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Appendix A

Procurement Processes, Skills and Electronic Commerce

A1. Legislation and Council Requirements

A1.1 The Council is obliged by law to follow the EU Procurement Directives which are rules governing the tendering and processes for the award of Public Sector contracts.

A1.2 The three main principles associated with the EU Procurement Directives are as follows:-

1. All potential contracts, the values of which singularly or cumulatively exceed specified financial thresholds, must be advertised throughout the European Union, so that all interested parties in all member states have an equal opportunity to submit tenders.
2. All enquiries must receive equal treatment in order to eliminate discrimination on the grounds of the nationality of the contractor or the origin of goods / services.
3. All tendering and award procedures must involve the application of objective criteria.

A1.3 In addition to the predominant requirements of EC Procurement Legislation, all purchasing and procurement activity must comply with other Legislation including the Local Government Act 1999, the Local Government (Contracts) Act 1997, the Council's Contracts and Financial Rules of Procedure.

A1.4 The main requirement of the Council's Standing Orders, regardless of the value of the intended acquisition, is that value for money must be achieved. This will include the evaluation of the 'whole life costs' of any proposal, including environmental and financial sustainability.

A2. Procurement Plans and Register of Procurement

A2.1 In order that appropriate control, advice and support of the procurement activity within the Authority can be maintained, all sections will be required to submit details of their planned procurement as part of the service planning process.

A2.2 The Service Plan will give indicative details of a section's intended procurement activity.

A2.3 Each section will be required to nominate a lead Procurement Officer who will be responsible for identifying future procurement proposals and keeping the central register up to date.

A2.4 A central register of procurement proposals will be kept by the Head of Finance for the following purposes;

• the identification of opportunities for corporate contracts
• compiling the Prior Information Notice (PIN) for the Official Journal of the European Commission
• planning purposes in respect of project teams and resources for large-scale procurement exercises.
• marketing purposes aimed at the local and wider private sector providers
• giving the Council an overall picture of the intended procurement activity for each financial year, in order to enable for a focus on strategic priorities.

A2.5 A corporate register of the contractual agreements that the Council has entered into will be held by the Head of Finance. It will be the responsibility of the nominated officer within each department to keep the register up to date in this regard.

A3. Project Teams and Procurement Guidance

A3.1 Where a procurement exercise, with an estimated value in excess of £100,000 per annum, is proposed, the responsible Director should consider the appointment of a Project Team, comprising of relevant technical officers. The Project Team may also include or refer to other relevant officers offering specialist advice such as legal, finance, I.T., personnel, etc and the possible use of external specialist consultants.

A3.2 Each project team will have a designated project manager who will be responsible for the co-ordination and management of the exercise. The project manager will determine the style and frequency of any meetings of the group, if specific meetings are deemed necessary. The project team approach is fundamentally about consulting the relevant specialists on appropriate maters rather than a dogmatic or bureaucratic process.

A3.3 Ordinarily the Project Manager for each Project Team will be a senior officer from the commissioning section.

A3.4 Before any project team moves forward with a significant procurement exercise, the project sponsor must notify the Corporate Management Team, to ensure consideration of any implications connected to the corporate Best Value Review Programme.

A3.5 Planning

• Consider at the outset the full extent of what needs to be done, by whom, and by when. Who needs to be involved? Are they being consulted?
• Establish a complete procedure timetable with consultation periods, approval dates, invitation, receipt and evaluation of tenders, interviews, contract award etc.
• Ensure adequate time is allowed for the whole process.
• If you think that the project might be right for a partnering agreement, build this in at the start.

A3.6 Establish roles and responsibilities

• Establish the roles and responsibilities of all involved. For example, who is to decide / approve the short list? Who will be responsible for the quality and price evaluations?
• Consult Legal Services and Internal Auditor if needed and be clear what approvals are required from elected Members and their role in the whole process.

A3.7 Ensure transparency of proceedings

• Be seen to be fair to all potential tenderers and that the process is conducted without favouritism.
• Engage widely with stakeholders and existing contractors in advance of formal proceedings.
• Get all internal players to contribute to the critical success factors and key evaluation criteria.
• Allow sufficient time for tenderers to 'put their case' during evaluation, at interviews, presentations etc.

A3.8 Prepare sound and complete tender documents

• Specify clearly what you want and describe in detail how tenderers are to price their submissions.
• Give sufficient thought to various pricing mechanisms such as lump-sum or schedules of rates, and how good these will be at accommodating changes.
• Remember, the more information you provide, particularly on the desired outcomes, the greater your chances of success.

A3.9 Consider monitoring and payment arrangements at the outset

• Be clear as to how payments to the successful tender are to be calculated once they have been awarded the contract, and make payments on time.
• Establish the monitoring procedures that are required to satisfy the Council that the service is being delivered in accordance with that specified.
• Consider 'default' procedures, performance incentives and profit sharing.
• Incorporate these processes within the tender documents, as they will provide the basis of the subsequent contract document.

