The SKS Scotland Short Guide to Managing Procurement in Voluntary Organisations & Social Enterprise
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- Bryce Sparks
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1 The SKS Sctland Shrt Guide t Managing Prcurement in Vluntary Organisatins & Scial Enterprise Jim Bennett jimbennett@skssctland.c.uk Tel: Managing Prcurement Page 1
2 Cntents 1.0 Intrductin 2.0 Sme Recent Pr Shws 3.0 Prcurement and Cntracting 4.0 Resurces 5.0 Appendix: Ethics in Prcurement SKS Sctland is a Cmmunity Interest Cmpany specialising in business supprt. Its prtfli includes everything frm cnsultancy in strategy, peratins, finance and staffing t the prvisin f basic business services such as marketing, administratin and bk keeping. The SKS Sctland scial missin is t find slutins t the emplyment needs f peple with lng term cnditins; 80% f its wrk is carried ut by peple with lng term cnditins. Jim Bennett has mre than twenty-five years experience in delivering cmmunity and ecnmic develpment initiatives. His skills include: facilitatin; business and rganisatinal develpment; finance and funding; strategic and peratinal management. His skills and experience were mainly develped in the scial enterprise sectr and he is qualified in Cmmunity Develpment and Leadership. He was a funder senir member f staff f the 100 millin charity, UnLtd and a c-funder f the Scial Enterprise Academy and the Scttish Scial Enterprise Calitin. He is an Investment Panel member fr Scial Investment Sctland and a Directr f SKS Sctland CIC. jimbennett@skssctland.c.uk Managing Prcurement Page 2
3 1.0 Intrductin Much has been written and talked abut hw vluntary rganisatins and scial enterprises access the public sectr prcurement market. This shrt dcument aims t lk at the reverse situatin, utlining hw the sectr shuld let and manage its wn cntracts. The authr has been n bth sides f the prcurement prcess fr many years and has submitted dzens f bids t private, gvernment and vluntary sectr rganisatins. In his experience, vluntary and scial enterprise rganisatins have a wee bit f a jurney t embark n t match the perfrmance f ther sectrs! The aspiratin fr vluntary rganisatins and scial enterprises shuld nt simply be abut their end prduct, but abut the prcess f achieving that end prduct. In terms f prcuring services, that means, amngst ther things, transparent prcesses, clear cmmunicatin and minimising waste. This shrt guide aims at shwing the general apprach that shuld be adpted. It des nt make any claim t be riginal, cmprehensive r definitive. Quite the reverse! The cntents have been culled frm many different prcurement sites and dcuments, much thanks t the UK gvernment s 2005 guidance. Additinal resurces are nted at the end f the dcument. 2.0 Sme Recent Pr Shws My experience ver the past year includes the fllwing examples f bad practice in prcurement by vluntary rganisatins and scial enterprises: An rganisatin embarking n a large scale cnstructin prject appinted an independent specialist (s far s gd) t their prject management grup t advise n cnstructin csts and methdlgy. The rganisatin then prceeded t allcate that advisr uncntested cntracts valued at ver 30,000. At the ther end f the spectrum, a small enterprise advertised publicly a tender with a value f They received 25 submissins, which tk a week t assess. There was actually n need t tender publicly. A husing assciatin received 15 bids fr a cnsultancy cntract they were ffering. Fllwing their decisin-making prcess, they nly infrmed the successful tenderer f the utcme, nne f the ther 14! A member f the Just Enterprise cnsrtium (which shuld knw better) advertised fr cnsultants t wrk fr them. A key criterin was that the daily rate shuld nt be mre than 200. They neglected, hwever, t tell that t tenderers. This meant that many rganisatins submitted bids which simply weren t lked at because they didn t meet this criterin, wasting everyne s time and mney. Managing Prcurement Page 3
