to the e-auction process. The formula must be based on the declared weightings that, if initially expressed as a range, must be reduced to a single value. Separate formulae must be provided for variants where these are permitted. Specifications must also state the information to be provided during the auction and when this will be available (electronically); relevant information about the auction process; conditions of bidding, particularly, minimum differences required for a new bid; relevant details concerning equipment and connection facilities. During each phase of the auction, sufficient information to enable tenderers to ascertain their relative ranking in relation to those values subject to auction must be communicated instantaneously. Other prices and values may also be communicated provided this is stated in the specification. The number of participants in a phase may be announced at any time but the identity of tenderers cannot be revealed at any time during the course of an auction. The auction can be closed in any one of three ways: by fixing the date and time in the invitation to participate; when no new prices or values which meet the minimum difference criteria are submitted; when the specified phases are complete. The contract must be awarded on the basis of the formula adopted which must include the initial evaluation of those aspects not subject to auction.
Dynamic Purchasing Systems

Dynamic purchasing systems are intended to address commonly used purchases. They are a kind of electronic framework which bidders can apply to join at any point during its lifetime. The open procedure must be used and the contract notice must indicate the intention to use a dynamic purchasing system. The system must be wholly electronic. The contract notice must provide the internet address at which documents may be consulted. The specification must state the nature of envisaged purchases and provide information on system, equipment and connection requirements. All those satisfying the selection criteria and who have submitted a compliant indicative bid in response to the contract notice (and supporting bid documentation) must be admitted to the system. Indicative bids may be improved at any time provided they remain compliant. Bidders must be allowed to submit an indicative bid at any time throughout the life of the system. Indicative bids must be evaluated within 15 days from submission, although the evaluation period can be extended
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provided that no invitation to tender is issued in the meantime. In addition, each contract within the system is subject to competitive bid which must be preceded by publication of a simplified notice inviting all suppliers interested in being admitted to the system to submit an indicative bid within a specified period not less than 15 days from the date of dispatch of the notice. Bids for a specific contract within the system cannot be invited until all indicative bids received by the deadline have been evaluated. All admitted bidders must be invited to submit a bid for a specific contract within the time limit specified by the purchaser. The award must be made on the basis of the award criteria set out in the contract notice (or supporting bid documentation) for establishment of the system, which may be refined for the specific bid. The contract award notice must be dispatched within 48 days of the award. The system cannot last more than four years unless, exceptionally, it can be justified. Bidders or other parties cannot be charged for establishing and operating the system.
Remedies
New EU rules which improve access to rapid and effective review procedures for suppliers who allege that public authorities have breached procurement rules took effect in the UK on 20 December 2009. The EU Remedies Directive amends the UK Public Contract Regulations and affects all procurement contracts commenced after 20 December 2009. The Remedies Directive aims in particular to tackle the direct illegal award of contracts and to improve the effectiveness of pre-contractual remedies. Public bodies that fall foul of the rules will be subject to new fines, the possibility of having contracts shortened and, where there are serious breaches of public procurement rules, having their contracts overturned or rendered ineffective. Included in the EU Remedies Directive: Harmonisation of standstill arrangements following contract awards Introduction of ineffectiveness as a remedy for illegal direct contract awards Allowance for a review procedure with contracting authorities Harmonisation of time periods (for review and standstill) Introduction of alternative penalties such as the imposition of (substantial) fines or shortening of the duration of an awarded contract
The idea of courts being able to declare contract awards ineffective (i.e. to tear them up') is a serious development in EU procurement legislation and represents a real change in the public sector procurement landscape. This may give rise to many problems if the procurement process is not carried out correctly particularly where suppliers are removed from competition, the 10 day standstill period is not observed or where mini tendering fails to take place in framework contracts. Where a procurement exercise falls within the realm of the EU procurement rules, officers are strongly advised to take advice from their departmental procurement team, the Lambeth Legal Team and Corporate Procurement. More information can be found in the summary document here: http://sharepoint.lambeth.gov.uk/sites/lts/corporateprocurement/Public%20documents/EU%20Procedures%2 0and%20Information/Changes%20In%20The%20EU%20Remedies%20Directive.doc and on the OGC website here: http://www.ogc.gov.uk/procurement_policy_and_application_of_eu_rules_european_procurement_directives. asp.
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Problem Areas
There are a number of differences in respect of tendering processes and practices between the member states and this has caused problems to contracting authorities in complying with the Regulations and their own rules and policies regarding procurement. Prominent among these are rules governing nominated sub-contractors and Approved Lists. 1. The system for appointing nominated sub-contractors are not recognised by most member states. It would appear that such a practice would run counter to the two primary objectives of the Directives: open advertising and preferential treatment for contractors in a particular member state. Accordingly on occasions where client departments need to nominate sub-contractors they should consult with lawyers at an early stage. 2. Regarding Approved Lists, the DOE Circular 16/90 states that there is no reason why approved lists should not be used as an aid to the selection of participants, provided that the selection is not discriminatory or based on those listed. Firms which respond to advertisements, and which meet the minimum technical and financial requirements, must be considered equally with those on the approved lists. Authoritative writers in EU Public Law and Practice have advised that in many cases the criteria by which firms were accepted on to the approved lists are unlikely to correspond exactly with the Regulations criteria for acceptance. Further, lists that require selection by rotation would not comply with anti-discriminatory provisions. Accordingly for contracts that breach the threshold it would be prudent to ask firms on the approved lists to apply in response to each advertisement. Recently there has been a shift of opinion among lawyers towards the understanding that the operation of an approved list would be in contravention of the principles contained in the Treaty of Rome made in 1957. The Treaty laid down various obligations on the free movement of goods, the right of establishment, right to provide services and a prohibition on discrimination on the grounds of nationality. The use of approved lists has not been tested in court. However, in view of market pressures on firms who are likely to apply for work with local authorities the likelihood of challenge is somewhat remote.
Variants
The contract notices provide for the Council to require variants. This term is not in common use in the UK and the closest equivalent is alternative tender. If the Council wishes to consider alternative tenders it should indicate that variants would be considered in the contract notice. CCT legislation requires local authorities to consider innovative methods of providing work.
Post-Tender Negotiation
The Regulation is silent on the question of post-tender negotiation. However, the DoE in Circular 16/90 stated: It is perfectly reasonable to try to ensure that a tenders bid has been constructed correctly or that the tenderer has fully understood the contract specification. It is also acceptable to seek clarification from the tender, or tenderers, of quality and performance or of particular terms and conditions. Similarly, it may be necessary to clarify or supplement the contracting authoritys requirement. There may be changes to the
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prices offered as a result. However, contracting authorities should not do anything to distort competition particularly as regards price. They must therefore not make fundamental changes to the contract specifications or the award criteria. This is because tenderers which are not party to such discussions might be able to match or better the offer which is accepted. In addition, they should take particular care where discussions are not confined to the tenderer which appears most likely to win the contract, as it may be more difficult in such case to avoid the suggestion of discrimination on the basis of nationality. If it becomes clear that significant changes to the specification or award criteria would be advantageous, the contracting authority should cancel the award procedure and start again. Where negotiated procedures are used, precontract negotiations are, of cause, necessarily involved.
Discrete Operational Units

The Service Regulations introduced the concept of discrete operational units and as a result the Commission has been understood to accept that independent procurement by separate parts of a purchasing authority can be treated in isolation for the purposes of the aggregation rules. Accordingly, where an organisation operates separately within the Council, as in the case of locally managed schools, they can be considered discrete operational units.
Problems with Valuation Methods

In order that the Council may not be accused of seeking to avoid the Regulations it should consider instituting procedures to ensure consistency of approach to the valuation of its recurring need in respect of goods and services.
Procurement Policy Note (1/09): Use of the Accelerated Restricted Procedure

In January 2009 the Office of Government Commerce (OGC) issued Procurement Policy Note 1/09. This Note provides information on the European Commissions decision to relax the rules on the use of the accelerated restricted procedure for procurement in 2009 and 2010. The Commission considers that the use of the accelerated restricted procedures for major projects will enable this to happen. Extending use of the accelerated restricted procedure in accordance with the Commissions statement will not require any change to the legislation. The relaxation of the rules governing the procedure will apply throughout 2009 and 2010. The time limits set out by the public procurement Directive 2004/18/EC include a certain time frame for potential bidders to decide whether to participate and to draw up their tenders. Furthermore the Remedies Directive 2007/66/EC provides for a standstill period between the award decision and the conclusion of the contract to allow for review of the award decisions. In the restricted procedure, bidders first have to request to participate. Subsequently, selected candidates are invited to submit their tenders. The regular regime for the restricted procedure, leading to the above time limit of 87 days, provides for minimum 37 days from the date on which the contract notice is sent for lodging requests to participate as well as for another minimum 40 days for the selected candidates to submit their tenders. After the award decision, the "standstill period" of 10 days applies before the contract can be concluded. Under the accelerated restricted procedure, which the Commission considers justified in the light of the financial crisis, contracting authorities can shorten the time limit for requests to participate from 37 to 10 days if the contract notice was sent by electronic means and the subsequent time limit for the selected candidates
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to submit their tenders from 40 to 10 days. With the remaining standstill period of 10 days, time limits for the restricted procedure can therefore be ultimately shortened to 30 days all in all. If you see the need to carry out a faster restricted procedure under the EU procurement Directive, you must in the first instance take legal advice from the Lambeth Legal Team. Once you have agreement to carry out the accelerated restricted procedure, you must include details and supporting reasons for doing so in your Procurement Strategy Report. Further details about public procurement legislation can be found at http://ec.europa.eu/internal_market/publicprocurement/index_en.htm.
Procurement Policy Note (2/09); Reserved and Contracts for Supported Factories and Businesses
In January 2009 the OGC also issued Procurement Policy Note 2/09. This Note says that Contracts can be reserved to supported factories and businesses, or to economic operators, which operate supported employment programmes, where more than 50% of employees are people with disabilities. The guidance Supported Factories and Businesses: OGC Guidance on reserved contracts in the new Procurement Regulations has been updated to provide detailed guidance on how this provision should be applied and how contracting authorities can ensure they achieve value for money when reserving contracts. This guidance is available on the OGC website at http://www.ogc.gov.uk/delivering_policy_aims_through_public_procurement_social_issues.asp. These provisions are in place under Article 19 of the Public Contracts Regulations 2006 and Article 28 of the Utilities Contracts Regulation 2006. These provisions can be applied to contracts both above and below the EU thresholds. These provisions can also be applied to framework agreements.
Additional Guidance Regarding Consultation During the Competitive Dialogue Procedure

