Policy and Procedures

Transcription

1 Procurement Policy and Procedures Page 1 of 23

2 Document Version Control Version Description Date Approval Number 0.1 for Discussion to P&R 01/04/2003 P&R noted 0.2 for Discussion to P&R 30/04/2003 P&R noted 1.0 Final to P&R (16 th June 2003) 16/06/2003 P&R noted 25 th June Final to P&R (24 th Sept 2003) 24/09/2003 P&R noted 24 th Sept Final (October 2003) 20/10/2003 Adopted by Council 21 st Oct Update to reflect 31/10/2005 Passed to recommendations set out in Council Procurement Compliance Audit subject to 2004/05 amendments 1.2 Amend as per P&R committee 30/11/ Amendments 09/05/2012 SMT /CMT Amend Annex A: Scheme of Delegation to include Assistant Directors. Review Remove Annex B (Schedule of Delegated Purchasing Officers and Budgetholders held in separate list by Finance). Adjust Procurement Control Limits Guidance Note 9: Single Tender Actions added. Guidance Note 7 & 8 updated. 2.1 Update to reflect feedback from SMT and CMT and CPD guidance note 3.0 Policy approved by SP&R 12th June 2012 and Council 25th June Implementation Date from 1st July th May nd July 2012 SP&R Council Page 2 of 23

3 TABLE OF CONTENTS 1 Introduction Purpose Scope Key Document Relationships...4 PROCUREMENT POLICY Purpose Principles The Procurement Process Identify Need for Goods (Process 1) Prepare Business Case (Process 2) Purchase Goods (Process 3) Manage Contracts (Process 4) Review (Process 5) Procedures, Guidance and Support Equality Impact Assessment...8 Annex A: Scheme of Delegation (Purchasing)...9 Procedure 1: Purchases < 30, Procedure 2 Purchases > 30,000 (Tender)...20 Page 3 of 23

4 1 Introduction 1.1 Purpose The purpose of this document aims is to clearly set out how the Council procures goods, services and works The audience for this document is both Members and Officers. 1.2 Scope This document sets out the policy, processes and procedures of Down District Council with regard to the procurement of goods, services and works Key Document Relationships The seeks to encompass and be consistent with other regulations that govern and direct the Council s procurement activities. Specifically: EC Directives Legislation, including Equality Legislation Departmental Guidance The Councils Standing Orders Best Practice 2 Audit Advice 1 The word goods shall, when used throughout this document, be deemed to mean Goods, Services or Works. Services include the appointment of consultants. It is envisaged that the policy will be extended to cover all expenditure. 2 Including the Public issued by Department of Finance and Personnel (May 2002) Page 4 of 23

5 PROCUREMENT POLICY 2 Purpose The purpose of this policy is to ensure that the Council: Correctly identifies the goods it needs to achieve its objectives Performs a critical evaluation of what is purchased and why Obtains the goods that it needs at the right price 3, time and quality 4 Can demonstrate a robust and reasonable decision making process 3 Principles The prime objective of Council procurement is to achieve value for money (VFM) Best VFM is the optimum combination of whole life costs and quality to meet the customer's requirement To avoid the prohibitive administrative burden of all procurement decisions having to be taken by the Council certain authorities have been delegated to the Clerk, the Directors and Officers in a scheme of delegation attached at Annex A. This sets out who has the authority to purchase goods on behalf of the Council. An Officer with authority to purchase goods is termed a Delegated Purchasing Officer. 3 Price should be based on Whole Life Cost. 4 Defined by term VFM or Value For Money. Page 5 of 23

6 4 The Procurement Process Procurement is made up of the five processes shown in the diagram below. Identify Need For Goods Process 1 Prepare Business Case Process 2 Purchase Goods Process 3 Manage Contract Process 4 Review Process Identify Need for Goods (Process 1) It is expected that the Council s planning processes will accurately identify and reflect the main purchases of goods to be made over the short term (specifically the Corporate Plan, the Capital Expenditure Plan, the Annual Business Plans and Budget) Once a need for a good has been identified it may receive a provisional allocation of money through the budgeting process The success of this process may be judged by the number of material purchases made in any period that were not identified in any plan. Page 6 of 23