4 A middle sized vluntary rganisatin advertised fr cnsultants t assist with a business and premises re-rganisatin. Arund 20 submissins were made. The rganisatin then decided that they culdn t affrd the cst, thus wasting the time f all the bidders. The issues invlved stretch frm ethics, t cmmn sense, t simple pliteness! The issue f gd gvernance als lms large. 3.0 Prcurement and Cntracting This sectin will utline the prcesses invlved in prcurement and cntracting. 3.1 Write a Specificatin A specificatin is simply a clear statement f what yu need, in what quantity and quality, and by when. A few pints t cnsider: If yu dn t knw hw t specify what yu want, then pay a technical specialist t specify it fr yu. An example might be a care rganisatin letting a cntract fr an advisr n the installatin f renewable energy surces. Organisatins such as Cmmunity Energy Sctland can advise n hw t specify what yu need. Yu shuld ensure that yur specificatins are clear and cmprehensive but nt discriminatry; fr example, dn t use brand names, use their generic equivalents. Yu shuld specify the level f quality which yu require, lking at whle life csts as well as price. Be aware nt t ver-specify. Over-specificatin can limit the prfessinal judgement f suppliers which yu culd benefit greatly frm. Chse the detail f the specificatin t meet the circumstances e.g. I.T equipment may well require a detailed specificatin, whereas specificatins fr cnsultancy/advice can ften benefit frm explicitly asking the suppliers t apply their prfessinal judgement in the tender. It is quite legal t specify a cmmunity benefit clause in cntracts f less than 50,000; fr example, suppliers t be scial enterprises, gds t be rganic r fair trade, staff f suppliers t be paid a living wage, r suppliers t demnstrate carbn neutrality. 3.2 Estimate the Cst, Get Apprval fr Spending A realistic estimate f all phases f the service r prduct is essential as this will influence the prcurement prcedure t be fllwed and is imprtant fr budgeting purpses. Prepare a realistic estimate f all phases f the service r prduct. Managing Prcurement Page 4
5 Establish whether funds are available t meet the purchase. Determine whether the estimate (exclusive f VAT) is ver the relevant EU prcurement threshld. Secure apprvals and funding: Once a realistic estimate f cst is available the bard r ther relevant bdy shuld be asked t apprve the expenditure. Yu shuld ensure that all necessary apprvals are sught and btained in adequate time. 3.3 Decide n the Tendering Prcedure Fllwing an apprpriate cmpetitive tendering prcedure will help minimise yur risk. The type f cmpetitive prcess t be fllwed can vary depending n the size and characteristics f the cntract t be awarded. There are three general types f prcedure which may be used: A single tender actin, where the value desn t justify a frmal tender. This is acceptable in certain circumstances fr less than 50,000. Usually used fr less than 5000 and/r where an existing satisfactry cntractr relatinship exists; A restricted prcedure where nly thse deemed t have the necessary capacity and expertise are invited t tender, r where there are relevant lcal/thematic cntractrs. Used fr cntract value f 5000 t 50,000; Fr a value f 50,000 and ver, an pen prcedure, where all interested parties are invited t tender, usually using sites such as r There s always a lt f discussin abut the need t advertise cntracts. Basically, the tw sites mentined abve are mre than adequate t advertise any cntract. Hwever, the questin shuld be asked internally abut the need t advertise at all if the cntract is relatively small. The Public Cntract Sctland site has an excellent Quick Qutes service where a limited number f cmpanies can be asked t bid in a simple specified frmat. This will save time and mney fr all invlved but still indicates a gd practice apprach. The EU has published sme helpful prcurement guidelines which are summarised in the table belw. Whilst their use is nt cmpulsry fr nn-public funds, where public funding is t be used t pay fr the cntract, it is all but bligatry t fllw this prcedure. Managing Prcurement Page 5
6 Where the cntract falls under 50,000, all qutatins supplied shuld include the fllwing: Managing Prcurement Page 6
