Transcript Approach to Transformation

Procurement Approaches
Jonathan Jones
Programme Manager
Smarter Procurement - IEWM
Fundamental Questions
Collaborative Contracting
 What did we originally set out to achieve? And did we achieve it?
 Does the original business case still apply?
 What is the current state of the supply market? (any changes?)
 Are we all getting a good deal out of the arrangement (or just some?)
 Is the greater good still delivering?
 Will we repeat the contract or now do something different?
 Is it over or under utilised and why?
Aggregation Benefits
Advantages
 Larger volumes will most of the time improve prices
 Collaborative arrangements provide greater strength over the market
 Collaboration will save resources and duplication of effort
 Most of the time local authorities are commissioning similar items
Disadvantages
 Can sideline SME’s or small local suppliers (politically bad)
 Generic requirements rather than bespoke to your service requirement
 Can be a lot of work for little reward
What worries procurement?
Legal and Transparency
 Following Standing Orders and Financial Regulations
 Not falling fowl of EU law
 Aggrieved suppliers doing; formal complaints, FOI, legal letters,
challenge, etc, etc
Value for Money
 The “S” word
 Exposure to competition
Different tendering procedures or arrangements
 Open
 Restricted
 Negotiated
 Competitive dialogue
 Frameworks
 Dynamic purchasing systems
The open procedure
Format
 One tendering activity open to all
 Minimum 52 day timescale (reduced by 5 days for full electronic access)
 First port of call for EU (or any tendering)
Advantages
 Bids made against EU OJEU advert
 Highest level of transparency
Disadvantages
 May generate a large number of tenders
 Under the Remedies Directive could generate admin
 May reduce opportunity for innovation
The restricted procedure
Format
 Two stage process; requests to participate / tendering
 37 days PQQ / participate and 40 days receipt of tender
 Heavily used by NHS, complex projects and construction
 Selection and award criteria separated
Advantages
 Utilises a Pre-qualification process for early de-selection
 Assessment of financial, technical and economic elements
 Can allow for specification development (transparent)
Disadvantages
 A longer two stage process
 Can be misused when open procedure is acceptable
 Now holds a Remedies Directive requirement
The negotiated procedure
Format
 Criteria for use
 Frowned upon but good procedure
Advantages
 Applicable when final outcome is not clear
 Used in emergency situations
 Used when a procurement has failed
 Opportunity to full OJEU advertise (technical, artistic or exclusive rights by
bidder)
Disadvantages
 Open to challenge if not advertised (Remedies Directive)
 Must meet the criteria for use
 Not always now deemed as good practice
 The EU doesn’t recognise bad planning
Competitive dialogue
Format
 Can be approached via several options i.e. notice for bidders or BAFO’s
 Strong project management approach required
 Procedure one or procedure two
Advantages
 Allows dialogue with the bidders to develop one or more suitable alternative
solutions capable of meeting the requirements
 Used when contracting authority seeks to award a particularly complex contract
 Used when the use of the open or restricted procedure will not allow the award
of that contract.
 Complexity is defined as “technical” (not able to specify), “legal” or “financial”
Disadvantages
 Can prove restricting and cumbersome
 Can prove to be a lengthy process
Frameworks (general)
Format
 Sets out the general terms of the contract
 Mini competitions can be run against framework categories (call off’s)
 Frameworks should now be in place for four years maximum
 Can break down requirements into various lots
 Can follow; open, restricted, negotiated or competitive dialogue award process
 The estimated maximum quantity or value of the goods, works or services for
which call-offs are to be placed is generally clear.
Advantages
 Allows for an overarching procurement to reduce procurement resources later
 Can provide advantages of big spend whilst providing no direct commitment
Disadvantages
 May not always secure the best value for money (contract)
 Now limited to four years duration which may limit return on investment for
supplier and not therefore obtain best terms
 There can be issues around “scope” and “variation” of requirements to
specification a four year duration
The framework agreement
Format
 Will be clearly advertised in OJEU notice as a “framework agreement”
 Will include all contracting organisations entitled to call-off under the
terms of the framework agreement (named or a generic description may be
used)
 Framework agreements can be concluded with a single supplier or with several
suppliers, for the same goods, works or services.
