Programme For Today

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Programme For Today

• Introduction
• Understanding the Environment in which we operate
• Rules Regulations
• Clarify What Procurement Is
• Consider why Procurement professionals are
  becoming interested in commissioning
• The European Angle
• E Procurement
• Today
• Tomorrow Beyond?
• What can you be doing now?
• Where to access further information?

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What are the Rules For WCC?
WCC Constitution
Financial Standing Orders (FSOs)
Contract Standing Orders (CSOs)
Procurement
External Rules e..g. EU Procurement Regulations
Procurement Code of Practice (CoP)
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What Is Procurement?

• The process of acquiring goods, services and
  works from external and internal providers to
  meet the needs of the citizens of Warwickshire
  and service users. The procurement process spans
  the whole life cycle of the product or service,
  from the initial identification of a need through
  to the end of the useful life and disposal of the
  asset or the end of the service

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The Procurement Cycle
Specify Identify need, investigate sources,
secure funds
Manage Performance/Quality measured, disposal
Buy Best supplier found, contract awarded, terms
negotiated
Pay Goods received, bills paid
Order Goods/Services ordered, delivery made,
performance measured
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Question For YouThinking about the Procurement
Cycle on the last slide, is Care Commissioning
any different to the procurement of any other
Service?

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So why are Procurement Specialists Becoming More
Interested in Commissioning?
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Supply Positioning
www.warwickshire.gov.uk/procurement
All procurement activity can be considered using
a supply positioning technique which contrasts
the relationship between the risk / service
criticality of the good, service or works and the
overall cost. Each procurement transaction, from
the purchase of a basket of stationery items to
the award of a multi million pound service or
works contract can be placed somewhere within the
matrix.
Low Value / High Risk
High Value / High Risk
Risk / Service Criticality
Low Value / Low Risk
High Value / Low Risk
Cost
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Care Commissioning
www.warwickshire.gov.uk/procurement
millions
Its Very Risky
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www.warwickshire.gov.uk/procurement
The Procurement Cycle Managing Risk Achieving
Efficiencies
Managing Risk
Achieving Efficiencies
Supplier
Cycle
Functional
Technical
Competitive
Ordering and
Contract
market
Negotiation
specifications
specifications
bidding
Administration
management
analysis
Order Pay
Buy
Manage
Specify
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The EU Procurement Regulations
www.warwickshire.gov.uk/procurement
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Directive Thresholds w/e/f 1/1/06

• Works
• Directives Apply _at_ aggregate contract value gt
  3.4m
• Goods
• Directives Apply _at_ aggregate contract value gt
  144,000
• Services
• Directives Apply _at_ aggregate contract value gt
  144,000

But Values Expected to Change Again on 31st
January 2006 Coincides with new Consolidated
Directive
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Which Procedure

• Open
• Restricted (most common with care Contracts
  includes pre qualification stage)
• Negotiated With Notice
• Negotiated Without Notice (close down bargains)
• Competitive Dialogue from end January 2006

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New Consolidated Regulations Effective End
January 2006

• Key Changes
• Online Buyer Profile
• Threshold Values
• Time Limits
• Specifications
• New Procedure (Dynamic Purchasing Systems)
• Electronic Procurement

• Central Purchasing Bodies
• Framework Agreements
• Sustainability (environmental and social
  considerations)

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Part A or Part B Service?

• Part A Services
• In broad terms these are services that must be
  tendered via Europe (assuming threshold is
  reached) and are specifically detailed within the
  EU regulations

• Part B Services
• In broad terms these are things excluded from
  tendering via Europe.
• The general understanding is that this covers all
  adult and children's care services BUT

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Part A or Part B Service contd?

• Not all services linked to Social Services are
  covered by Part B e.g. commissioning of
  training
• European case law establishing the need for
  sufficient advertising of contracts potentially
  covers part B services and contract values lower
  than current threshold levels Result
  authorities may choose to advertise everything
  which is a change to the more traditional ways of
  contracting with the VCS

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E Procurement

• Implementing E-Government
• Local Authorities were doing it anyway -
  Efficiency
• National Procurement Strategy Shared vision,
  objectives and hard targets for ALL local
  authorities
• Launched October 2003
• 27 strategic milestones to be delivered by 31st
  December 2006
• Milestones specifically Relating to e-Procurement
• Councils to have implemented appropriate e
  procurement solutions by 31st December 2005
• Councils to be using Procurement Cards by 31st
  December 2005
• Councils to be using an appropriate e marketplace
  by 31st December 2006

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What Does Appropriate E Procurement Solutions
Mean?

• Today for Warwickshire CC it means -
• Electronic Ordering
• Electronic Invoicing
• Electronic Remittances
• Ordering via some supplier web sites

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What Does Appropriate E Procurement Solutions
Mean?