7 qutes are in written/printed frm (despite the EU verbal qute guidance abve) and clearly riginate frm a reputable supplier wh can deliver the items r wrk supplier's cntact/business details are clear and legitimate qutes are based n specificatins as described there are n missing elements cst calculatins are up-t-date, crrect and precise suppliers shuld cnfirm fr hw lng the qute is valid fr whether the price includes VAT at the apprpriate rate. 3.4 Prepare yur Invitatin t Tender (ITT) One shuld ensure that the ITT is clear and cmprehensive. Clarity and cmpleteness at this stage will help eliminate the need fr clarificatins later. Set ut all the criteria that will be applied in the award prcess, tgether with the relative weightings f each and the budget available. These criteria will frm the basis against which tenders will be cmparatively evaluated and are the key t an bjective, transparent award prcedure. Specify any special cnditins f tender, required frmat f tender respnses, etc. An example f criteria wuld be: The factrs that will be utilised in this evaluatin will include: Overall value fr mney Previus experience f wrking with public/cmmunity partnership grups Experience f undertaking reviews and wider develpment strategies Specific expertise r knwledge f LEADER, Sctland s rural develpment landscape and the develpment f rural cmmunity activity Understanding f prject requirements Methdlgy and apprach prpsed There will be a price/quality rati f 20% price, 80% quality (criteria 2 t 5 will have a weighting f 15% each and criterin 6 will have a weighting f 20%) Special cnditins might include: Cmmunity Benefit Clauses e.g. 15% weighting fr the tenderer being a scial enterprise Requirement t prvide Equal Opprtunities r health and safety plicies. T stay n the right side f the law, Scial Firms Sctland have pinted ut that all yu have t d is make sure that: The cmmunity benefits yu seek fit with yur strategic bjectives. The cmmunity benefits frm part f the cre purpse f the cntract. Managing Prcurement Page 7
8 Use f the cmmunity benefits still represents value fr mney/best Value fr yur rganisatin. 3.5 Allw sufficient time fr submissin f tenders Yu shuld allw suppliers sufficient time fr submitting the necessary infrmatin and preparing the tenders (taking int accunt hliday perids, etc). The cmplexity f the cntract will have a bearing when fixing the timescale fr submitting respnses. 3.6 Issuing Tender Dcuments and Clarificatins Respnses t requests fr infrmatin, requests fr tender dcuments and ther supprting dcumentatin must be issued withut delay. Ensure that additinal infrmatin supplied t ne party, in respnse t a request, is supplied t all interested parties if it culd be significant. 3.7 Receipting and Opening tenders Return late tenders unpened t the tenderer and recrd their existence and time f arrival. Open all tenders received n time as sn as pssible after the designated latest time and date set fr receipt, and all at the same time. Arrange fr the pening f tenders t take place in the presence f at least tw fficials. Ensure that a clear reprt f the tenders received is prduced. 3.8 Clarifying Tenders Yu may seek additinal infrmatin in clarifying submitted tenders but ensure that any clarificatin f tenders des nt result in substantive alteratins t bids after the deadline fr submissin has passed. 3.9 Evaluating Tenders The evaluatin and award prcess must be demnstrably bjective and transparent and based slely n the criteria published in the ITT. This is best achieved by the use f a scring system based n all the relevant weighted criteria, indicating a cmparative assessment f tenders under each criterin. Arrange fr the evaluatin f tenders t be carried ut by a suitably cmpetent prfessinal if yu cannt make the assessment unaided. Evaluate price exclusive f VAT. If price is the sle criterin, award the cntract t the lwest priced bid cmplying with the specified requirements. If the mst ecnmically advantageus tender is the basis fr award, award the cntract t the tender that best meets the relevant published criteria. Managing Prcurement Page 8
9 3.10 Ntifying Tenderers Unsuccessful tenderers fr any cntract shuld be infrmed f the results f the tendering prcess withut delay. In the case f cntracts cvered by the EU Directives, allw a 14 calendar day interval between ntifying unsuccessful tenderers f the utcme f the tendering prcedure and the frmal award f cntract Debriefing unsuccessful tenderers Offer unsuccessful tenderers debriefing. In the debriefing, prvide an bjective assessment f the cmparative strengths and weaknesses f the unsuccessful tender. Give due regard t cmmercial sensitivity and the need t avid cmprmising the rights r cmpetitive situatin f ther tenderers Awarding the cntract The cntract shuld be awarded t the supplier r service prvider that is best able t fulfil requirements (selected in accrdance with the award criteria), whse bid is within budget and in all ther