Training Workshop

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Training Workshop

• Eddie Regan,
  BIP
  Solutions Ltd

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Guide to Procurement
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Eddie Regan Senior PASS Consultant BiP
Solutions Limited
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• Understanding the Market

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• Public Sector Market Size
• HM Treasury estimates that public procurement,
  excluding public corporations, is worth around
  150 billion per annum.
• Figures used by the European Commission (2004)
  suggests that public procurement in UK was worth
  18.4 of GDP in 2002.

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Public Sector Market Size Local Authorities
(England/Wales) spend approximately 40 billion
p.a. - Bought-in Goods and Services - 27
billion - Capital
Expenditure - 13 billion NHS 17 billion -
National Contracts 5bn
Regional NHS spend approx 12bn MoD
16 billion Education 10 billion
Civil Government 13 billion Scotland 8
billion
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• Public Bodies in the 1980s
• Approximately
• 40 Principal Government Departments
• 12 Regional Health Authorities
• 2,000 Local Authority Purchasing Departments

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Public Bodies Now

• 21 Government Departments
• 1000 Non Departmental Public Bodies
• 10 Strategic Health Authorities
• 73 Foundation Trusts
• 74 Mental Health Trusts
• 152 Primary Care Trusts
• 173 Acute Trusts
• 2,000 Local Authority Purchasing Departments

• 300 UK Universities
• 24,000 State Independent Primary Schools
• 3,500 Secondary Schools
• 42 Police Authorities
• 13 Ambulance Services
• 62 Fire Brigades
• 3,000 Registered Social Landlords

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• Definition of SME

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• Local Government Supply Base
• (England/Wales)
• Number of Local Authority suppliers 200,000
• There are only 6,000 large businesses in the UK,
  therefore vast majority of these
  suppliers are SMEs

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• Types of Businesses
• There are an estimated 4.0 million business
  enterprises in the UK
• 99.2 are small (0 to 49 employees)
• 26,000 (0.6) are medium-sized (50 to 249
  employees)
• 6,000 (0.2) are large (250 or more employees)

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• EC Defining SMEs
• Medium-sized up to 250 employees or up to 50
  million turnover
• Small - up to 50 employees or up to 10 million
  turnover
• Micro up to 10 employees or up to 2 million
  turnover

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• Low Value Procurement

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• On the 23rd June 2006, the European Commission
  published an Interpretative Communication on the
  Community Law applicable to contract awards not
  or not fully subject to the provisions of the
  Public Procurement Directives
• This document states
• According to the ECJ the principles of equal
  treatment and of non-discrimination imply an
  obligation of transparency which consists in
  ensuring, for the benefit of any potential
  tenderer, a degree of advertising sufficient to
  enable the market to be opened up to competition.
• The obligation of transparency requires an
  undertaking located in another Member State has
  access to appropriate information regarding the
  contract before it is awarded, so that, if it so
  wishes, it would be in a position to express its
  interest in obtaining that contract.

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• It further goes on to state
• The Commission is of the view that the practice
  of contacting a number of potential tenderers
  would not be sufficientSuch a selective
  approach cannot exclude discrimination against
  potential tenderers.in particular new entrants
  to the market.
• the only way that the requirements laid down by
  the ECJ can be met is by publication of a
  sufficiently accessible advertisement prior to
  the award of the contract..published by the
  contracting entity in order to open the contract
  award to competition.

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• Judgement covers
• Low value (under the EC Directive thresholds)
• Concession contracts (non-works)
• Contracts for Annex II B Services
• Works Contracts under EC thresholds
• Every contract not covered by OJEU publication
  requirements
• OJEU allows for non-OJEU contracts to be
  advertised through the Official Journal.