In the guidance for the Competitive Dialogue procedure, you will see several references to consultation. There are three consultation situations in Competitive Dialogue: 1. The consultation between the procurement project team and the suppliers 2. The internal consultation between the Lambeth project leader and their departments representative cabinet member 3. The consultation undertaken with project stakeholders When working with your tenderers, consultation begins on the first date when any form of interaction between bidders and the contracting authority occurs. This could be bidder meetings or, if no bidder meetings are held, submission by bidders of their initial proposals - i.e. what is currently the submission of PITN responses. The address(es) applicable to the consultation may be the location of bidder meetings and/or the address to which initial proposals should be submitted, as in the contracting authority's project office. Once your procurement project has been given approval to proceed and you are going to use the Competitive Dialogue procedure, you must contact your departmental head of procurement, along with your departments representative cabinet member. Throughout the Competitive Dialogue process, you must keep both informed of progress and seek advice and guidance as required.
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And of course in the planning phase you will need to address the stakeholder management issues that may be present in the procurement project; all stakeholders should be identified, analysed and managed from the start to the finish of the project, and on into contract management if necessary. Some of the more common activities in stakeholder management include stakeholder meetings, surveys, focus groups and stakeholder groups; in contract management stakeholders can be involved in contract monitoring as well. For more information see section 1.9 of the Procurement Guide titled Stakeholders & Stakeholder Management and speak to you departments communications manager. Before undertaking the consultation process in the Competitive Dialogue procurement route, you must speak to your departmental head of procurement. The OGC has issued updated guidance to the Competitive Dialogue procedure; you can download a copy here: http://www.ogc.gov.uk/documents/guide_competitive_dialogue.pdf.
Conclusion
The procurement rules are intended to cover all purchasing activities of public bodies or where public money is spent. Accordingly it may be considered best practice to publish a notice in OJEU and comply with requirements for the evaluation of tenders in all cases where there may be some doubt as to the Councils duty to comply with these requirements. You should contact the Corporate Procurement Team for initial advice.
3.3
Tendering for Consultancy Services
Though the use of professional services or consultants is fairly usual at Lambeth, Guidelines in their appointment and use must be observed. Professional services are often sought for the following reasons: Objectivity Technical experience or job / market knowledge in a particular field of work As a second set of hands in the project being carried out
3.3.1
General Principles: What Is A Consultant?
This group of people are known by various terms which are used interchangeably. Terms used include Temporary Workers, Interims, agency staff, Consultants and Consultancies. For this group of staff there are two groups of people and they are procured differently.
Group 1
Are likely to be: A company or an individual who trade as a limited company Procured through a tendering exercise A company that submits invoices directly to the Council for a specific piece of work that is limited by time or purpose Where their work does not form part of business-as usual operations which would be done by a Lambeth employee A professional service that has been contracted out
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Companies employees who probably do not have a Lambeth email address or a Lambeth telephone number
Examples include: Consultancy Surveyors e.g. Atkins Ltd An equalities consultant such as Cohesia Indigo Edge a consultant to Revenues and Benefits
Procurement Route
This group can only be appointed through a procurement exercise, should you require any further information you should contact your departmental Procurement Team. The Capital Ambition has produced Toolkit to help with the appointment of this group and you that you can access it here: http://sharepoint.lambeth.gov.uk/sites/lts/corporateprocurement/Public%20documents/Procurement%20Tool kits/Toolkit%20%20Procurement%20of%20Consultancy%20and%20Professional%20Services%202007.pdf.
Group 2
This group is likely to be: Temporary workers who are engaged in an assignment which will provide delivery of ongoing local authority service. This includes all posts within the council including individuals who provide specialist services for project work Individuals who submit timesheets on the Matrix system Individuals who are procured via the Human Resources Managed Service Provider Matrix Individuals who are paid on hourly or daily rates Individuals who require a Lambeth access pass and may access the Lambeth intranet and have a Lambeth telephone number
Examples include: All temporary workers who are appointed via the MSP (Matrix) for a specific period Interim managers and project managers appointed via the MSP (Matrix) Interim directors
Appointments
People falling into Group 2 can only be appointed through the Lambeth Managed Services Provider. Should you require a temporary worker, you must contact Matrix 0871 227 0187 who are our service provider. If Matrix cannot provide an agency worker please contact HR who will discuss options available to you or email Clientrelationship@lambeth.gov.uk.
3.3.2
The Lambeth Business Case Template
Lambeth Council has developed a Procurement Business Case Template, a Consultants Tender Template and Business Questionnaire forms for the appointment of consultants; these documents can be found on the
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Corporate Procurement intranet site. The business case template is designed to assist you in preparing a business case for the use of consultants. In turn, this assists with planning and managing the consultancy project. The progress and outturn of the consultancy can be monitored against the business case. This will need to be attached to the Procurement Board approval form if at or over 25,000k in value. The business case serves as a fitness for purpose checklist. There are key aspects within the template: strategic fit, options appraisal, commercial aspects, affordability and achievability. This template should be used together with the guidance given in this Procurement Guide.
3.3.3
Consultancy Services for Construction
The recommendations of the Latham committee provide a response to historic difficulties, and the construction industry is beginning to change more rapidly. Partnering between clients, contractors and other construction suppliers is seen by many as a panacea for the ills of the British construction industry. The shift towards greater collaboration, away from a highly competitive and adversarial way of working, will be very demanding. The ideas are not new and collaborative relationships between firms have always been common in the industry. Statutory requirements, the need for formal compliance and the Constitutional Process can make the position for a local authority seem more involved, but the same principles of modernisation should apply. Thus, there is no doubt that partnering should play a much greater role in the future. Lambeth, like all large authorities, faces a difficult period of change over the coming years and its approaches must remain flexible and pragmatic. Construction related procurement must take account of Best Value principles as well as the great diversity of technical services that are required. Despite its important initial contribution, CCT had become a barrier to developing partnership approaches. While it is very difficult to prescribe best practice, client focus is now established as a common theme. It is possible that simplified forms of contract will become common, covering only the essential relationships. The legislative environment for local authorities is likely to continue to change and their relationships with the construction industry will require constant review. Risk analysis should remain as a significant factor in the corporate decision process - it is both time and quality related. Once you have considered such strategic issues and need for the procurement of a consultant has been established, you should adopt a two stage competition with: Restrictions on the numbers of consultants at the shortlisting stage Final selection from a small group of suitably qualified consultants
The basis of competition should involve: Selection by ability at the shortlisting stage Selection by both ability and price at the final selection stage
Price alone should not be used for selection unless the services can be fully defined and there is no clear difference in ability between consultants. Required early decisions include: The works procurement strategy (e.g. consultant-led or contractor-led) Whether one or more consultants will be appointed
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Whether separate appointments are needed at different stages Who takes responsibility for design coordination
A project brief should be prepared to include: Aims and objectives The quality required of the completed project The project location The scope of the whole project The project function and the performance expected of the project Any relevant standards and constraints The project timescale The project budget
The consultants brief should include statements of: The services required The quality required of these services The consultants responsibilities The outputs required Liaison with other project participants
Shortlisting should be used to ensure that only suitably qualified consultants take part in the final competition and that the competition is kept to manageable proportions. The objective of shortlisting is to identify usually between 3 and 6 consultants for final competition. The key criteria for shortlisting should be: Track record of similar commissions in terms of approach, technical ability and performance to quality, time and cost constraints Professional resources and support facilities available Qualifications of key staff Financial standing Adoption of a quality management system
Where client requirements are clear it may also be useful to invite an initial statement for approaching the commission (proposed management and technical method). Final selection would normally follow a formal tendering route and the guidance contained within this Procurement Guide applies. Evaluation would normally include an interview, unless the project is simple and consultants are well known. The method of evaluation should take into account the overall experience and facilities of the consultant, the relevant experience and expertise being offered and the approach to the commission that is being suggested. Some form of scoring is likely to be useful as a Guide but judgement will always be necessary when bringing together cost and quality considerations. You should always ensure that there is a record of the evaluation including the results of any scoring system and names of those involved in the decision.
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3.3.4
Management Consultancy Services
Local authorities use management consultants for a very wide range of services. Indeed the term management consultancy is often interpreted loosely. Mainstream management topics include areas such as strategic reviews, change management, organisational development, management restructuring, total quality programmes and performance management. However, management consultancy services also include accountancy, information technology, communications technology, economic development, marketing, recruitment, race relations, environmental planning, training, research and many other disciplines. Management consultants have traditionally been used where there is a lack of in-house skills or resources or where an independent review is required. The current trend is for an even wider use of consultants as a response to the increased pace of change within local government. The influences include information and communications technology, procurement strategies that alter the pattern of service provision, greater use of partnership, modern trends in governance and greater delegation within authorities. The first stage in procuring management consultancy is to be clear about the need and the commitment to spend. You must prepare an assignment brief that sets out the outputs expected. In many cases, it is also necessary to set out some of the inputs, e.g. the need to interview and take account of the views of certain officers, members or representational groups. You should also use the Business Case Template described earlier in this section. In addition, you should note that CPT have a model set of tendering documents for consultancy services. The brief should include assignment objectives, timetable, monitoring arrangements and details of deliverables. The wording of a brief should be carefully constructed as: You are relying on the brief to obtain realistic proposals from consultants who correctly understand your requirements; You cannot assume that the consultant has familiarity with particular terms; You should guard against the possibility of the consultant interpreting the brief either too narrowly or too broadly; this would impact significantly on the approach suggested and the price quoted
The brief can also set out invoicing arrangements. With larger assignments you may wish to link payments to phases of work. In other cases you may wish to link final payment to final delivery of outputs. You must avoid any arrangements that require payment in advance of the work being completed unless there are exceptional reasons for doing so (which you must carefully record). You should take account of the commitment that the Council needs to make in order to allow the consultants to achieve the objectives (e.g. access to materials and staff, meetings to review progress and understanding). Competition should be used to select consultants unless there are demonstrable reasons for not doing so. These would include unique knowledge or expertise (e.g. through having completed a closely related assignment within the authority). The basis of competition should be (a) production of a shortlist and (b) final selection. Open advertisement for consultancy services is rarely worthwhile, as you are likely to receive a very high number of responses. However, you should ensure that you have sufficient knowledge of the market for the particular area of consultancy support that you require. This knowledge probably exists within your department but you can obtain advice from CPT. The length of the initial shortlist, i.e. the consultants
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you will approach, will depend on the nature of services you require. Similarly the number of consultants you ask to produce full proposals will depend on the nature and likely cost of your requirements. At the final selection stage, you should normally require the consultant to provide a written proposal in response to your written brief. This proposal should normally include: The issues that the consultant considers to be relevant The approach, including method, that the consultant will adopt The programme of work (including resources and timescale) The team that will undertake the work (names, qualifications, etc.) What the consultant will require from the authority Costs (including the basis of costing and any expenses)
Selection should be based on the consultant or consultancy team that has been named to undertake the assignment. The general track record of the consultancy organisation may affect your decision to shortlist but it should not be a major factor in your final selection. This final selection should be based on: General experience and qualifications of the consultancy team Relevant experience and expertise of the consultancy team References from previous clients (for similar work where possible) Understanding of the clients needs Feasibility and credibility of the proposed approach Price
Audit Commission research has indicated that most consultancy work was not usually let on the basis of lowest price, although few authorities held records to justify their decisions. You must always take account of the available budget and it can be useful to indicate your budget when producing the brief. This can help a consultant to understand the scope and depth of the required work and it can help in making a comparison of competing bids. You should normally interview the shortlisted consultants before making your selection decision. The exceptions would be where the work is clearly defined and the consultants are well known to you. You should prepare a formal agreement before a consultancy assignment commences. This may range from a letter to a formal legal contract. As a minimum, the agreement should: Confirm agreed total costs (fixed price arrangements are usually preferable where the work can be closely specified) Make reference to the brief Make reference to the consultants submission Confirm invoicing and reporting arrangements
It is not uncommon for consultancy assignments to lead to extensions; this extension work may have a higher cost than the original work but you must follow the same good practice guidance for extension work as applies to the original assignment. In some cases it will be possible to justify single tender action (as only the one consultancy will have the necessary knowledge). However, in all cases, you should ensure that there are written records and a formal agreement defining the extension work.
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Remember that should you require a consultant, agency worker or contractor, you must contact Human Resources in the first instance on namoa-buahin@lambeth.gov.uk. HR can assist you with the correct route for procuring the professional service you require.
Gateway Three: Present Procurement Officer Delegated Decision Report to procurement Board We are in the home stretch now and what a race it has been! You have learned all the necessary, required knowledge to purchase or contract for a product or service; you have passed Gateways One & Two with ease and successfully tendered for your purchase or contract. Tender evaluation is behind you and you have selected the best supplier that represents Value for Money for the Council Keeping in mind the Lambeth Purchasing Cycle (at the beginning of this Guide) you will need to prepare your Officer Delegated Decision Report(s) and submit to the procurement Board. Once the Board recommends your procurement project upwards (as per the Scheme of Delegation) and you have final approval, discussions with your successful supplier can start about implementation. Dont forget to de-brief the unsuccessful suppliers and set up your new supplier on Oracle, and update the Forward Plan. But we are not done yet! Its time to start managing your contract and time to move to Gateway Four
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3.4
The Supplier Setup Process
The Supplier Setup Form includes important supplier information and procurement questions that must be completed in full BEFORE you place your order. This can take time so be sure to plan for this! The electronic Setup Form must be completed in full. Incomplete forms will be returned and this may cause you delays if any information is left out or incomplete. The online supplier setup form is available within Oracle iProcurement; the e-form enables the efficient raising of a request for a new supplier and allows the requester to follow the progress through the approval process. You can find the form on Oracle here: http://comp-ap-65/training/. The Supplier Setup Form e-learning course can be found here: http://comp-ap65/training/flash/enhancements/Supplier%20Creation%20Form%20%20output%20Files/Trainers%20Are%20Us%20Supplier%20Set%20Up%20Form_demo/Trainers%20Are% 20Us%20Supplier%20Set%20Up%20Form_demo.htm and the e-learning course for a new Supplier Setup approval can be found here: http://comp-ap65/training/flash/enhancements/Approval%20of%20Supplier%20Set%20Up%20Form%20%20Output%20Files/Approval%20of%20Supplier%20Set%20Up%20Form_demo/Approval%20of%20Suppli er%20Set%20Up%20Form_demo.htm. For additional e-learning courses, see the links below: Linking a Contract to a Requisition http://comp-ap-65/training/flash/enhancements/Attaching%20a%20Contract%20to%20a%20Requisition%20%20Output%20Files/Attaching%20a%20Contract%20to%20a%20Requisition_demo Approving a Requisition linked to a Contract http://comp-ap-65/training/flash/enhancements/Approval%20of%20Requisition%20With%20CPA%20%20Output%20Files Once the form and bank details are received, they can be processed. Incomplete forms cannot be processed and may cause delays, so be sure to complete the form in full. The form will then be sent to Finance for addition onto the Oracle system and when this is complete, you can then raise a requisition in Oracle. You must not trade with the supplier or service provider until given the approval that the supplier has been set up; failure to adhere to this guidance will contravene standing order regulations and is a disciplinary offence.
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Gateway Four: Review
Contract Management
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4.0
Introduction to Gateway Four