respects cmplies with the ITT, apprval requirements, public prcurement law and natinal guidelines. Recrd in the cntract dcument(s) all terms and special cnditins that apply, including health and safety requirements, insurance, etc. Attach a specificatin t the cntract dcument(s) which reflects the slutin prpsed by the successful tenderer. Ensure that the cntract specifies clearly the rles and respnsibilities f bth the client and the supplier/service prvider what needs t be dne, by whm and hw much it will cst Managing the cntract The management stage f a cntract is where value fr mney gained during the preceding stages is realised. A cntract needs t be effectively managed by the user, nt just left t the supplier. Practive invlvement in the management f the cntract is essential t maximise value. A cntract flder shuld be held which will hld all cntract dcumentatin Fr larger wrks, it may be necessary t engage a technical specialist t draft the cntract Written, timescaled actins with named lead individuals shuld be agreed and signed ff with the cntractr An inspectin f prgress regime shuld be agreed with the cntractr, undertaken, and details recrded Where apprpriate, an external technical specialist shuld be engaged t assess wrk prgress Managing Prcurement Page 9
10 Where remedial actin is deemed necessary, this shuld be nted t the cntractr in writing, with details f imprvements necessary and timescales nted. At the cnclusin f the cntract, review the whle prcurement prcess, nt just the supplier s perfrmance but als the effectiveness f the earlier stages. This review prcess can prvide infrmatin fr future prcurements, in respect f develping and specifying needs, supplier selectin and cntract management. 4.0 Resurces Tendering fr Public Sectr Cntracts this is a practical guide fr scial enterprises and ther third sectr rganisatins that want t understand the prcurement prcess and increase their skills when tendering. Better Value: Purchasing public services frm the scial ecnmy and the accmpanying case studies in Better value: The scial ecnmy delivering public service cntracts these guides are intended t demnstrate t the public sectr the advantages f cntracting with the scial ecnmy. Develping cnsrtia this guide is fr scial enterprises and ther third sectr rganisatins aiming t develp cnsrtia t deliver public services New appraches t cmmissining this reprt utlines develpments in cmmissining arund mre cllabrative appraches t purchasing services. Making the Case: Scial Added Value Guide this guide stresses t scial enterprises and third sectr rganisatins the imprtance f prving their scial added value and describes sme f the tls that can be used t measure this. Investing in Impact: Develping Scial Return n Investment this reprt utlines the lessns learned frm using Scial Return n Investment as an impact measurement tl. Buying fr Gd: Husing Assciatins, Scial Firms and Cmmunity Benefits in Prcurement This guide shws Husing Assciatins hw t use cmmunity benefit clauses in prcurement and has a particular fcus n cntracting with Scial Firms and ther scial enterprises. Cmmissining Public Services: the gd practise apprach twards cmmissining public services Buying fr Gd, Scial Firms, Husing Assciatins and Cmmunity benefit Clauses The abve are available frm: Managing Prcurement Page 10
11 Appendix 1: Ethics in Prcurement Adapted frm the Natinal Public Prcurement Plicy Unit / Gvernment Cntracts Cmmittee June Intrductin The purpse f this nte is t prvide infrmatin t assist yu t cnduct purchasing in a way that satisfies prbity and accuntability requirements. 2. Guiding Principles It is very imprtant that the public prcurement functin is discharged with prbity, transparency and accuntability in a manner that secures best value fr public mney. Prbity requires the purchasing prcess t be cnducted ethically; hnestly; and with fairness t all participants Transparency and accuntability require that the basis fr decisins is demnstrably clear and bjective and that the purchaser is held t accunt fr the cnduct f the prcurement prcess Cntracting must be cst effective and efficient in the use f resurces while uphlding the highest standards f integrity. 3. Prbity In the cntext f prcurement, the aim shuld be that individuals and rganisatins are trusted and respected by thse with whm they deal and that business is cnducted by all parties nt nly efficiently but in a fair and reasnable manner. Sme f the practical implicatins f ensuring prbity in prcurement are set ut in the fllwing subsectins. 