7 4.3 Prepare Business Case (Process 2) The purpose of this process is answer the question Is this objective worth the resources which would be spent on it? Expenditure thresholds will be used to determine which approach should be taken in order to prepare a business case. It is noted that the effort spent on a business case should be considered on a case-by-case basis but the general principle is that the resources devoted to appraisal should be in proportion to the scale and importance of the objectives. 4.4 Purchase Goods (Process 3) The objective of this process is to ensure that a selected supplier has offered better value for money than offered from any other potential supplier. There should be demonstrable competitiveness amongst suppliers Expenditure Thresholds and Purchase Types will be used to determine the approach that should be taken to purchase a good and who has Authority to Purchase The amount to be considered is the aggregated value of the purchases that form part of the same requirement and shall take account of need for a minimum period of one year. 4.5 Manage Contracts (Process 4) The Delegated Purchasing Officer will be responsible for the monitoring of supplier performance throughout the period of supply. 4.6 Review (Process 5) There should be periodic review and evaluation of the outcomes generated by expenditure. Page 7 of 23

8 5 Procedures, Guidance and Support There are a number of procedures, guidance notes and sources of support to assist Officers and Members to perform these processes The procedures are: Procedure 1: Purchases < 30,000 Procedure 2: Purchases > 30,000 (Tender) A number of Guidance Notes (most recent update in brackets) have been issued to assist Officers to perform these processes. These are as follows: Guidance Note 1: Business Case Pro forma (Nov 2005) Guidance Note 2: Full Economic Appraisal (Nov 2005) Guidance Note 3: Appointing Consultants (Nov 2005) Guidance Note 4: Support Sustainability in Purchasing (Jan 2006) Guidance Note 5: Completing Order Forms (Apr 2008) Guidance Note 6: Delegation to Nominated Officers (Jan 2006) Guidance Note 7: Evaluation Matrix Less than 30,000 (Aug 2008) Guidance Note 8: Evaluation Matrix Above 30,000 (Jul 2012) Guidance Note 9: Single Tender Action & Contract Extensions (Jul 2012) It is envisaged that over time a series of further Guidance Notes will be issued. These guidance notes, once approved by Council, will form part of this policy It is envisaged that standard forms and other supporting information will be published on the intranet to assist Officers to perform these processes and procedures If any Officer has any questions, doubts or concerns about this their policy they should direct a query to their Director, Assistant Director or the Business Improvement Manager. 6 Equality Impact Assessment This Policy has been assessed on 21 August 2012 under Down District Council s Equality Impact Assessment process and has been screened out as having no impact on any of the groups designated in Section 75 of the Northern Ireland Act If at any stage there are any issues within the policy which are perceived by any party as conflicting with their rights, that party should bring these to the attention of your line manager or raise a grievance through the Grievance Procedure. Page 8 of 23

9 Annex A: Scheme of Delegation (Purchasing) What is a Scheme of Delegation To avoid all procurement decisions having to be taken by the Council certain authorities have been delegated to the Clerk, the Directors and Officers. The scheme of delegation sets out these authorities below. With regard to expenditure thresholds the amount 5 to be considered is the aggregated value of the purchases or call-offs that form part of the same requirement and shall take account of need for a minimum period of one year. Unauthorised Purchases Uauthorised purchases are defined as a commitment for goods made by anyone other than an authorised employee of the Council. An authorised employee is one to whom delegated authority has been given as defined in this Scheme of Delegation. An authorised individual/team is termed a Delegated Purchasing Officer ( DPO ). Council employees who make unauthorised purchases are personally responsible for payments of any cost incurred, and disciplinary action may result, including termination of employment. Difference between Delegated Purchasing Officers and Budget Holders A Budget Holder is accountable for the specification, budget and usage of purchased goods. A Delegated Purchasing Officer has the authority to commit the Council to expenditure on goods within defined limits but only after having obtained permission from the relevant Budget Holder. In many instances the role of Budget Holder and Delegated Purchasing Officer are combined into one post but there are instances when the two roles are held by distinct post holders. Delegation of Purchasing Authority below level of Budget Holder There are a number of post holders (termed Nominated Officers ) below the level of Budget Holder who have been delegated purchasing authority for the purchase of certain types of goods within certain expenditure limits. This authority is delegated to facilitate responsiveness and efficient procurement transactions. Authority to act as a Nominated Officer shall only be granted by the relevant Director of the service and must be done so in writing and placed on file. A copy should be forwarded to the Principal Accounting Officer (see Guidance Note 6). 5 Based on reasonable cost estimates Page 9 of 23