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• Key Issues

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• There are a number of government policies where
  public procurement is seen as a lever to
  sustainability, which include
• Apprenticeships and Skills
• Equality gender, race, disability
• EU Procurement Markets
• Fair and Ethical Trade
• Human Rights and Core Labour Standards
• Innovation
• Local Labour UK Jobs and Manufacturing
• Regeneration
• SMEs (including black and minority ethnic
  enterprises BMEs, women owned WO and disabled
  owned DO businesses and social enterprises)
• Sustainable Procurement
• Third Sector Organisations (TSOs)

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• The Public Sector Directive 2004/18 clarifies the
  scope to include
• environmental and social issues in the public
  procurement process.
• For example
• Accessibility criteria must be included in the
  technical specification wherever possible, and
  green production process standards and relevant
  part of eco-labels may be specified.
• At the selection stage procurers may consider
  relevant environmental and social aspects of
  technical capacity and ability (e.g.
  environmental management systems), and, in
  looking at track record, they can consider social
  and environmental offences among the grounds for
  exclusion.
• Relevant environmental characteristics relating
  to whole life costs and quality may be included
  in the award criteria.

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• Opportunities for consideration of social issues
• The circumstances in which the consideration of
  social issues during the procurement process is
  most likely to be appropriate.
• Where the authority has obligations of a social
  nature, for example under the Race Relations
  Amendment Act, in relation to a particular
  function the performance of which it is
  contracting out, it can legitimately pass these
  on to the contractor.
• For example, an obligation on a public authority
  running a prison to monitor the ethnicity of the
  prisoner may need to be passed on to the
  contractor as a contract condition.

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• Criteria involving social considerations may be
  used to determine the most economically
  advantageous tender provided that the principles
  of non-discrimination and transparency are
  respected
• They must provide an economic advantage for the
  contracting authority which is linked to the
  product or service which is the subject matter of
  the contract.
• A criterion that makes it possible to evaluate
  the quality of a service intended for a given
  category of disadvantaged persons may be used.

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Qualification Process
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• Mandatory exclusions
• The award of public contracts to economic
  operators found guilty of
• organised crime
• corruption
• fraud to the detriment of the EC or
• money laundering
• must be avoided.

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• Other Grounds for Exclusions
• Bankrupt or being wound up
• Guilty of other offences
• Guilty of grave professional misconduct
• Social security breach
• Unfulfilled obligations relating to taxes
• Serious misrepresentation in supplying
  information

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• Qualifications
• Authorised to pursue professional activity
• Can provide required evidence of appropriate
  economic and financial standing
• Can provide evidence of appropriate technical
  capacity and professional ability
• Quality Assurance Standards
• Environment Management Standards

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• Selection according to technical capacity
• The objective, at this stage, is to select the
  candidates most able to execute the contract.
• Where relevant to the subject of the contract,
  contracting authorities can ask for evidence of
  the following
• Specific knowledge or experience and, for
  services contracts, ability
• Description of technical facilities and measures
  for ensuring quality
• Statement of tools, plant and technical equipment
• Indication of environmental management measures

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• What cannot be done
• Contracting authorities should not, for example
• Ask for evidence that is not directly linked to
  the subject of the contract.
• Ask about candidates general policies, where
  this goes beyond what is necessary to assess the
  candidates capacity to perform the particular
  contract.
• WARNING Any information that is requested would
  be assumed, by the courts, to have been taken
  into account, even if only the relevant aspects
  of that information were considered.

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• Supplier Evaluation

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• The following Table shows weightings (W) that
  will be assigned to each heading and the specific
  questions (Q) relating to that heading. The
  Table also shows how given responses will be
  scored (S).
• Number under Q relate to the PQQ reference.

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Most Common Requirements

• Health and Safety Policy
• Environmental Policy
• Equal Opportunities Policy
• Race Relations
• Insurance
• References

• 2 Years Financial Accounts
• Personnel Profiles
• Past Experience
• Investors In People
• Staff Turnover
• TUPE/TURER

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• Weightings and Evaluation Issues

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• Award Criteria
• Lowest Price
• or
• Most Economically Advantageous Tender (MEAT)
• Sub Criteria
• Quality, Price, Technical Merit, Aesthetic and
  Functional Characteristics, Environmental
  Characteristics, Running Costs, Technical
  Assistance, Cost-effectiveness, After Sales
  Service, Delivery Date/Delivery Period/Period
  of Completion.

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• Award Criteria
• Objective criteria which ensure compliance with
  the principles of
• transparency,
• non-discrimination
• equal treatment and
• which guarantee that tenders are assessed in
  conditions of effective competition.