There is an old quotation about public sector procurement, when it comes to contract management: Let and Forget. We tend to follow the procurement processes very well and manage to get some pretty decent savings, but when it comes to managing the contract for the next 3 or 5 years afterwards, our performance is not so sterling. Gateway four concentrates on the principles of effective contract management and will give you the tools to manage all your contracts effectively and efficiently so you will NEVER Let and Forget.
4.0.1
Preparing For Successful Contract Management
A contract will only be successful if you have thought ahead to its operation from the very first stages of the procurement process. The questions that can help you to think ahead are reproduced below as they relate directly to contract management: What performance measures will be required? Will it be possible to express these as measurable performance indicators and targets? How will it be possible to monitor these indicators and targets in an efficient and effective manner? What client resources will be required? What arrangements can be built in for defaults and, if necessary, contract termination due to nonperformance? Does the procurement process require a project management approach with a team involvement? How will risk management be incorporated?
The answers to the above questions will assist you in focussing on the basic practicalities as a complement to the additional detailed guidance given in this section. An additional and very useful document is the OGCs Contract Management Guidelines and this can be found here: http://sharepoint.lambeth.gov.uk/sites/lts/corporateprocurement/Public%20documents/Contract%20Manage ment/OGC%20-%20Contract%20Management%20Guidelines.pdf.
4.0.2
What Is Contract Management?
Contract management is the process that enables both parties to meet their obligations in order to deliver the objectives required from the contract. It also involves building a good working relationship between client and contractor. It continues throughout the life of a contract and involves managing proactively to anticipate future needs as well as reacting to situations that arise. The central aim of contract management is to obtain the services as agreed in the contract and achieve value for money. This means optimising the efficiency, effectiveness and economy of the service or relationship described by the contract, balancing costs against risks and actively managing the clientcontractor (or provider) relationship. Contract management may also involve aiming for continuous improvement in performance over the life of the contract, particularly under Best Value requirements. There are 3 essential areas involved in contract management: 1. Service delivery management ensures that the service is being delivered as agreed to the required level of performance and quality
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2. Relationship management keeps the relationship between the Council and contractor open and constructive, aiming to resolve or ease tensions and identify problems early 3. Contract administration handles the formal governance of the contract and changes to the contract documentation
4.0.3
Getting the Contract Right
This section of the Guide concerns client activities following the award of a service contract. But a key point is that the foundations for contract management are laid in the stages before contract award, including the procurement process. The terms of the contract should include an agreed level of service, pricing mechanisms, provider incentives, contract timetable, means to measure performance, communication routes, escalation procedures, change control procedures, agreed exit strategy and agreed break options, and all the other formal mechanisms that enable a contract to function. These formal contract aspects form the framework around which a good relationship can grow. If the contract was poorly constructed, it will be much more difficult to make the relationship a success. The preparation stage, specification development stage, evaluation stage, clarification stage and, if applicable, contract negotiation process must all take account of the requirements for contract management. Any method statements should be used to monitor contractor performance. It is vital to build a contract that not only identifies clearly the obligations of the provider (and indeed the client), but also enables a productive relationship built on good communication and mutual trust. While the contract must be built on a firm formal and legal foundation, it should not be so restrictive that it precludes flexible, constructive management of the relationship between client and contractor.
4.0.4
Method Statements & Implementation Plans
Contract management issues should have been carefully considered when developing tender documentation. The evaluation process would have included consideration of how the tenderer proposes to deliver services. It is likely that the tenderer would have been required to provide one or more Provisional Method Statements, giving details of how they propose to meet the requirements of the specification. The extent and detail of these statements would vary according to the nature of the contract. Provisional Method Statements become part of the contract once the tender has been accepted by the Council. The client should therefore ensure that the contractor delivers against these statements. The Council has the right to negotiate on the details in order to improve quality, effectiveness and value for money. Any agreed amendments also become part of the contract. The client should also agree a formal implementation plan with the successful contractor as soon as possible after award and well before the contract start date. Following agreement over the details of Provisional Method Statements and the formal implementation plan, the client should incorporate checklists into their monitoring arrangements. These checklists should ensure that the contractor is providing services in accordance to method statements and the implementation plan. Where practicable, the client should request management reports to assist in this monitoring.
4.0.5
Service Delivery Management
The contract should define the service levels and terms under which a service is provided. Service level management is about assessing and managing the performance of the contractor to ensure value for money. You should consider service quality against cost in order to assess the value for money that a contract is providing. As well as assessing whether services are delivered to agreed levels or volumes, you must also
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assess the quality of the service. You will have to create hard measures to allow the quality of service to be assessed, even in areas where it is difficult to quantify. Some aspects of service quality that could be assessed are completeness, availability, capacity, reliability, flexibility, timeliness, responsiveness, security, standards, usability, accuracy, auditability and satisfaction. However, you should always consider the resource implications of making such assessments. It is important to devise highly effective and efficient means of monitoring, e.g. through joint arrangements with the contractor, based partly on exception reporting and random checks rather than blanket monitoring. The contractors responsibilities towards contract management are also highly relevant. A key part of assessing the service provided is the baseline, or level from which service levels and improvements are measured. You will need to agree this before the service commences. Benchmarking, or comparing performance across different organisations and providers, is another useful way to gauge improvements or pricing levels. Managing risk is another important aspect of managing service delivery (see Section 2.11).
4.0.6
Relationship Management
As well as the contractual and commercial aspects, the relationship between the parties is vital to making a success of the arrangement. The approach to this will vary depending on the contract, but it is important that you do not neglect the specific responsibilities, even though there may not be a nominated individual assigned to the role of relationship manager. In long term contracts, where interdependency between the Council and the contractor is inevitable, it is in the contractors interests to make the relationship work. The three key factors for success are trust, communication, and recognition of mutual aims. You need to design management structures for the contract to facilitate a good relationship, and staff involved at all levels must show their commitment to it. You should establish information flows and communication levels at the start of a contract, and maintain them throughout its life. The three primary levels of communication in a contractual arrangement are operational (end users/technical support staff), business (contract manager and relationship manager on both sides) and strategic (senior management/board of directors). You should encourage the right attitudes and behaviours, based on trust rather than adversarial models. You should establish procedures for raising issues and handling problems, so that they are dealt with as early as possible and at the appropriate level in the organisation.
4.0.7
Contract Administration
Contract administration, the formal governance of the contract, includes such tasks as contract maintenance and change control, charges and cost monitoring, ordering and payment procedures and management reporting. You should not underestimate the importance of contract administration to the success of the contract, and to the relationship between the Council and contractor. Clear administrative procedures ensure that all parties to the contract understand who does what, when, and how. The contract documentation itself must continue to accurately reflect the arrangement, and you should carefully control changes to it (required by changes to services or procedures). Responsibility for authorising different types of change will often rest with different people, and documented internal procedures will need to reflect this.
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Management reporting procedures control what information is passed to management about the service; this can range from a comprehensive overview of all aspects to solely reporting exceptions to normal service. You must also consider arrangements for asset management.
4.0.8
Seeking Improvements A good working relationship will help make improvement a reality, based on the principle that improvement is good for both parties, not just a means for the Council to drive down costs. Incentives motivate contractors to improve by offering increased profit or some other benefit as a reward for improved performance or added value. Benefits based payments, where payment is dependent on the realisation of specific benefits to the client or customer, are a more sophisticated form of incentive. Normally built into the contract terms, it is vital that incentives are balanced and encourage appropriate contractor behaviour
Service delivery management, relationship management and contract administration should keep both contract and relationship running smoothly, and providing the value for money represented by the contract at its outset. You will almost certainly want to aim for improvement over the life of the contract as well; ideally, the requirement for improvement will be built into the contract. It may be appropriate to aim for continuous improvement over the life of a contract, perhaps expressed through a capped price that decreases year on year. A plan could be developed with the contractor detailing how improvements will be made.
4.0.9
Handling Problems
No matter how good the relationship between client and contractor is, and however stable the services being delivered, problems may arise. You should therefore develop and agree procedures for handling these; clear reporting and escalation procedures help keep the heat out of the relationship. The objective is a relationship in which client and contractor co-operate to ensure that problems are recognised and then resolved quickly and effectively.
The relationship manager should ensure that the contractor has problem management procedures in place, including escalation procedures within the contractors organisation, and that these are used when needed. These procedures should seek to prevent problems as well as to resolve them. The contract must define the procedures for undertaking corrective action if, for example, target performance levels are not being achieved. Your response to non-performance should be commensurate with the severity of the failure. For certain types of service failure, the contract may specify the application of service credits; procedures are required to calculate these and to enforce them. Apart from service performance issues, problems can arise in a number of areas and for a wide range of reasons: clashes of personality; slow or incorrect submission of invoices; slow payment of invoices; problems with contract administration procedures. Whatever the nature of the problem, it is vital that: Problems are recorded as they occur, in order to highlight any trends and to help in assessing overall performance and value for money The contractor is notified of problems by an appropriate route and at an appropriate level approaches to resolving problems are clear and documented Escalation procedures are followed