10 Difference between Budget Allocation and Authority to Purchase An allocation of funds through the budget process does not confer authority to purchase. The Authority to Purchase is subject to the rules set out in this policy. Officer Duties & Responsibilities Authority to purchase is only delegated to Designated Purchasing Officers if they behave consistently with the following duties and responsibilities: To ensure that a budget exists Personally satisfied that the expenditure represents VFM Took reasonable steps to check they had authority to purchase Price is competitive To enter into agreements under Standard or Model Terms & Conditions To behave, as an employee, consistently with the Code of Conduct To hold reasonable stock and stores only Exceptions An Officer is authorised to act as a DPO beyond their threshold limits in exceptional circumstances e.g.: Extreme Urgency e.g.: in the event of a major incident Where an exception to the policy has been made the rationale for the exception must be documented. This document should be retained by the Delegated Purchasing Officer. Guidance Note 9 sets out how to handle Single Tender Actions and Contract Variations. Absence & Holidays If a Director is the stated DPO they may not delegate downwards to cover a period of absence. They must delegate to a fellow Director. Assistant Directors may only delegate to Director. If a Budget Holder or other Officer is the stated DPO they must delegate upwards to cover a period of absence/holiday. Terms & Conditions If a contract is to be entered into which is a material variation to Standard Terms & Conditions or Model Terms and Conditions then Authority to Purchase is only delegated if the Designated Purchasing Officer took reasonable steps to protect the Councils interest. For example: the DPO sought and has obtained an opinion from the Principal Administrative Officer. Page 10 of 23

11 Petty Cash Minor purchases of goods urgently required and with a value not exceeding 20 may be made from Petty Cash. Page 11 of 23

12 PROCUREMENT CONTROL LEVELS The Procurement Control Limits set out what is required to ensure adequate competition at various levels of expenditure by Delegated Purchasing Officers. Aggregated Value Price Check Requirements Formal Business Case? 0-5,000 In line with Annexe A of PGN 04/12 the requirement is to ensure that all purchases below 5,000 are subject to normal value for money. No, but VFM must be demonstrable. All Delegated Purchasing Officers should carry out a price check with at least two suppliers (a price check will include obtaining telephone quotes, written quotes, quotes, catalogue price, internet prices) to ensure value for money has been achieved. Price checks should be documented and retained on file for audit purposes. > 5,000 - < 15,000 5 written quotes sought and held on file / E-tender. Yes > 15,000- < 30,000 5 written quotes sought and held on file. / E tender Yes > 30,000 Tender. Yes Page 12 of 23

13 WHO MAY PURCHASE VARIOUS CATEGORIES OF GOODS? Routine Purchases To be flexible and responsive authority to purchase for routine goods/services is decentralised. It is devolved to each directorate as set out in the table below. Routine purchases must be made under standard terms and conditions or model terms and conditions. Aggregated Who? / Notes Value > 0 to < 1,500 DPO = Budget Holder or Nominated Officer > 1,500- DPO = Budget Holder < 5,000 > 5,000 - DPO = Assistant Director < 15,000 or Director > 15,000- DPO = Director < 30,000 > 30,000 Reserved by Council Specialised Purchases Construction Works and Services To be flexible and responsive authority to purchase for routine goods/services is decentralised. It is devolved to each directorate as set out in the table below Aggregated Who? / Notes Value > 0 to < 1,500 DPO = Budget Holder or Nominated Officer > 1,500- DPO = Budget Holder < 5,000 (Estates Officer & Parks Officer for landscaping) > 5,000 - DPO = Assistant Director < 15,000 or Estates Department. > 15,000- DPO = Director < 30,000 > 30,000 Reserved by Council Page 13 of 23