A3.10 Ensure procedures provide for probity and accountability

• Ensure that the whole process is adequately documented and recorded to demonstrate the decision-making processes to others.
• Ensure all key documents are signed, dated etc., and retained to ensure that those responsible for making decisions can be held accountable.
• Communicate all decisions to the whole team.

A3.11 Think before you act

• Review your plans before commencing. Do not 'rush' things - unless it is a real emergency. Inadequate time in the planning stage will lead to problems.
• Think what can go wrong? What if delays occur? What contingencies do you have? (e.g. slack in the timetable)? What if a key person leaves or goes off sick?
• Is the price / quality model practical, robust and will it deliver Best Value? Ensure you test it thoroughly.

A3.12 Once contracts have been put in place the commissioning section or its agent will be responsible for working with the contractor / supplier to deliver the three following main objectives:-

• effective contract management;
• contract compliance;
• continuing service development

A3.13 Effective contract management means the function of ensuring the proper adherence, by both provider and client, to the terms of a contract and understanding the relationships and the risks involved.

A4. Development of Provider Market

A4.1 The Council currently has a mixed economy of providers. These include in-house, joint arrangements (with other LAs), partnerships, West Mercia purchasing consortia and commercial contracts with private sector providers.

A4.2 Fundamental to developing opportunities within any market is the understanding of that market and its respective players. As part of the options appraisal of Best Value reviews, the research into specific markets will be required as a standard part of the process.

A4.3 Dialogue with the market however, will not be restricted purely to Reviews but will be standard operational procedure for all procurement within the Council. The dialogue, as stated previously, may include publishing the Council's forthcoming Procurement proposals and the OJEC Prior Information Notice in order to allow for an informed market.

A4.4 On a local basis, special consideration will be given to ensure that tender opportunities are advertised to allow the opportunity for bids to be received from the immediate area. Consideration of some amount of 'seed-sowing' will be given to developing local markets and suppliers. These initiatives will be delivered in ways that do not conflict with either Standing Orders or Procurement Legislation.

A4.5 In addition to direct dialogue with the market providers, the Council will also develop links with other sources of market intelligence. These sources will include the IDEA, (through both their market place and contract database initiatives) Trade Organisations, specialist consultants and Professional Bodies.

A5. Development of Procurement Efficiency and Electronic Commerce

A5.1 The exploration of both 'Front of House' services to the Council's users and 'Back Office' electronic data interchange with contractors is an objective of the Council's IEG statement.

A5.2 In addition to having a number of quality procurement arrangements in place, whether they be delivered by in-house or external providers, the benefits of computerisation and other electronic technologies need to be explored in delivering efficiencies within these arrangements.

A5.3 These efficiencies could include the full transaction cycle i.e. from order placing through to payment of invoice and could include the following:-

Order Raising:	Electronic order number generation
Order Placing:	Electronic on-line ordering from electronic catalogues (intranet or internet)
Order Receipt:	Electronic 'booking in' of goods and services.
Invoicing:	Electronic billing by suppliers directly to the Council's electronic purchase order module
Payment:	Payment by automated electronic means, such as BACS, EPS etc.
Performance Monitoring:	Electronic assessment of order due dates against actual delivery, to give assessment of vendor performance

A5.4 The key vehicle to the delivery of electronic procurement within the Council is the successful implementation of an electronic purchase order module, which would interface with the Council's Financial Management System. This will be subject to the submission of a bid to the Programme Management Board, their subsequent approval and funding being available.

A5.5 As well as the quantitative financial information, the module will provide an analysis of purchasing activity with individual suppliers and within different types of goods, works and services. This information will allow for the identification of further corporate contract opportunities and to further refine existing ones.

A5.6 The opening up of the Council's services through on-line Internet methods will achieve both higher quality accessibility to its users and lower costs to the Council.

A5.7 Both of these strategic objectives are compatible and consistent with Central Government's requirements on all Local Authorities in regard to the E-Government Initiative.

A6. Development of Professional Procurement Skills

A6.1 Although there are a number of strong procurement skills within the Council, particularly within the professional services, there is however, a need to increase skills and experience across the organisation. To this end a programme of training and development needs to be established.

A6.2 This training should be aimed at nominated lead officers, staff who supervise procurement activity or, those staff who undertake purchasing or procurement activity as a major part of their work. A skills audit will be undertaken as part of the annual Employee Development Interview in order to assist in the identification of these staff and their training needs.

A6.3 Once trained, officers will then cascade, through 'on the job' training, knowledge appropriate to their teams' and / or colleagues' needs. The training will be designed to support the requirements of both Best Value and compliance with Financial and Contract Rules of Procedure. Staff will need to understand the key principles of procurement, the implications surrounding procurement and purchasing and the benefits from best practice.

A6.4b The objectives of the training might include the following:-

• Procurement cycles
• The role of procurement within the Council
• Best practice
• Implications for the Local Economy
• Internal and external markets
• West Mercia Supplies
• Legal implications
• Health and Safety implications
• Financial and budget implications
• Whole life costing
• Environment and sustainability
• Community leadership and working in partnership with local groups
• Equity and Access to Services provided by external supplier.