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• Relative Weighting
• All tenderers to be reasonably informed of the
  criteria and arrangements which will be applied
  to identify the most economically advantageous
  tender.
• It is therefore the responsibility of contracting
  authorities to indicate the criteria for the
  award of the contract and the relative weighting
  given to each of those criteria in sufficient
  time for tenderers to be aware of them when
  preparing their tenders.

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• Relative Weighting
• Contracting authorities may derogate from
  indicating the relative weighting of the award
  criteria in duly justified cases
• for which they must be able to give reasons where
  the weighting cannot be established in advance,
  in particular on account of the complexity of the
  contract
• In such cases, they must indicate the descending
  order of importance of the criteria

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• Applying Award Criteria an example
• Based on the Commissions Practical Guide on
• EC-funded aid contracts for consultancy
  services
• Distribute maximum of 100 points between various
  criteria on technical aspects
• Evaluate tenders, total scores, express as
  percentages
• Exclude if minimum criteria of 80 marks not met
• Evaluate financial aspects, express as
  percentages
• Apply relative weighting (8020
  TechnicalFinancial)

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Tender Evaluation Summary

• Technical Evaluation Bid X
  Bid Y Bid Z
• Evaluator A 55 88
  84
• Evaluator B 60 84
  82
• Evaluator C 59 82
  90
• Total 174
  254 256
• Average score 58.00
  84.67 85.33
• Technical score
  99.22 100.00
• Financial Evaluation
• Total fees
  951.320
  1,060.452
• Financial score
  100.00 89.71
• Composite Evaluation
• Technical score x 0.80
  79.38 80.00
• Financial score x 0.20
  20.00 17.94
• Overall score 99.38
  97.94
• Final ranking Eliminated
  1st 2nd

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• Improving Your Chances

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• Background
• For the first time, all UK businesses have
  access to public sector lower-value procurement
  notices under 100,000 in a single location.
  Supply2.gov.uk enables all suppliers to
• browse a database of public procurement contracts
  by product, service and region
• receive daily email alerts highlighting relevant
  contract opportunities
• publish their business profile online which can
  be accessed by all public sector buyers
• resources to assist with the tender process
• gain market intelligence
• access in excess of 68,000 contracts advertised
  on the portal

Uniting buyers and suppliers in a single
location, making it easier for businesses and
government to work together
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• Benefits for buyers
• A cost-effective and efficient means of
  advertising lt100k contracts
• Better value for money through use of local
  supply chains
• Ability to advertise local, regional and national
  lower-value tenders
• Assistance with regeneration and community
  development plans by increasing the involvement
  of local businesses
• Access to a diverse range of competitive
  suppliers, resulting in better-value solutions
• Compliance with EU legislation on the advertising
  of lower-value contract opportunities
• Review standardised PQQ for equal treatment
• Interoperability Partnerships - integrating
  procurement systems and promoting support for
  small businesses

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• Understanding the Documentation

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• Basic Tips
• Preparation
• Maintain a database of the basic information
  likely to be requested
• Deploy a tender team (never do it alone).
• Prepare a Bid Strategy
• Determine if you can win
• Check if weightings are listed
• Do not presume that the documentation is
  infallible
• Be compliant
• Monitor progress against a tender checklist

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• Basic Tips
• Keep track of any amendments (results of
  Clarification Questions)
• Check commercial and contractual aspects
  warranties, insurance, guarantees, performance
  indicators, service level agreements,
  social/employment issues etc
• Check payment schedules
• Ensure parent guarantees, if required, are
  secured in time
• Allow time for Red Teaming of the Tender
• Review your final proposal against your checklist
  to ensure all issues are addressed

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• Winning Tenders
• Are customer focused
• Provide added value at no added cost
• Are innovative
• Identify and address risk
• Show clearly how they will deliver continuous
  development and
• improvement
• Clearly show how and why they are the Most
  Economically
• Advantageous Tender
• They provide benefits that
• are demonstrable/measurable
• are tangible
• have identifiable monetary value

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• Final Pointers
• Dont believe the PQQ/ITT is correct ASK
  questions if in any doubt
• Identify and meet risk head-on and up front
• Always show how and why your tender provides good
  VfM
• Try to add value throughout the course of the
  contract
• Identify problems early and discuss
• Audit relations throughout the contract
• Be positive and professional

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Thank you for attending
V3 (10.05.07)