14 IT Service Purchases The complexity (rate of change) and the integration requirements make it sensible to centralise all IT Service procurement. The following thresholds will apply. Aggregated Who? / Notes Value > 0 to < 1,500 DPO = IT Manager / Nominated Officer > 1,500 - DPO = IT Manager < 5,000 > 5,000 - DPO = Director of < 15,000 Environmental Services > 15,000- < 30,000 DPO = Director Environmental Services > 30,000 Reserved by Council Training and Development Purchases To drive towards retaining IIP there is a need to centralise and co-ordinate training expenditure. This expenditure will include conference expenditure. The following thresholds shall apply: Aggregated Who? / Notes Value > 0 to < 1,000 DPO = Training Officer > 1,000 to < 1,500 > 1,500 - < 5,000 DPO = Training Officer DPO = HR Manager / Assistant Director > 5,000 - DPO = SMT < 15,000 > 15,000- DPO = CMT < 30,000 > 30,000 Reserved by Council Page 14 of 23

15 Travel Travel must be purchased in accordance with that policy and with the thresholds below: Aggregated Who? / Notes Value > 0 to < 1,500 DPO = Budget Holder > 1,500 - < 5,000 > 5,000 - < 15,000 DPO = Principal Admin Officer (Assistant Director) DPO = Senior Management Team > 15,000- DPO = CMT < 30,000 > 30,000 Reserved by Council Capital Expenditure Capital Expenditure is devolved to each Directorate. Aggregated Who? / Notes Value > 0 to < 1,500 DPO = Budget Holder or Nominated Officer. > 1,000 to < 1,500 > 1,500 - < 5,000 > 5,000 - < 15,000 DPO = Budget Holder or Nominated Officer. DPO = Budget Holder DPO = Director or Assistant Director. > 15,000- DPO = Director < 30,000 > 30,000 Reserved by Council Lease agreements With regard to purchasing any item by way of lease the Delegated Purchasing Officer Must advise the Principal Accounting Officer prior to any commitment All purchases will require seeking 5 quotations Page 15 of 23

16 Project Expenditure To handle expenditure associated with major projects. In normal circumstances the Project Director will be a Director. Aggregated Who? / Notes Value > 0 < 1,500 DPO = Project Manager > 1,500 - < 5,000 > 5,000 - < 15,000 DPO = Project Manager DPO = Director or Assistant Director > 15,000- DPO = Director < 30,000 > 30,000 Reserved by Council Energy Supplies & Utilities Restricted to use of Council-wide framework / contract covering Heating Oil, Electricity and Water. Aggregated Who? / Notes Value > 0 to < 1,500 DPO = Budget Holder or Nominated Officer. > 1,500 - DPO = Budget Holder < 5,000 > 5,000 - < 15,000 DPO = Director or Assistant Director. > 15,000- DPO = Director < 30,000 > 30,000 Reserved by Council Page 16 of 23

17 Procedure 1: Purchases < 30,000 Overview This procedure covers the purchasing of goods with a value of less than 30,000 (exc. VAT). Step 1: Check Authority to Purchase All Officers must check that they are a Delegated Purchasing Officer for a specific purchase. Each Delegated Purchasing Officer should confirm with the Budget Holder that funds are available before proceeding. Step 2: Prepare Business Case The Budget Holder /Delegated Purchasing Officer must prepare an appropriate business case. The Business Case must establish if the expenditure is justified in terms of the Council s objectives. In most circumstances a formal business case is required for expenditure over 5,000. It may be that a formal business case for expenditure of less than 5,000 is required if there is a high risk associated with the purchase. It may be that some purchases of over 5,000 will be covered by an umbrella business case and do not require a separate business case. Step 3: Prepare Specification The Budget Holder / Delegated Purchasing Officer must prepare the specification. Step 4: Prepare Procurement Approach/Strategy The Delegated Purchasing Officer develops the best way to procure the goods, service or works. A formal procurement approach should be produced for purchases of greater than 5,000. This should include: Estimated Value Procurement Approach to be taken Advertising Required Timetable Page 17 of 23