Advantages
 There is no commitment to buy from the agreement
 Final specific terms and conditions can be agreed
 Standstill period optional when mini-tendering
Disadvantages
 The length of the framework agreement will be a maximum of four years unless
there are justifiable exceptional circumstances (under Article 32);
 May not always secure best value (mini competition requirement)
 Under the Remedies Directive if standstill is not applied the is still a potential for
ineffectiveness
The framework contract
Format
This a contract concluded between a Contracting Authority and an economic
operator for the purpose of laying down the essential terms governing a series of
“specific contracts” to be awarded during a given period, in particular as regards;
 The duration
 The subject
 The prices ...
Advantages
 Improved supplier pricing due to potential quantities and commitment agreed
 Used for specific pieces of project work (Construction / partnerships)
Disadvantages
 Can be a “one size fits all” scenario you are obligated to
Dynamic purchasing systems
Format
 Like a framework agreement except during its life other economic operators
(suppliers) may submit indicative bids and if they meet the published criteria,
join the system.
 Must use the open procedure and should be limited to a maximum duration of
4 years duration period.
 It is a completely electronic provisioning process aimed at the supply of
standardized and widely used goods and services.
 Any provider which satisfies the selection criteria and submits an indicative
tender may join at any point in its duration period.
Dynamic purchasing systems
Disadvantages
 Still a new and highly experimental procedure
 May generate a large number of tenders (like an open procedure)
 Under the Remedies Directive could generate admin
 May reduce opportunity for innovation at meeting a criteria
 DPS is entirely electronic and commissioning organisations may need to
undertake extensive development work with the provider sector to ensure that
it is able to respond
Advantages
 The DPS provides a list of registered suppliers that developes and grows
 It is an entirely digitalized process
 Provider offers may be improved in successive stages of the process
 Supports transparency, flexibility and competitiveness of the procedure
Part A and Part B Services
Part A services (Annex II A)
Are categories 1 to 16 and are traditionally advertised in OJEU with supporting
CPC or CPV reference codes.
Part B services (Annex II B)
Are categories 17 to 27 and are traditionally not advertised in OJEU, however,
award notices are published for statistical purposes. Key features are;
 Locally delivered services (hotel, rail, people placement etc)
 25 health and social services (CPC 93) (CPV 74511000-4 / 85000000-9 +)
 27 other services
Selection and award criteria
Selection Criteria
 Assessment of provider capability
 Assesses their economic or financial ability to deliver contract
 Assesses technical or professional ability – relevant expertise and experience
Award Criteria
 This considers the merits of “eligible” tenders
 To assess which tender is “most economically advantageous
 Using only using criteria linked to the “subject matter” of the contract
The Remedies Directive
Came into force December 2009 giving more power to the supplier to challenge
any perceived weaknesses within a public tendering exercise, as follows;
Top six mistakes
(1) Mixing up the selection and award criteria
(2) Award criteria and weightings
(3) End stages of competitive dialogue
(4) Frameworks (illegal access)
(5) Moving goalposts (re-negotiating)
(6) Negotiating in restricted procedure
Warning!
Don’t show to the marketplace
any perceived weaknesses!
Bidders will generally feel more able to challenge due to the recession,
greater knowledge of their rights, more feeling of “formality” with less fear of
“rocking the boat”.
Material Change
Material change occurs where there is evidence of intention to renegotiate
fundamental contract terms where:
 It is so substantial, different providers would have bid
 The winning bidder would have been different
 These are effectively new services or products
 The risk/reward balance tipped in favour of contractor
Going forward
Items to consider for a new contract;
 What lessons have been learned? (factor in)
 What should the new specification look like?
 Have we consulted the market / suppliers? (what’s new)
 Are we all still committed to this?
 Do we have a clear vision of what we want to achieve?
Thank You
[email protected]