3.1 Legality There is an bligatin n staff t exercise their pwers lawfully. They must be aware f the prvisins f the varius Acts, Directives, regulatins, plicies and prcedures that are relevant t their functin. 3.2 Disclsure f Interest Any frm f persnal interest which may impinge, r might reasnably be deemed by thers t impinge, n impartiality in any matter relevant t his r her duties shuld be disclsed in writing t management. Persnal interest includes an interest f a relative r cnnected persn. The management must then decide if the exercise shuld be dealt with by anther member f staff r seek further advice. 3.3 Gifts Staff/cntractrs shuld nt accept benefits f any kind frm a third party which might reasnably be seen t cmprmise their persnal judgement r integrity. Managing Prcurement Page 11
12 The actins f staff/cntractrs must be abve suspicin and nt give rise t any actual r ptential cnflict f interest and their dealings with cmmercial and ther interests shuld bear the clsest pssible scrutiny. It is nt pssible t give guidelines fr every cnceivable situatin that may arise but if a dubt arises abut a particular situatin line management shuld be cnsulted. The fllwing general guidelines prvide a framewrk within which decisins in this area can be made r lcal rules frmulated: Gifts must never be slicited, directly r indirectly. Subject t lcal rules, an fficial may accept and retain gifts f lw intrinsic value. Any gift f mre significant value shuld be refused. Cash, gift cheques r any vuchers that may be exchanged fr cash may nt be accepted regardless f the amunt. Staff must nt seek r accept special facilities r discunts n private purchases frm cntractrs, suppliers r service prviders with whm they have fficial dealings. 3.4 Hspitality Nrmal business practice may ccasinally justify accepting rutine / mdest hspitality frm suppliers prvided that: The frequency and scale f hspitality is nt allwed by the recipient t reach a psitin whereby he r she might be, r might be reasnably deemed by thers t have been, influenced in making a business decisin as a cnsequence f such hspitality. The number f staff availing f the hspitality is kept t a minimum. Invitatins d nt include prvisins deemed t be excessive, such as significant travel, vernight accmmdatin r trips abrad. Availing f the hspitality des nt identify the cntracting authrity in a public way with any particular cntractr, supplier r service prvider. Offers f hspitality shuld be reprted t line management. Particular care shuld be taken where suppliers are in the prcess f tendering fr business. In this regard there shuld be n acceptance f gifts r hspitality frm cntractrs, suppliers r service prviders invlved in a current tendering prcess. 4.0 Transparency and Accuntability Prcurement transactins and decisins must in all respects be fair, equitable and ensure value fr mney. Yu must be able t justify decisins made and actins taken. In rganising the prcurement functin, management in cntracting authrities must ensure apprpriate separatin f duties within the prcurement cycle. Fr example, insfar as pssible, rdering and receiving gds and services shuld be distinct frm payment fr gds and services. Managing Prcurement Page 12
13 Accurate written recrds (including cmputer recrds) are essential in demnstrating that prper ethical standards have been bserved. Therefre, apprpriate recrds shuld be maintained thrughut the purchasing prcess. These recrds shuld prvide an audit trail f the reasns fr making a particular prcurement decisin. The type and detail f infrmatin that is recrded shuld be specified in lcal prcedural guidelines and will depend n the cmplexity r sensitivity f the particular purchasing issue. 5.0 Cnfidentiality f Infrmatin The basic rule is that cmmercially sensitive infrmatin must be kept secure and never used fr persnal gain r t prejudice fair cmpetitin. Infrmatin n individual cntracts must nt be given t the media r any ther enquirer (except the individual cntractr cncerned), withut the authrity f line management. Disclsure f supplier and tender infrmatin relating t the tender prcess prir t cntract award, and in particular t anther interested party, is strictly prhibited. Managing Prcurement Page 13
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