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4.0.10
Escalation Procedures
If a dispute cannot be resolved at the level where it arises, it will be necessary to involve a higher level of authority. This escalation process needs to be managed. Escalation procedures should allow for successive levels of response depending on the nature of the problem and the outcome of action taken at lower levels. The levels for escalation should match those of the interfaces established between contractor and client. Every effort should be made to resolve the problem at the lowest practicable level. For more serious problems, the contract should specify the circumstances under which the organisation would have the right to terminate the contract. The contract manager must consult senior management as soon as this possibility arises. The contract manager should collate information on the number and severity of problems, as well as the way they were resolved, during the life of the contract. This information will provide useful input to service reviews. The contract manager should periodically arrange for a check on the financial viability of the contractor, as well as continually monitoring any changes in ownership of the contractor. Where potential problems are identified the contract manager should seek specialist advice as soon as possible. Normally, most problems should be resolved before they become major issues; contract managers and service managers on both sides should meet regularly to raise any issues promptly as they occur. In extreme cases, where agreement cannot be reached, the client and contractor should seek the assistance of mediators before resorting to legal action. For any major service contract the Council must develop an exit strategy. This would apply in the case of irrevocable contract failure. The exit strategy should be in the form of a high level project plan. It should cover all available options, e.g. bringing in an alternative temporary contractor, temporarily providing the service in house or temporarily using another local authority. For these options the practical steps of transferring management arrangements, records and other aspects of the service should be thought through and recorded. Whether or not such transitional arrangements are possible, the exit strategy should aim to predict the time and resources required to set up alternative permanent arrangements. A particular focus must be on maintaining a service to customers. Where this is impossible, the impact and recovery procedures should be assessed. For all scenarios, cost implications should be estimated. Where impacts could be severe, the exit strategy should identify what contingency measures and safeguards should be built into the contract (e.g. live copies of records lodged with the client, spare equipment or stand by agreements with other authorities or suppliers).
4.0.11
Managing Changes
The only constant is change. Its a clich, but it goes to the heart of the problems that can beset large-scale contracts. A successful arrangement requires a mutual commitment to meeting evolving business requirements. Whats more, properly managed change can be a good opportunity to alter or improve the service. A successful arrangement requires a mutual commitment to meeting evolving business requirements and adapting to changing circumstances. Properly managed change can be a good opportunity to improve the service. Change is easier to deal with when preparations are made. Not every possibility can be foreseen and planned for, but it is desirable that the contract includes some flexibility as well as procedures for handling changes. Areas where change might be necessary include performance measures, service functionality, service infrastructure and workload.
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The drivers for change during the term of a contract can come from a range of sources. Internal drivers for change could include evolving business requirements; the organisational restructuring of either party, or significant revisions to the corporate strategy/business objectives of either party. External drivers could include developments in technology (things which were not possible become possible, and therefore desired, or necessary to maintain the market efficiency of service provision); economic trends that affect the profitability/value for money of the relationship - from the perspective of the client or the contractor; the need to provide electronic forms of service delivery to meet customer expectation, and changes in legislation or legal interpretation. The importance of understanding the implications of change from the perspective of both parties cannot be overemphasised. Change to a contractual arrangement affects the scope and thus the viability of the contract, for either or both parties. To an extent, both parties are taking a calculated risk when they enter long term contract arrangements that the cumulative effect of change over the term will balance out for both. It may not necessarily be so, especially over relatively short periods, and both parties need to remain conscious of the impact on themselves and on their partners. Joint planning of change is vital if risks are to be minimised.
4.0.12
The Contract Management Guide
If the contract relates to an important public-facing service, you may want to publish a short contract Guide. This would act as a handy reference for all stakeholders including the client team, contractor managers and supervisors, the public, Members, Council officers and outside agencies. It would assist in responding to queries or problems. The contract Guide could give details of the services provided, what the contract covers and other key features of the contract. It could also summarise key contract conditions, contract monitoring arrangements and default mechanisms. A template for the Contract Management Guide can be found on the CPT intranet site at http://intranet.lambeth.gov.uk/StaffServices/FinanceAndProcurement/Procurement/ProcurementAtLambeth/ ProcurementFormsTemplatesAndDocuments.htm.
4.0.13
Contract Novation
In simple terms novation means replacing a party to a contract with a new party. It is a concept that originated in Roman Law and refers to the process by which two contracting parties agree, by consent, to replace one of them with a third party. The process of novation actually changes the parties to a contract such that there is effectively a new contract between those parties on the same terms. If a supplier changes their name, they effectively become a new entity; a novation will also be required. Some examples: the seller of a business transfers the contracts with his customers and suppliers to the buyer. A novation agreement should be used to transfer each contract. Or a design and build contractor in the construction industry transfers a construction contract to a new, substitute contractor. A contract novation is necessary. Lambeth has a contract novation process in place and where a novation is required (as above) the contract manager must carry out some very specific steps to update our contract records. You can find the guidance in the standalone page here: http://sharepoint.lambeth.gov.uk/sites/lts/corporateprocurement/Public%20documents/Forms%20and%20te mplates/Contract%20Novation%20Guidance.docx.
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4.1
Lambeths Contract Management System
The principles of contract management, together with some good practice Guidelines, have been covered in previous sections of the Procurement Guide. This section relates to Lambeths specific requirements for the control of contract management arrangements. In particular, this relates to the use of an enhanced contract register that will be available on the intranet. The requirements described in this section overlap to some extent with the description of requirements; this is because of the important interface between procurement activity and contract management.
4.1.1
Contract Management & the Procurement Process
Lambeth Council has in place a fairly straightforward formal contract management system, applicable to contracts over 100,000 in value. Contracts valued below the 100,000 value should also be monitored and managed, though they do not need to have formal reports written and presented to Procurement Boards. Internal Audit will also make regular checks of contracts of lower value to ensure that good practice has been followed and essential records are maintained. The contract management system aims to assist you with your specific obligations. The Corporate Procurement Team has developed both the system and the Principles of Effective Contract Management training course following review and consultation of contract management practices within the Council; any queries regarding the system and its developments should be addressed to CPT. Your contract specification will include details on how your contract will be monitored and managed, and with what frequency. Completed Gateway 4 forms and contract performance reviews will need to be sent in to the relevant procurement board and the board may call it in for you to present it in person. The involvement of the Procurement Boards is detailed throughout this Guide, and in detail in Section 1. This involvement will help to ensure that tendering exercises are compliant and that contracts include corporate requirements. A further advantage of the involvement of procurement boards is that this will help to avoid duplicate or unnecessary tendering, i.e. where similar contracts are already being progressed or have been awarded. Procurement Board approval will be as per the value of the contract: Procurement Board 1 (Strategic Procurement Board) Procurement Board 2 500,000 and greater 100,000 up to 500,000
When contracts are awarded, every contract and waiver valued at 25,000 and greater will be scanned into the Contract Register. Gateway 4 forms and contract performance reviews will also be scanned into the Contract Register, if valued at 100,000 and greater. For procurements valued at 100,000 and greater, the lead procurement officer must conduct an Equalities Impact Assessment (EIA) for their procurement exercise at the point approval to tender is granted. EIA guidance, self-certification guidance and the report template can be found on the Lambeth internet site at: http://www.lambeth.gov.uk/Services/CommunityLiving/EqualityDiversity/EqualitiesImpactAssessments.htm.
Gateway Four: Contract Implementation Review
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Gateway 4 is the procurement milestone point where the supplier and contract manager come together in their first formal review meeting after contract award; this will usually happen after the first 90 days of contract delivery. The purpose of the meeting is for the contract manager to review any implementation issues, to ensure the contract is getting off to a good start. One the meeting has occurred, the contract manager completes a Gateway 4 form, attaches any notes or action plan to the form and sends it in to the relevant Procurement Board. The Gateway 4 form is mandatory for all contracts valued at 100,000 and greater and may be called in by the Procurement Board. Upon completion, copies of the forms need to be submitted to the Procurement Board as below: Contracts valued 100,000 up to 500,000 Contracts valued 500,000 and greater Procurement Board 2 Procurement Board 1
4.1.2
Ongoing Contract Monitoring
After completing the Gateway 4 form, contract managers have to submit these and ongoing performance reviews to the Procurement Board as above. All of the Procurement Boards may call in contracts for performance reviews to be presented in person, for contracts valued at Where a contract is valued at 100,000 and greater. Regular reviews will be made through use of the Contract Performance Review Form. There are two sections in the report: the first is a text section that the Lambeth contract manager completes with the supplier, along with a progress report on equalities issues that were raised in the initial Impact Assessment. The next section is a scorecard matrix on which both parties score the contracts performance against standard Lambeth contract management KPIs. Performance scores and details from the review will be submitted to the relevant board and entered onto the contract register.
The maximum number of points a contract can receive in the Performance Review are 50 points. Where the contract is reviewed at 29 points or below (or if any one criterion is scored at a 2 and lower), the Contract Performance Improvement Plan (included on the form) must be completed. The Improvement Plan must detail the contracts problems, their impact, proposed or actual remedial action, and the outcome of any remedial action - including proposals for additional action.