• Tomorrow and beyond it potentially means for
  Warwickshire CC -
• Electronic Auctions
• Electronic Tendering
• Payments using Procurement Cards
• Transacting through an E Marketplace

But remember the common agenda. All authorities
are doing broadly the same thing!
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Modern Procurement Techniques

• e Auctions

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Whats an e Auction

• Europe (Article 1(7)) defines an electronic
  auction as -
• A repetitive process involving an electronic
  device for the presentation of new prices,
  revised downwards which occurs after an initial
  full evaluation of tenders enabling them to be
  ranked using automatic evaluation methods
• I.e. an electronic system enabling suppliers to
  adjust specified elements of their initial bid
  and which shows consequent changes in rank
  immediately

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My Take On That Definition Is

• Where a Buyer uses an electronic system to
  seek and receive electronic bids from multiple
  sellers with the objective of receiving the
  lowest price whilst delivering the desired
  quality and level of service

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How Do Auctions Work?
Shortlisted suppliers (based on initial cost and
quality evaluation) invited to participate in
auction
Traditional Tender Process Conducted
Priced or un-priced tenders evaluated in line
with criteria specified in the contract
normally MEAT
Auction Conducted
Contract awarded to Best Value supplier/s Not
necessarily cheapest!!
Initial evaluation combined with changes to
prices following auction to establish final
quality / cost score for each shortlisted supplier
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How Suppliers Are Supported During The Auction

• e-Auctions are generally managed by an auction
  service provider and during the process you
  should receive
• An experienced Event Manager to help make the
  e-Auction a success
• Each supplier is trained by the Event Manager to
  ensure familiarity with software.
• A Mock e-Auction is run to allow participating
  suppliers to gain experience in bidding
• Communication channels are set up between all
  parties to ensure no problems on the day of the
  e-Auction
• Dedicated operational and technical support for
  all participants

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Whats The Benefit To The Buyer?

• Encourages competitive behavior amongst suppliers
  in a dynamic real time environment with a finite
  start and finish date.
• Potential to secure better terms through a
  transparent and secure electronic communication
  medium
• Provides a quick, efficient and paperless
  process, reducing business overheads and allowing
  more time for strategic procurement activity
• Demonstrates value for money

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Whats The Benefit To The Supplier?

• Question - How do you as suppliers know what
  price to tender?
• Auctions allow -
• Suppliers to adjust their bid quickly in response
  to real time market pressures
• Suppliers to get more than one opportunity to win
  the business
• All short listed suppliers to modify their terms
  to improve their overall quality / cost ranking

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Modern Procurement Techniques

• e Sourcing

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The Traditional Tendering Process is Costly For
Buyer Supplier

• Buyer
• Tender preparation
• Advertising
• Issuing PQQs Tenders
• Communicating with suppliers
• Receiving Opening Tenders
• Tender Evaluation (particularly remotely)
• Negotiation (auction)
• Tender award notification

• Supplier
• Tender Notification
• PQQ / Tender Receipt
• PQQ / Tender completion
• Communications with Buyer
• Tender submission
• Tender receipt
• Negotiation (auction)

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Sourcing using eSourcing
eCollaboration
eContract Management
eEvaluation
Conduct Complex Evaluations
Collaboratively develop tender documents
Finalise contract
Manage contract
Monitor performance
Buy Side
Winning supplier proposal
Technical Spec Other Docs
Evaluation Report
Supplier Replies
eTendering
Typical Public Sector Sourcing Process
Advertise Opportunity/EOI
Award
Negotiate/ Auction
PQQ
ITT
Evaluation
Participate in eAuction
Express Interest
Respond to PQQ
Respond to ITT
Supply Side
Suppliers
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What Can Suppliers Usefully Be Doing Now?

• Attend events like this
• Increase your knowledge by speaking to your Local
  Authority customers regarding their e procurement
  solutions
• Get the dialogue going in your own organisations
  how can you respond
• If you havent got a business e mail address or
  access to the internet think about getting it
  (Broadband?)
• Do your homework - Keep up to date with the
  regulations affecting the buyers procuring your
  services and use the regulations to your
  advantage, dont view them as a problem to be
  overcome.
• Embrace new procurement techniques as they may
  give you the competitive edge
• DO NOT SPEND BIG MONEY ON NEW COMPUTER SYSTEMS OR
  SOFTWARE THEY ARE NOT NECESSARY

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Where Can I Get More Information on e Tenders?
www.warwickshire.gov.uk/procurement
www.warwickshire.gov.uk/procurement
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Any Questions?
www.warwickshire.gov.uk/procurement