18 Step 5: Select Suppliers / Prepare Request for Quotation (RFQ) The Designated Purchasing Officer s aim is to ensure open and fair competition in obtaining goods and services with a sufficient number of competent, financially sound suppliers with capacity to provide the services and goods. The normal procedure is to go to open competition. If this is varied (a non-competitive action) then the reasons should be documented. It may be that a Select List is established at this step. Where a Council Select List / Call-off contract exists it would be generally be expected that this would be used. The Delegated Purchasing Officer may have the discretion not to use this list. They may not use the Select List / Call-off contract where they can clearly demonstrate that they can achieve better VFM by buying elsewhere and that there is no sole supplier relationship in place. The Request for Quotation is prepared. The evaluation criteria should be established at this time. These criteria will the basis of judgement to determine which quotation represents best VFM. Step 6: Obtain Supplier Quotes The RFQ is provided to the suppliers identified in the previous step. The Designated Purchasing Officer or his nominee seeks the appropriate number of quotes. The receipt of quotes is not under sealed bid. Step 7: Evaluation of Quotes The evaluation of quotes should be carried out by the Delegated Purchasing Officer and by the Budget Holder. The evaluation of quotes submitted must be based on the pre-defined evaluation criteria. See Guidance Note 7. Step 8: Contract Award The successful supplier will be informed. Unsuccessful bidders will be informed and debriefed if required. The DPO is responsible for ensuring that the contract is appropriately documented. Page 18 of 23

19 CONTRACT All contracts at this level are likely to be under Standard Terms of Conditions or model terms and conditions. If the contract substantially varies from standard terms and conditions or model terms and conditions then advice should be sought by the DPO, in the first instance from the Principal Administrative Officer. OR DER FORM An Order Form 6 will be created and fully completed. Guidance Note 5 sets out the information required to fully complete an Order Form. It is recognised that an Order Form or formal contract may not be raised for all purchases e.g. purchases made by Letter of Engagement. If an Order Form has not been raised then an equivalent document is required. This document should set out the main terms and conditions of the specific purchase. Step 9: Retain Documentation The retention of documentation produced by this procedure is the responsibility of the each Delegated Purchasing Officer. 6 Standard Order Form preprinted and pre-numbered forms for each department. Page 19 of 23

20 Procedure 2 Purchases > 30,000 (Tender) Overview This procedure covers the purchasing of goods with a value of greater than 30,000 (exc. VAT). The overriding principles are that the Council should seek to obtain a competitive price and tenderers must be given an equal opportunity to win the business. Step 1: Obtain Council Approval Council Approval to proceed to tender is required prior to purchasing an item of value > 30,000. It should be noted that Council is required to legally tender on all purchases > 30,000. The following information may be supplied to Council when seeking approval to tender for goods. It is noted that this information may be in outline form at this stage but should be sufficient so as to allow Council to make a correct decision. Business Case (may be outline rather than fully complete) Procurement Strategy / Tender Approach Explanation as to why a variation from Open Competitive Tendering is recommended if appropriate Agree delegation of purchase to committee or officers only Step 2: Prepare Business Case The Budget Holder /Delegated Purchasing Officer prepare an appropriate Business Case. The Business Case establishes if the expenditure is justified in terms of the Council s objectives. In all circumstances a formal business case is required for expenditure over 30,000. The effort expended on the Business Case should be proportionate to the impact of the purchase. It may be that some purchases of over 30,000 will be covered by an umbrella business case and do not require a separate business case. Step 3: Prepare Procurement Strategy / Tender Approach The Delegated Purchasing Officer should prepare an appropriate Procurement Strategy/ Tender Approach. This sets the key issues associated with a purchase to ensure they have been considered and addressed. Where a variation from open tendering is being pursued the reasons should be clearly documented. If the projected expenditure is likely to exceed the current EU thresholds then a number of additional factors should be considered which may impact the Procurement Strategy /Approach and may require the DPO to seek specialist advice. Page 20 of 23