100,000 and greater but is either for a product or for services lasting a period of 6 months and shorter, a Gateway 4 report is not required. However, officers must complete a Short Contract Closure Review form and submit it to their Procurement Board; this form is designed for use as an end of contract review for short term services, supplies and consultancy or works contracts. These short term contracts will have a term not greater than 6 months in length. The Short Contract Closure Review form can be found on the Lambeth Corporate Procurement intranet site
If a contracts problems are not resolved in a timely manner, the Procurement Board may call in a poorly performing contract on a more frequent basis. Additionally, if a contract is seriously at risk and emergency situations arise outside of the quarterly review period, the Lambeth contract manager has an obligation to report this to their Procurement Board immediately.
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4.1.3
Contract Variations & Extensions
Subject to any statutory restrictions and compliance with Financial Regulations, an Executive Director, following approval from a Procurement Board, may authorise the following changes to an existing contract: A change in price determined within the terms of the contract or arising from the application of a price formula included in the contract A variation with a resulting change in price determined within the contract terms An extension of a contracts term, where allowed in the terms and conditions of contract
All contract variations and extensions must follow procurement rules as detailed in the Guide, following the Scheme of Delegation. More information can be found in section 3.1.13.
4.2
Effective Contract Monitoring
This section offers additional advice on the effective monitoring of contracts, including the monitoring of performance. These guidelines are based primarily on Westminster City Councils Contracts Code.
4.2.1
Overview
The purpose of contract monitoring at Lambeth is to ensure that the Contractor is achieving the requirements of the contract and that value for money is being obtained. Even if self-monitoring arrangements are agreed, the Council has an obligation to verify results and ensure any corrective action is taken. Monitoring should also cover the views of service users, typically through satisfaction surveys at appropriate intervals. Monitoring results should be used to advise the procurement board(s) about excellent or satisfactory contract performance as well as contracts that are poorly performing. Quarterly reviews will be made through use of the Contract Performance Review Form. The form can be found on the CPT intranet site at http://intranet.lambeth.gov.uk/StaffServices/FinanceAndProc urement/Procurement/ProcurementAtLambeth/Procurement FormsTemplatesAndDocuments.htm. The form is divided into the following section headings: Report & Contract Information Contract Outputs & Performance Indicators Performance Score Performance Score Comments General Comments & Recommendations Equalities Assessment Progress Report Contract Performance Improvement Plan Performance Scoring Matrix Signatures
All Lambeth contracts valued at 100,000 and greater must have a Gateway 4 review completed at the first 90 days after a contract begins; afterwards this must be followed by ongoing performance review reports, throughout the term of the contract. If you are managing a contract that requires you to complete a mandatory or statutory review on a regular basis, you do not have to conduct a Lambeth contract performance review in addition. Simply complete your statutory or mandatory review as usual and submit this to your Board in place of the Lambeth review form. Be sure to agree this with your Procurement Board in advance and if your review does not include a quantitative scoring methodology, score your suppliers performance based upon the Lambeth scoring matrix 276 and attach to your review. Do not duplicate your effort!
There are two main sections in the report, a quantitative section (numerical scoring) and a qualitative (quality or text) section. The quantitative section is a numerical scorecard section that both parties use to score the contracts performance against standard Lambeth contract management KPIs. The qualitative section of the form is a text section that the Lambeth contract manager completes with the supplier, and this section includes a progress report on equalities issues that were raised in the initial Equalities Impact Assessment. Both the performance scores and text details from the review will be submitted to the relevant board and entered onto the Contract Register. When conducting a review, the Lambeth contract manager should arrange a meeting with the suppliers contract manager and the review should be done by both parties together. This will ensure that the review is fair and transparent and will promote good communication between both parties. Both parties apply scores for the contracts performance against the following standard Lambeth contract management KPIs: Achievement of contract Key Performance Indicators Quality & consistency of work Value for Money, delivery to budget & budget control Professionalism of management & cooperation from staff Communication & ability to provide information Customer care Ability to deal with complaints and their resolution Health, safety & security arrangements Equalities (including performance on equality targets) Environmental issues.
4.2.2
The Quantitative Review
In the quantitative section the maximum number of points a contract can receive in the Performance Review are 50 points, or a maximum of 5 points per KPI. The method of scoring Contractor performance used on the form is based on a 0 to 5 point matrix: Failure: The Supplier has shown no evidence of skill and experience in delivering the contracts Key Performance Indicators. The Supplier has made no effort to resolve complaints or contractual issues that have arisen and has shown poor communication skills with the Lambeth staff. There is a high risk that the contract will fail completely if an urgent Improvement Plan is not put in place. Very Poor: Less than acceptable. The Supplier has shown a lack of convincing evidence of skill and experience in delivering the contracts Key Performance Indicators. They have shown a lack of real understanding of the contracts requirements or evidence of ability to deliver; medium risk that relevant skills or requirement are not be available in their delivering the service or supply they have been contracted for. Poor: The Supplier is only meeting the very minimum requirements in delivering upon the Key Performance Indicators established for the contract. Satisfactory: An acceptable level of service delivery. The Supplier is delivering upon the Key Performance Indicators established for the contract. Good communication exists between the Supplier and the Lambeth contract manager and staff members. Good: Above satisfactory. The Supplier demonstrates a real understanding of Lambeths requirements and shows evidence of their ability to not only deliver the contracts Key Performance Indicators, they show real motivation to improve upon these. Good communication exists between the Supplier and the Lambeth contract manager and staff
2 3
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members. Excellent: The Suppliers performance has provided real confidence in their delivery of the service or supply. The Suppliers positive attitude, innovative approach, motivation and excellent communication skills have added real value to Lambeth. They have shown a deep understanding of the service or supply they are contracted to deliver and have both delivered and improved upon the Key Performance Indicators established for the contract.
When using the matrix above, officers should support their score in the quantitative section by notes, comments and references to evidence of successes or failures. Where the contract is reviewed at 20 points or below, a Contract Performance Improvement Plan (Section 8.0 on the form) must be completed by the Lambeth contract manager. The Improvement Plan must detail the contracts problems, their impact, proposed or actual remedial action, and the outcome of any remedial action - including proposals for additional action. This, along with the entire form, is submitted to the relevant board(s) and scores and details from the review will be entered onto the Contract Register. The method of applying a single numerical score to each key output or outcome for the overall performance of the contract is a valuable method of assessing trends or comparing between contracts. However, the unavoidable subjectivity of any numerical approach naturally demands caution. As noted above, a low score may not be the fault of the contractor. Formal action should only be taken against a contractor if there is hard evidence of failure and this is reliant on more detailed performance records. The qualitative section of performance reporting is therefore very important as this indicates areas of failure or shortcomings and their cause. The scoring system in the quantitative section should yield scores of 3 or higher more for each KPI; by definition lower scores indicate some degree of failure. The following points would normally apply: Any reported performance which is scored at 2 or below is a cause for concern and requires full explanation on the review form Contract KPIs which consistently score below 4 are also a cause for concern Even in cases where the contracts overall score is satisfactory, individual elements of performance may be poor and require attention There may be regular or irregular temporary periods of under performance which may complicate the quarterly reporting arrangement; such temporary failures will require investigation and reporting.
4.2.3
The Qualitative Review You should consider the possibility that failures may not be the fault of the contractor. They may be due to client failure or to circumstances beyond the control of either contractor or client. During the review you should agree upon the score with the contractor and offer them the opportunity to submit their own evidence and/or add their own supporting comments. This emphasises the need for adequate record keeping throughout the life of any contract and promotes good communication 278
The qualitative section includes text sections on contract performance in the following areas:
Contract outputs & performance indicators Performance score comments General comments & recommendations Equalities assessment progress report Contract Performance Improvement Plan
Lambeth contract managers and suppliers should endeavour to complete these sections in full, providing any relevant support (both positive and negative) for both the text and
scores rendered in the review. Additional to satisfying the needs of the review, this qualitative section provides a readable history of the contract that is beneficial when re-tendering is scheduled and to any future staff changes both at Lambeth and at the suppliers company.
4.2.4
The Contract Management Toolkit
In procurement, we can make savings in 2 main areas: 1. Tendering 2. Contract management Through advertising and competition, we can make savings before a contract is awarded and through efficient and effective contract management we can make savings in contracts that are already in place. Through careful analysis we can identify savings in contracts and service areas; the money that we find is then removed from accounts and redirected into other priority and frontline services. The Contract Management Toolkit is a useful instrument for identifying where savings can be made in our contracts. It is included in Lambeths 8 Strategic Levers to Service and Financial Planning.
The 9 Levers
The foundation of this Toolkit is the use of strategic category management, using the 9 Levers of service and product delivery. These Levers provide officers with advice on practical areas of contract management; each section in the Toolkit gives brief guidance on what contract managers can do to reduce the costs of contract services. Ultimately, our goal is to work smarter with our suppliers in order to take out costs that will benefit both the supplier and Lambeth. The 9 Levers are below, along with an example from the Toolkit for each: 1. Volume Concentration Can we pool volumes across the whole spend area? 2. Understand The Suppliers Costs Challenge the supplier on what we are being charged for 3. Finding the Cheapest Supplier Think about sourcing products and services from the cheapest place think about geographic differences in prices 4. Specification Development Make changes to your specification to reduce or eliminate costs 5. Improving Processes with the Supplier Improve invoicing procedures by consolidating invoices & orders 6. Relationship Re-structuring How do we become our suppliers number one customer? 7. Demand Management How are we balancing our customers requirements with the capabilities of the supply chain? 8. Compliance Eliminate maverick or off-contract spend 9. Logistics Buy less frequently & buy in larger quantities
How to Use the Toolkit

Below is a simple checklist for using the Contract Management Toolkit:
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1. Choose the contract you will be reviewing and confirm this with your Business Unit Manager/ Head of Service. 2. Read the toolkit through completely and ask any questions. 3. Check the contracts relevant documentation the specification, the terms and conditions, method statements, etc. 4. Review the 9 Levers and go through those areas that will have an impact on your contract. Make notes and comments against each of the 9 Levers; you can find the link in the Useful Links section of this Toolkit: a. On the Applicability and Current Situation gauge, double click on the numbered boxes to select numbers 1-5. Remember that 1 is lower and 5 is higher b. Write comments against each Lever and include the estimated value of savings and time frame for realising them. Enter the total estimated savings possible at the bottom of the worksheet 5. Arrange a meeting with your Head of Service and Divisional Director of Resources and present your completed Toolkit to them, detailing the savings you have discovered. Have them sign off the worksheet. 6. Contact your departmental Procurement Board administrator and arrange to present your completed Toolkit to your Procurement Board. For contracts valued at 500,000 and greater, you must also present your toolkit to the Strategic Procurement Board. The Toolkit is then scanned into the Contract Register. 7. Meet with your departmental Head of Finance and present your completed Toolkit; work together on how your savings can be realised and if required, complete a Savings Realisation form. Have them sign off the Toolkit. Contracts valued at 500,000 and greater must have a Toolkit exercise completed a minimum of once a year. For contracts valued from 100,000-500,000, the departmental head of procurement will create a list of contract in their department that must be reviewed during each calendar year. The Contract Management Toolkit can be found on the CPT SharePoint site here: http://sharepoint.lambeth.gov.uk/sites/lts/corporateprocurement/Public%20documents/Contract%20Manage ment/Contract%20Management%20Toolkit/The%20Lambeth%20Contract%20Management%20Toolkit.doc. A standalone version of the 9 Levers Worksheet can be downloaded from here: http://sharepoint.lambeth.gov.uk/sites/lts/corporateprocurement/Public%20documents/Contract%20Manage ment/Contract%20Management%20Toolkit/The%209%20Levers%20Worksheet.doc. For an example of what information should go onto the worksheet, see a worked example here: http://sharepoint.lambeth.gov.uk/sites/lts/corporateprocurement/Public%20documents/Contract%20Manage ment/Contract%20Management%20Toolkit/The%209%20Levers%20Worked%20Example.doc.
4.2.5
Conclusion
If a contracts problems are not resolved in a timely manner, the Procurement Boards may call in a poorly performing contract on a more frequent basis than the minimum quarterly schedule described above. Additionally, if a contract is seriously at risk and emergency situations arise outside of the quarterly review period, the Lambeth Contract Manager has an obligation to report this to their Procurement Boards immediately.
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Both monitoring and reporting of performance demand skill and experience. You need to ensure that contract failures are identified and that value for money is being obtained. You need to identify the real causes of problems and then take action to tackle them. This often requires close working with the contractor. Moreover, there may be times when your monitoring mechanisms prove inadequate due to a changing context, changing baselines or changing customer expectations. The contract may be being adhered to but the outcomes no longer match customer need. You have a responsibility to do your best to identify such circumstances and report them to the Procurement Board. A final consideration relates to Lambeths policies in relation to supporting the community. Contract management should embrace these wider objectives wherever possible. Section 1 of the Procurement Guide contains details on Lambeths policies in relation to equalities, sustainability and supporting local businesses. Another important consideration is linked to Section 17 of the Crime and Disorder Act 1998. This requires local authorities to consider the community safety implications of all their activities. The Council should do its best to deliver the local Crime Reduction Strategy. This can have links to the delivery of certain contracts and further advice is available from the Community Safety Team.
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The Procurement Jargon Buster