21 Step 4: Select Suppliers / Prepare Invitation to Tender (ITT) The Designated Purchasing Officer s aim is to ensure open and fair competition in obtaining goods and services with a sufficient number of competent, financially sound suppliers with adequate capacity to provide the services or good. This may be done in a number of ways. It may be that to minimize the cost associated with an Open Tendering process a Select List (Limited Tendering) is established prior to detailed tendering. The purpose of doing this is to minimise the tendering costs associated with complex purchases. The cost savings must be balanced against the potential risk of reduced competitiveness. This step seeks to ensure that tender documents are forwarded only to suppliers having the capacity and resources to perform the contract satisfactorily. Evaluation of responses will be undertaken by the Tender Review Panel based on predetermined criteria. These criteria will cover the tenderers organisational and financial structure, capabilities, list of previous similar work carried out and client references. PREPARE ITT DOCUMENTATION Tender Documentation should include: Covering Letter / Letter of Acknowledgement Tenders Instruction, Background Specification Terms & Conditions of Tender Schedules for completion (inc price schedule) The evaluation criteria should be established at this time. These criteria will the basis of judgement to determine which quotation represents best VFM Step 5: Advertise Tender If an Open Tender approach has been selected an appropriate advertisement is placed. An appropriate advertisement is one which, at a minimum Allows at least 10 days public notice Sets out the nature and purpose of the contract Invites tenders for its execution States the last date and time when tenders will be received An advertisement must be placed according to EC Directives if the current EU thresholds are passed. Step 6: Issue Tenders & Handle Queries All requests must be formally requested. The following information will be recorded on a Tender Request List whenever a potential supplier/contractor requests the tender documentation. Name & Full Business Address Time and date request is received and mode of receipt (by hand or post) Time and date the Tender Documentation All queries from suppliers must be directed to the person identified in the Tender Documentation Page 21 of 23

22 Step 7: Receive Tenders The following actions will be taken on receipt of a tender: A receipt will be issued to each tender submitted by hand All tenders will be date stamped on receipt and time stamped All tenders will be kept securely until opening All tenders received will be noted on a Tender Log Sheet 7 Tenders received after the closing time and date will not be considered. The following actions will be taken The tender will be date stamped on receipt It will be marked RECEIVED AFTER CLOSING DATE and remain unopened The Council will accept completed tenders by fax and other electronic means. Step 8: Opening of Tenders Received All valid tenders received: Must be opened at one time Must be opened in presence of Chairman or his nominee. This nominee must not be a person connected to the purchasing decision Must be opened in the presence of Clerk or his nominee (a member of the SMT) All pricing schedules/pages are signed by the Chairman or his nominee All tenders must be recorded All communication with tenderers between tender opening and contract award should be handled appropriately. Step 9: Evaluation of Tenders The evaluation of tenders will be carried out by the Tender Review Panel. See Guidance Note 8 Step 10: Tender Report Following evaluation, the Tender Evaluation Panel will complete a Tender Report which should include: Recommendation Summary Sheet of Tenders Completed Evaluation Schedules Tender Log Sheet Commercial sensitivity will have been a consideration in determining the reports content. 7 It is envisaged that a standard Tender Request Log Sheet will be available on the intranet. Page 22 of 23

23 Step 11: Council Approval This report may be submitted to the Management Team for scrutiny and approval. This report will be submitted to Council 8 for scrutiny and approval. Step 12: Contract Award Following acceptance of a tender the Delegated Purchasing Officer will notify both the successful and unsuccessful Tenderers in writing. An appropriate debrief should be provided to unsuccessful bidders if required. Members or Officers must not contact suppliers prior to the official notification of the contract award being sent out. All queries with suppliers following the award must be conducted through the Delegated Purchasing Officer. If the award of All contracts entered into by way of tender must be under seal. Step 13: Retain Documentation The retention of documentation produced by this procedure is the responsibility of the each Delegated Purchasing Officer. 8 and/or appropriate Committee and/or nominated panel Page 23 of 23