Below are some terms that you may encounter in the procurement profession many of which also appear in this Guide. It is by no means a complete list, as new terms are being used all the time, but it will help you identify some of the more commonly used words and phrases used throughout the procurement profession. Term Definition
Agent Agreement Approved List Audit Trail
A person or organisation acting on behalf of the Council or on behalf of another organisation. The legally binding contract terms and conditions between the parties, another word for a contract. A list drawn up in accordance with Rule 7.2 of the Contract Standing Orders. System or paper generated evidence showing how and why and by whom certain processes and functions were carried out. An officer of the Council who has been nominated by the Chief Officer to manage a contract or contracts with a contractor or supplier. The issue of an order or contract to a supplier. The criteria by which the successful quotation or Tender is to be selected - see further Rules 10 and 11 of the Contract Standing Orders. The procedure for awarding a contract as specified in Rules 8, 10 and 15 of the Contract Standing Orders. The most effective and desirable method of carrying out a function or process derived from experience rather than theory. 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 a combination of economy, efficiency and effectiveness as implemented by the Council. This terminology has now in many instances been superseded by Value for Money. BIP are a source for procurement training and information. See http://www.bipsolutions.com/. An insurance policy: if the contractor does not do what it has promised under a contract with the Council, the Council can claim from the insurer the sum of money specified in the bond (often 10% of the contract value). A bond is intended to protect the Council against a level of cost arising from the contractors failure.
Authorised Officer
Award Award Criteria
Award Procedure Best Practice
Best Value
BIP (British Information Publications ltd) Bond
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BME (Black and Minority Ethnic)
The term "black/minority ethnic group" refers to communities whose origins lie mainly in South Asia (e.g. India, Pakistan, Bangladesh, Sri Lanka), Africa, The Caribbean (originally Africa), and China. In Lambeth, Black Groups total 25.8% (Black Caribbean 12.1%, Black African 11.6%, Other Black 2.1%,); Asian groups make up 4.6%; Chinese/Other 4.8%; and Mixed Ethnic 2.4% of the total population. This document is used in a restricted OJEU (Official Journal of the European Union) tendering process and the responses are used to help us shortlist suppliers. Where the Open procedure is used, the Business Questionnaire is also required to be completed and will be sent out with the tender documents. Also known as PQQ - prequalification questionnaire & 'RFI' - request for information. Under Best Value, local authorities are required to review all of their services. Authorities must decide in which order services are to be reviewed, draw up a programme and publish this in their Best Value Performance Plan. It is also a requirement of the Local Government Act that all councils ensure that they achieve "best value" from all of their contracts. The Councils cabinet as defined in the Constitution. An enabling agreement with one or more suppliers for a defined range of works, goods or services covering terms and conditions (including price) which users call off to meet their requirements. Any person who asks or is invited to submit a quotation or tender. Cashable savings can be defined as money saved by the Council through the letting of the contract; these savings will be realised and returned to the Council. The only exceptions to savings being returned to the Council are in respect of the Housing Revenue Account, grant maintained accounts in CYPS and Capital Accounts as these accounts are ring-fenced. Where cashable savings are made in ring-fenced accounts, the savings are to be returned to the original account, and the savings recorded as Non-Cashable. Non-cashable savings arise as a result of the letting of a contract but are not realised as money; these are also referred to as efficiency savings. An example would be re-Tendering a cleaning contract at the same price, but getting more buildings cleaned, or getting the same buildings cleaned better.
Business Questionnaire or BQ
BVR (Best Value Review)
Cabinet Call Off Contract
Candidate Cashable & Non-cashable Savings
Chief Finance Officer
The Director of Finance and Performance or such other officer as may be designated chief finance officer by the Council. The departmental Executive Director.
Chief Officer
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Code of Conduct Commissioning
The code regulating conduct of all officers of the Council. The process of specifying, securing and monitoring services to meet peoples needs at a strategic level. This applies to all services, whether they are provided by the local authority, NHS, other public agencies, or by the private and voluntary sectors. A committee which has power to make decisions for the Council, for example a joint committee with another local authority, but not a scrutiny committee. Awarding contracts by the process of seeking competing tenders. Any purchase over 25,000 in value that requires formal tendering procedures to be adopted. The document approved by the Council which: Allocates powers and responsibility within the Council and between it and others Delegates authority to act to the Cabinet, Committees, Portfolio Holders and Officers Regulates the behaviour of individuals and groups through rules of procedure, codes and protocols. Someone employed for a specific length of time to work to a defined project brief with clear outcomes to be delivered, who brings specialist skills or knowledge to the role, and where the Council has no ready access to employees with the skills, experience or capacity to undertake the work. A binding agreement made between two or more parties, which is intended to be enforceable at law. Any of the following decisions: Composition of Approved Lists Withdrawal of Invitation to Tender Whom to invite to submit a quotation or tender Shortlisting Award of contract Any decision to terminate a contract. A contract let by the Strategic Procurement and Contract Management Service to support the Councils aim of achieving Value for Money. A firm or person who has made a contract to supply goods and/or services. A Central Purchasing Body (CPB) is a contracting authority which acquires goods or services intended for one or more contracting authorities. It awards public contracts intended for one or more contracting authorities or concludes framework agreements for work, works, goods or services intended for one or more contracting authorities. The CPBs Lambeth uses are the LCSG (London Contracts and Supplies Group) and the OGC
Committee
Competitive Tendering Complex Purchase Constitution
Consultant
Contract Contracting Decision
Corporate Contract
Contractor Central Purchasing Body
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the Office of Government Commerce. Procurement Boards Lambeth has 3 Procurement Boards. The Boards will approve tendering, award and contract management activity according to the aggregate value of the contract: Procurement Board 1: Strategic Procurement Board 500,000 and greater Procurement Board 2 100,000 up to 500,000 Procurement Board 3 25,000 up to 100,000 EU (European Community) EU (European Union) Procedure EU Threshold European Community of nations now referred to as the EU European Union. The procurement procedure required by the EU where the Total Value exceeds the EU Threshold. The contract value at which the EU public procurement directives apply. The thresholds as of 1 January 2008 are: 173,934 for goods & services 4,348,350 works and construction. The use of an electronic system to acquire goods, works & services from and make payments to third parties. Solutions currently on the market include: Complete 'end to end' procurement systems that are integrated with financial back office systems Stand alone modules used to seek tenders or quotations (known as e-Sourcing) Web-based systems that enable ordering from approved catalogues (e-Marketplaces) Other web-based systems such as e-Auctions Procurement cards for ordering & payment Payment through BACS & CHAPS. A set of secure tender documents (see below) that are prepared using a variety of software programmes and which are intended for completion by a tenderer using IT or a PC. The researching and gathering of product or service information by electronic means, chiefly by Internet or email use. This includes the 27 members of the European Union, along with the three Western European countries that have chosen not to join the EU - Iceland, Liechtenstein and Norway. Microstates Andorra, Liechtenstein, Monaco, San Marino and Vatican City are too small to have full membership but use the Euro and have special relations with the EU. Switzerland is not a member of the EU and not in the European Economic Area but has similar ties to the EU countries through bilateral treaties.
e-Procurement
e-ITT (Electronic Invitation to Tender)
e-Sourcing
European Economic Area
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European Union
As of 1 January 2008 the 27 member states are: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxemburg, the Netherlands, Portugal, Spain, Sweden and the United Kingdom, Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Romania, Slovak Republic, Slovenia, Bulgaria and Romania. Detailed assessment and comparison of supplier offers. Exor Management Services Ltd manage the Lambeth approved list of suppliers and service providers. The most senior officer representing the Deputy Chief Executive Corporate Services or designated by him to provide financial advice to the Chief Officer. The regulations outlining officer responsibilities for financial matters issued by the Chief Finance Officer in accordance with the Constitution. An agreement between one or more authorities and one or more economic operators, the purpose of which is to establish the terms governing contracts to be awarded during a given period, in particular with regard to price and, where appropriate, the quantity envisaged. The successor agreement to the General Agreement on Trade and Tariffs. The main signatories other than those in the European Economic Area are Canada, European Union, Hong Kong (China), Iceland, Israel, Japan, Korea, Liechtenstein the Netherlands with respect to Aruba, Norway, Singapore, Switzerland, United States. As identified in the Constitution. A high-profile purchase is one that could have an impact on functions integral to Council service delivery should it fail or go wrong. A high-risk purchase is one which presents the potential for substantial exposure on the Councils part should it fail or go wrong. A high-value purchase is where the value exceeds the EU Threshold values. Invitation to Tender documents in the form required by this Procurement Guide. This document would be used in the tendering process where the nature of the goods or services is such that the specification cannot be established. We strive to be very clear on our requirements and therefore this procurement process is not used frequently by Lambeth. Decisions that are defined as key decisions in the Constitution. KPIs are tools that help us to measure the performance
Evaluation Exor Financial Officer
Financial Regulations
Framework Agreement
Government Procurement Agreement
Head of Legal Services High Profile
High Risk
High Value Invitation to Tender (ITT) Invitation to Negotiate (ITN)
Key Decisions Key Performance Indicator (KPI)
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of suppliers against their contractual obligations. KPIs are normally detailed in the service specification document. Line Manager The officers immediate superior or the officer designated by the Chief Officer to exercise the role reserved to the line manager by these contract procedure rules. A letter that creates an immediate binding contractual relationship between the Council and the successful tenderer prior to entering into a formal contract. A letter informing a successful tenderer that it is the Councils intention to enter into a contract with her/him in the future but creates no liability in regard to that future contract. Recognition of the collective expertise and resources of the London Boroughs, the GLC, and ILEA, and the desirability of increased participation in the development of policy led to the creation of the London Joint Supplies Board which in 1991 was renamed The London Contracts and Supplies Group (LCSG). A statement from a supplier (or potential supplier), typically within a tender, to help the purchaser or procurement officer to understand how the goods or services will be delivered.
Letter of Acceptance
Letter of Intent
LCSG (London Contracts and Supplies Group)
Method Statement
Most Economically Advantageous Tender , or The tender that will bring the greatest benefit to the MEAT Council. Most Economically Advantageous award criteria may embrace sustainability issues. Nominated Suppliers and Sub-contractors Officer Office of Government Commerce (OGC) Those persons specified in a main contract for the discharge of any part of that contract The officer designated by the Chief Officer to deal with the contract in question. The Office of Government Commerce (OGC) is an office of HM Treasury, responsible for improving value for money by driving up standards and capability in procurement Formerly OJEU (Official Journal of the European Community). Contracts that fall within the EU threshold values & are not exempt categories must be advertised for tender by placing a notice in the OJEU. A contract which binds the parent of a subsidiary company as follows: if the subsidiary company fails to do what it has promised under a contract with the Council, the Council can require the parent company to do so instead. This is a form of partnership between the private and public sector and is normally used for high risk-/high value contracts and principally to raise money for higher value projects.
OJEU (official Journal of the European Union)
Parent Company Guarantee
Private Finance Initiative (PFI)
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Portfolio Holder Public Private Partnership (PPP) Pre-Qualification Questionnaire (PQQ) Priority Services Procurement
A member of the Cabinet to whom political responsibility is allocated in respect of specified functions. It is very similar to a PFI arrangement, but the aim is not as centred upon finance, but service delivery. See business questionnaire. Those services required to be tendered as defined in the EU public procurement directives. The planning, sourcing, researching, contracting, purchasing, negotiating, leasing, renting, or selling of materials, services, equipment or supplies. Facets include strategy planning, statutory implications marketing and international statues and agreements. The document setting out the Councils approach to procurement and key priorities for the next few years. To obtain goods or services in exchange for money or its equivalent; to buy. The suite of guidance documents, together with a number of standard documents and forms, which supports the implementation of these contract procedure rules. The Guide is available on the Councils intranet. A quotation of price and any other relevant matter (without the formal issue of an Invitation to tender). Contracts to which these contract procedure rules apply (see Rule 4). See business questionnaire. The new term for Sustainable Procurement, Responsible Procurement emphasises the importance of both social and environmental objectives in ensuring best value in procurement. The process of selecting Candidates who are to be invited to quote or bid or to proceed to final evaluation. Companies employing less than 250 people The researching and gathering of product or service information specifications, costs, service delivery means, etc. Or SPB, this board has been set up to ensure that a strategic overview is taken of all significant contracts and purchases. The SPB will approve all procurement activity over 500,000 in value and take responsibility for the Councils overall strategy and approach relating to procurement. The document used to establish the requirements for the goods or services to be purchased. The Line Managers immediate superior.
Procurement Strategy Purchase Purchasing Guide
Quotation Relevant Contract Request for Information (RFI) Responsible Procurement
Shortlisting SME (Small and Medium Size Enterprises) Sourcing
Strategic Procurement Board
Specification Supervising Officer
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Sustainability
The environmental and sustainable development issues that must be considered in a procurement exercise. Lambeth has adopted the term Responsible Procurement in place of Sustainable Procurement. See Responsible Procurement. A Candidates proposal submitted in response to an Invitation to Tender. Documents exchanged with prospective tenderers when they are invited to tender and that form the basis on which tenders are submitted, including business questionnaire, instructions to tenderers, contract conditions, specification, pricing document, form of tender and tenderers responses. The log kept by the Director of Resources to record details of tenders. The whole of the value or estimated value (in money or equivalent value) for a single purchase or disposal calculated as follows: a. Where the contract is for a fixed period, by taking the total price to be paid or which might be paid during the whole of the period b. Where the purchase involves recurrent transactions for the same type of item, by aggregating the value of those transactions in the coming 12 months c. Where the contract is for an uncertain duration, by multiplying the monthly payment by 48 d. For feasibility studies, the value of the scheme or contracts which may be awarded as a result e. For Nominated Suppliers and Sub-contractors, the total value shall be the value of that part of the main contract to be fulfilled by the Nominated Supplier or Sub-contractor.
Tender Tender Documents, Process, People
Tender Record Log Total Value
TUPE (Transfer of Undertakings (Protection of Subject to certain conditions, these regulations apply Employment) Regulations 2006 (SI 2006 where responsibility for the delivery of works or services No.246)). for the authority is transferred from one organisation (e.g. private contractor, local authority in-house team) to another (e.g. following a contracting out or competitive tendering process) and where the individuals involved in carrying out the work are transferred to the new employer. These regulations seek to protect the rights of employees in such transfers, enabling them to enjoy the same terms and conditions, with continuity of employment, as existed with their former employer. Broadly, TUPE regulations ensure that the rights of employees are transferred along with the business. Urgency A situation whereby the Council shall suffer significantly either financially or operationally, if immediate action is not taken. Value for money is not the lowest possible price; it combines goods or services that fully meet your needs, with the level of quality required, delivery at the time you
Value for Money (VFM)
289
need it, and at an appropriate price. Variation Any alteration, modification, addition to or deletion of any requirement of the contract terms or specification.
290
291

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The Lambeth Procurement Guide

Edition 15 March 2013

The London Borough of Lambeth Corporate Procurement Team

GATEWAY ONE: PLAN

Introduction to Gateway One

Rules & Responsibilities

Central Purchasing Bodies

The Lambeth Procurement Guide V15 20 March 2013

1.4 1.5 1.6

Markets & Market Development

Stakeholders & Stakeholder Management

Gateway One: Present Business Case to Procurement Board

GATEWAY TWO: THINK

Essential Procurement Knowledge

The Lambeth Procurement Guide V15 20 March 2013

Feasibility Studies and Assets The Private Finance Initiative - PFI

2.7 2.8 2.9

Council Charging & Trading Powers

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Freedom of Information & Procurement

Terms & Conditions of Contract Framework Agreements

Gateway Two: Present the Procurement Strategy to Procurement Board

Purchasing, Tendering & Contract Award

Formal Tendering: Services & Supplies Valued at 25,000 and Greater

Procurement Under EU Directives

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Tendering for Consultancy Services

Gateway Three: Present Procurement Delegated Decision Report to Procurement Board

The Supplier Setup Process

GATEWAY FOUR: REVIEW

Introduction to Gateway Four

Lambeths Contract Management System

Gateway Four: Contract Implementation Review

Ongoing Contract Monitoring Contract Variations & Extensions

Effective Contract Monitoring

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4.2.2 4.2.3 4.2.4 4.2.5

The Procurement Jargon Buster

The Lambeth Procurement Guide V15 20 March 2013

Sally Leigh Head of Commissioning and Partnership Strategy

The Lambeth Procurement Guide V15 20 March 2013

Introduction to the Procurement Guide

The Lambeth Procurement Guide V15 20 March 2013

First Contact: Your Departmental Procurement Team

The Lambeth Procurement Guide V15 20 March 2013

Stephen Regalado Corporate Procurement Officer: Customer Engagement

The Lambeth Procurement Guide V15 20 March 2013

The Lambeth Procurement Strategy 2010-2014

Who This Strategy Is For

The Lambeth Procurement Mission Statement

The Vision for Lambeth Procurement

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Commercial Considerations In Lambeth Procurement

Responsible Procurement: The Aims & Goals of Lambeth Procurement

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The Lambeth Procurement Guide V15 20 March 2013

The Lambeth Procurement Guide V15 20 March 2013

The Future for Lambeth Procurement

A Safer Lambeth With Strong Communities

More Opportunities For Children & Young People

Better Housing & Flourishing Local Communities

Respect For The Environment

Developing Personalised Care Services